G.R. No. 168402 August 6, 2008 Aboitiz Shipping CORPORATION, Petitioner, Insurance Company OF North AMERICA, Respondent

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24. G.R. No. 168402 August 6, 2008 Transport System.

The bill of lading7 issued by Aboitiz


contained the notation "grounded outside warehouse."
ABOITIZ SHIPPING CORPORATION, petitioner,
vs. The container van was stripped and transferred to another
INSURANCE COMPANY OF NORTH crate/container van without any notation on the condition of
AMERICA, respondent. the cargo on the Stuffing/Stripping Report.8 On August 1,
1993, the container van was loaded on board petitioner's
DECISION vessel, MV Super Concarrier I. The vessel left Manila en
route to Cebu City on August 2, 1993.
REYES, R.T., J.:
On August 3, 1993, the shipment arrived in Cebu City and
THE RIGHT of subrogation attaches upon payment by the discharged onto a receiving apron of the Cebu International
insurer of the insurance claims by the assured. As subrogee, Port. It was then brought to the Cebu Bonded Warehousing
Corporation pending clearance from the Customs
the insurer steps into the shoes of the assured and may
authorities. In the Stripping Report9 dated August 5, 1993,
exercise only those rights that the assured may have against
petitioner's checker noted that the crates were slightly
the wrongdoer who caused the damage.
broken or cracked at the bottom.
Before Us is a petition for review on certiorari of the
On August 11, 1993, the cargo was withdrawn by the
Decision1 of the Court of Appeals (CA) which reversed the
representative of the consignee, Science Teaching
Decision2 of the Regional Trial Court (RTC). The CA
Improvement Project (STIP) and delivered to Don Bosco
ordered petitioner Aboitiz Shipping Corporation to pay the
Technical High School, Punta Princesa, Cebu City. It was
sum of P280,176.92 plus interest and attorney's fees in favor
of respondent Insurance Company of North America received by Mr. Bernhard Willig. On August 13, 1993,
(ICNA). Mayo B. Perez, then Claims Head of petitioner, received a
telephone call from Willig informing him that the cargo
sustained water damage. Perez, upon receiving the call,
The Facts immediately went to the bonded warehouse and checked the
condition of the container and other cargoes stuffed in the
Culled from the records, the facts are as follows: same container. He found that the container van and other
cargoes stuffed there were completely dry and showed no
On June 20, 1993, MSAS Cargo International Limited sign of wetness.10
and/or Associated and/or Subsidiary Companies (MSAS)
procured a marine insurance policy from respondent ICNA Perez found that except for the bottom of the crate which
UK Limited of London. The insurance was for a was slightly broken, the crate itself appeared to be
transshipment of certain wooden work tools and completely dry and had no water marks. But he confirmed
workbenches purchased for the consignee Science Teaching that the tools which were stored inside the crate were
Improvement Project (STIP), Ecotech Center, Sudlon already corroded. He further explained that the "grounded
Lahug, Cebu City, Philippines.3 ICNA issued an "all-risk" outside warehouse" notation in the bill of lading referred
open marine policy,4 stating: only to the container van bearing the cargo.11

This Company, in consideration of a premium as In a letter dated August 15, 1993, Willig informed Aboitiz
agreed and subject to the terms and conditions of the damage noticed upon opening of the cargo.12 The
printed hereon, does insure for MSAS Cargo letter stated that the crate was broken at its bottom part such
International Limited &/or Associated &/or that the contents were exposed. The work tools and
Subsidiary Companies on behalf of the title holder: workbenches were found to have been completely soaked in
- Loss, if any, payable to the Assured or order. 5 water with most of the packing cartons already
disintegrating. The crate was properly sealed off from the
The cargo, packed inside one container van, was shipped inside with tarpaper sheets. On the outside, galvanized metal
"freight prepaid" from Hamburg, Germany on board M/S bands were nailed onto all the edges. The letter concluded
Katsuragi. A clean bill of lading6 was issued by Hapag- that apparently, the damage was caused by water entering
Lloyd which stated the consignee to be STIP, Ecotech through the broken parts of the crate.
Center, Sudlon Lahug, Cebu City.
The consignee contacted the Philippine office of ICNA for
The container van was then off-loaded at Singapore and insurance claims. On August 21, 1993, the Claimsmen
transshipped on board M/S Vigour Singapore. On July 18, Adjustment Corporation (CAC) conducted an ocular
1993, the ship arrived and docked at the Manila inspection and survey of the damage. CAC reported to
International Container Port where the container van was ICNA that the goods sustained water damage, molds, and
again off-loaded. On July 26, 1993, the cargo was received corrosion which were discovered upon delivery to
by petitioner Aboitiz Shipping Corporation (Aboitiz) consignee.13
through its duly authorized booking representative, Aboitiz
1
On September 21, 1993, the consignee filed a formal DISMISSED. The defendant's counterclaims are,
claim14 with Aboitiz in the amount of P276,540.00 for the likewise, DISMISSED for lack of basis.18
damaged condition of the following goods:
The RTC ruled that ICNA failed to prove that it is the real
ten (10) wooden workbenches party-in-interest to pursue the claim against Aboitiz. The
trial court noted that Marine Policy No. 87GB 4475 was
three (3) carbide-tipped saw blades issued by ICNA UK Limited with address at Cigna House, 8
Lime Street, London EC3M 7NA. However, complainant
ICNA Phils. did not present any evidence to show that
one (1) set of ball-bearing guides
ICNA UK is its predecessor-in-interest, or that ICNA UK
assigned the insurance policy to ICNA Phils. Moreover,
one (1) set of overarm router bits ICNA Phils.' claim that it had been subrogated to the rights
of the consignee must fail because the subrogation receipt
twenty (20) rolls of sandpaper for stroke sander had no probative value for being hearsay evidence. The
RTC reasoned:
In a Supplemental Report dated October 20, 1993, 15 CAC
reported to ICNA that based on official weather report from While it is clear that Marine Policy No. 87GB 4475
the Philippine Atmospheric, Geophysical and Astronomical was issued by Insurance Company of North
Services Administration, it would appear that heavy rains on America (U.K.) Limited (ICNA UK) with address
July 28 and 29, 1993 caused water damage to the shipment. at Cigna House, 8 Lime Street, London EC3M
CAC noted that the shipment was placed outside the 7NA, no evidence has been adduced which would
warehouse of Pier No. 4, North Harbor, Manila when it was show that ICNA UK is the same as or the
delivered on July 26, 1993. The shipment was placed predecessor-in-interest of plaintiff Insurance
outside the warehouse as can be gleaned from the bill of Company of North America ICNA with office
lading issued by Aboitiz which contained the notation address at Cigna-Monarch Bldg., dela Rosa cor.
"grounded outside warehouse." It was only on July 31, 1993 Herrera Sts., Legaspi Village, Makati, Metro
when the shipment was stuffed inside another container van Manila or that ICNA UK assigned the Marine
for shipment to Cebu. Policy to ICNA. Second, the assured in the Marine
Policy appears to be MSAS Cargo International
Aboitiz refused to settle the claim. On October 4, 1993, Limited &/or Associated &/or Subsidiary
ICNA paid the amount of P280,176.92 to consignee. A Companies. Plaintiff's witness, Francisco B.
subrogation receipt was duly signed by Willig. ICNA Francisco, claims that the signature below the name
formally advised Aboitiz of the claim and subrogation MSAS Cargo International is an endorsement of
receipt executed in its favor. Despite follow-ups, however, the marine policy in favor of Science Teaching
no reply was received from Aboitiz. Improvement Project. Plaintiff's witness, however,
failed to identify whose signature it was and
RTC Disposition plaintiff did not present on the witness stand or
took (sic) the deposition of the person who made
that signature. Hence, the claim that there was an
ICNA filed a civil complaint against Aboitiz for collection
endorsement of the marine policy has no probative
of actual damages in the sum of P280,176.92, plus interest
value as it is hearsay.
and attorney's fees.16 ICNA alleged that the damage
sustained by the shipment was exclusively and solely
brought about by the fault and negligence of Aboitiz when Plaintiff, further, claims that it has been subrogated
the shipment was left grounded outside its warehouse prior to the rights and interest of Science Teaching
to delivery. Improvement Project as shown by the Subrogation
Form (Exhibit "K") allegedly signed by a
representative of Science Teaching Improvement
Aboitiz disavowed any liability and asserted that the claim
Project. Such representative, however, was not
had no factual and legal bases. It countered that the
presented on the witness stand. Hence, the
complaint stated no cause of action, plaintiff ICNA had no
Subrogation Form is self-serving and has no
personality to institute the suit, the cause of action was
probative value.19 (Emphasis supplied)
barred, and the suit was premature there being no claim
made upon Aboitiz.
The trial court also found that ICNA failed to produce
evidence that it was a foreign corporation duly licensed to
On November 14, 2003, the RTC rendered judgment against
do business in the Philippines. Thus, it lacked the capacity
ICNA. The dispositive portion of the decision17 states:
to sue before Philippine Courts, to wit:
WHEREFORE, premises considered, the court
Prescinding from the foregoing, plaintiff alleged in
holds that plaintiff is not entitled to the relief
its complaint that it is a foreign insurance
claimed in the complaint for being baseless and
company duly authorized to do business in the
without merit. The complaint is hereby
2
Philippines. This allegation was, however, denied of subrogation under the contract of insurance and
by the defendant. In fact, in the Pre-Trial Order of as recognized by Philippine courts. x x x
12 March 1996, one of the issues defined by the
court is whether or not the plaintiff has legal xxxx
capacity to sue and be sued. Under Philippine law,
the condition is that a foreign insurance company
Plaintiff insurer, whether the foreign company or
must obtain licenses/authority to do business in the
its duly authorized Agent/Representative in the
Philippines. These licenses/authority are obtained country, as subrogee of the claim of the insured
from the Securities and Exchange Commission, the under the subject marine policy, is therefore the
Board of Investments and the Insurance
real party in interest to bring this suit and recover
Commission. If it fails to obtain these
the full amount of loss of the subject cargo shipped
licenses/authority, such foreign corporation doing
by it from Manila to the consignee in Cebu City. x
business in the Philippines cannot sue before
x x22
Philippine courts. Mentholatum Co., Inc. v.
Mangaliman, 72 Phil. 524. (Emphasis supplied)
The CA ruled that the presumption that the carrier was at
fault or that it acted negligently was not overcome by any
CA Disposition countervailing evidence. Hence, the trial court erred in
dismissing the complaint and in not finding that based on
ICNA appealed to the CA. It contended that the trial court the evidence on record and relevant provisions of law,
failed to consider that its cause of action is anchored on the Aboitiz is liable for the loss or damage sustained by the
right of subrogation under Article 2207 of the Civil Code. subject cargo.
ICNA said it is one and the same as the ICNA UK Limited
as made known in the dorsal portion of the Open Policy. 20
Issues

On the other hand, Aboitiz reiterated that ICNA lacked a


The following issues are up for Our consideration:
cause of action. It argued that the formal claim was not filed
within the period required under Article 366 of the Code of
Commerce; that ICNA had no right of subrogation because (1) THE HONORABLE COURT OF APPEALS
the subrogation receipt should have been signed by MSAS, COMMITTED A REVERSIBLE ERROR IN
the assured in the open policy, and not Willig, who is RULING THAT ICNA HAS A CAUSE OF
merely the representative of the consignee. ACTION AGAINST ABOITIZ BY VIRTUE OF
THE RIGHT OF SUBROGATION BUT
WITHOUT CONSIDERING THE ISSUE
On March 29, 2005, the CA reversed and set aside the RTC CONSISTENTLY RAISED BY ABOITIZ THAT
ruling, disposing as follows: THE FORMAL CLAIM OF STIP WAS NOT
MADE WITHIN THE PERIOD PRESCRIBED
WHEREFORE, premises considered, the present BY ARTICLE 366 OF THE CODE OF
appeal is hereby GRANTED. The appealed COMMERCE; AND, MORE SO, THAT THE
decision of the Regional Trial Court of Makati City CLAIM WAS MADE BY A WRONG
in Civil Case No. 94-1590 is hereby REVERSED CLAIMANT.
and SET ASIDE. A new judgment is hereby
rendered ordering defendant-appellee Aboitiz
(2) THE HONORABLE COURT OF APPEALS
Shipping Corporation to pay the plaintiff-appellant
COMMITTED A REVERSIBLE ERROR IN
Insurance Company of North America the sum
RULING THAT THE SUIT FOR
of P280,176.92 with interest thereon at the legal REIMBURSEMENT AGAINST ABOITIZ WAS
rate from the date of the institution of this case PROPERLY FILED BY ICNA AS THE LATTER
until fully paid, and attorney's fees in the sum
WAS AN AUTHORIZED AGENT OF THE
of P50,000, plus the costs of suit.21
INSURANCE COMPANY OF NORTH
AMERICA (U.K.) ("ICNA UK").
The CA opined that the right of subrogation accrues simply
upon payment by the insurance company of the insurance
(3) THE HONORABLE COURT OF APPEALS
claim. As subrogee, ICNA is entitled to reimbursement from
COMMITTED A REVERSIBLE ERROR IN
Aboitiz, even assuming that it is an unlicensed foreign
RULING THAT THERE WAS PROPER
corporation. The CA ruled:
INDORSEMENT OF THE INSURANCE
POLICY FROM THE ORIGINAL ASSURED
At any rate, We find the ground invoked for the MSAS CARGO INTERNATIONAL LIMITED
dismissal of the complaint as legally untenable. ("MSAS") IN FAVOR OF THE CONSIGNEE
Even assuming arguendo that the plaintiff-insurer STIP, AND THAT THE SUBROGATION
in this case is an unlicensed foreign corporation, RECEIPT ISSUED BY STIP IN FAVOR OF
such circumstance will not bar it from claiming ICNA IS VALID NOTWITHSTANDING THE
reimbursement from the defendant carrier by virtue FACT THAT IT HAS NO PROBATIVE VALUE
3
AND IS MERELY HEARSAY AND A SELF- operated as an acceptance of the authority of the agents.
SERVING DOCUMENT FOR FAILURE OF Hence, a formal indorsement of the policy to the agent in the
ICNA TO PRESENT A REPRESENTATIVE OF Philippines was unnecessary for the latter to exercise the
STIP TO IDENTIFY AND AUTHENTICATE rights of the insurer.
THE SAME.
Likewise, the Open Policy expressly provides that:
(4) THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN The Company, in consideration of a premium as
RULING THAT THE EXTENT AND KIND OF agreed and subject to the terms and conditions
DAMAGE SUSTAINED BY THE SUBJECT printed hereon, does insure MSAS Cargo
CARGO WAS CAUSED BY THE FAULT OR International Limited &/or Associates &/or
NEGLIGENCE OF ABOITIZ.23 (Underscoring Subsidiary Companies in behalf of the title holder:
supplied) - Loss, if any, payable to the Assured or Order.

Elsewise stated, the controversy rotates on three (3) central The policy benefits any subsequent assignee, or holder,
questions: (a) Is respondent ICNA the real party-in-interest including the consignee, who may file claims on behalf of
that possesses the right of subrogation to claim the assured. This is in keeping with Section 57 of the
reimbursement from petitioner Aboitiz? (b) Was there a Insurance Code which states:
timely filing of the notice of claim as required under Article
366 of the Code of Commerce? (c) If so, can petitioner be
A policy may be so framed that it will inure to the
held liable on the claim for damages?
benefit of whosoever, during the continuance of the
risk, may become the owner of the interest insured.
Our Ruling (Emphasis added)

We answer the triple questions in the affirmative. Respondent's cause of action is founded on it being
subrogated to the rights of the consignee of the damaged
A foreign corporation not licensed to do business in the shipment. The right of subrogation springs from Article
Philippines is not absolutely incapacitated from filing a 2207 of the Civil Code, which states:
suit in local courts. Only when that foreign corporation is
"transacting" or "doing business" in the country will a Article 2207. If the plaintiff's property has been
license be necessary before it can institute suits.24 It may, insured, and he has received indemnity from the
however, bring suits on isolated business transactions, insurance company for the injury or loss arising out
which is not prohibited under Philippine law.25Thus, this of the wrong or breach of contract complained
Court has held that a foreign insurance company may sue in of, the insurance company shall be subrogated to
Philippine courts upon the marine insurance policies issued the rights of the insured against the wrongdoer or
by it abroad to cover international-bound cargoes shipped by the person who has violated the contract. If the
a Philippine carrier, even if it has no license to do business amount paid by the insurance company does not
in this country. It is the act of engaging in business without fully cover the injury or loss, the aggrieved party
the prescribed license, and not the lack of license per se, shall be entitled to recover the deficiency from the
which bars a foreign corporation from access to our courts. 26 person causing the loss or injury. (Emphasis added)

In any case, We uphold the CA observation that while it was As this Court held in the case of Pan Malayan Insurance
the ICNA UK Limited which issued the subject marine Corporation v. Court of Appeals,28 payment by the insurer
policy, the present suit was filed by the said company's to the assured operates as an equitable assignment of all
authorized agent in Manila. It was the domestic corporation remedies the assured may have against the third party who
that brought the suit and not the foreign company. Its caused the damage. Subrogation is not dependent upon, nor
authority is expressly provided for in the open policy which does it grow out of, any privity of contract or upon written
includes the ICNA office in the Philippines as one of the assignment of claim. It accrues simply upon payment of the
foreign company's agents. insurance claim by the insurer.29

As found by the CA, the RTC erred when it ruled that there Upon payment to the consignee of indemnity for damage to
was no proper indorsement of the insurance policy by the insured goods, ICNA's entitlement to subrogation
MSAS, the shipper, in favor of STIP of Don Bosco equipped it with a cause of action against petitioner in case
Technical High School, the consignee. of a contractual breach or negligence.30 This right of
subrogation, however, has its limitations. First, both the
The terms of the Open Policy authorize the filing of any insurer and the consignee are bound by the contractual
claim on the insured goods, to be brought against ICNA UK, stipulations under the bill of lading.31 Second, the insurer
the company who issued the insurance, or against any of its can be subrogated only to the rights as the insured may have
listed agents worldwide.27 MSAS accepted said provision against the wrongdoer. If by its own acts after receiving
when it signed and accepted the policy. The acceptance payment from the insurer, the insured releases the
4
wrongdoer who caused the loss from liability, the insurer notice did not comply with the notice requirement under the
loses its claim against the latter.32 law. There was no evidence presented that the notice was
timely given. Neither was there evidence presented that the
The giving of notice of loss or injury is a condition notice was relayed to the responsible authority of the carrier.
precedent to the action for loss or injury or the right to
enforce the carrier's liability. Circumstances peculiar to As adverted to earlier, there are peculiar circumstances in
this case lead Us to conclude that the notice requirement the instant case that constrain Us to rule differently from the
was complied with. As held in the case of Philippine PCIC case, albeit this ruling is being made pro hac vice, not
American General Insurance Co., Inc. v. Sweet Lines, to be made a precedent for other cases.
Inc.,33 this notice requirement protects the carrier by
affording it an opportunity to make an investigation of the Stipulations requiring notice of loss or claim for damage as
claim while the matter is still fresh and easily investigated. a condition precedent to the right of recovery from a carrier
It is meant to safeguard the carrier from false and fraudulent must be given a reasonable and practical construction,
claims. adapted to the circumstances of the case under adjudication,
and their application is limited to cases falling fairly within
Under the Code of Commerce, the notice of claim must be their object and purpose.36
made within twenty four (24) hours from receipt of the
cargo if the damage is not apparent from the outside of the Bernhard Willig, the representative of consignee who
package. For damages that are visible from the outside of received the shipment, relayed the information that the
the package, the claim must be made immediately. The law delivered goods were discovered to have sustained water
provides: damage to no less than the Claims Head of petitioner, Mayo
B. Perez. Immediately, Perez was able to investigate the
Article 366. Within twenty four hours following the claims himself and he confirmed that the goods were,
receipt of the merchandise, the claim against the indeed, already corroded.
carrier for damages or average which may be found
therein upon opening the packages, may be Provisions specifying a time to give notice of damage to
made, provided that the indications of the damage common carriers are ordinarily to be given a reasonable and
or average which give rise to the claim cannot be practical, rather than a strict construction.37 We give due
ascertained from the outside part of such packages, consideration to the fact that the final destination of the
in which case the claim shall be admitted only at damaged cargo was a school institution where authorities
the time of receipt. are bound by rules and regulations governing their actions.
Understandably, when the goods were delivered, the
After the periods mentioned have elapsed, or the necessary clearance had to be made before the package was
transportation charges have been paid, no claim opened. Upon opening and discovery of the damaged
shall be admitted against the carrier with regard to condition of the goods, a report to this effect had to pass
the condition in which the goods transported were through the proper channels before it could be finalized and
delivered. (Emphasis supplied) endorsed by the institution to the claims department of the
shipping company.
The periods above, as well as the manner of giving notice
may be modified in the terms of the bill of lading, which is The call to petitioner was made two days from delivery, a
the contract between the parties. Notably, neither of the reasonable period considering that the goods could not have
parties in this case presented the terms for giving notices of corroded instantly overnight such that it could only have
claim under the bill of lading issued by petitioner for the sustained the damage during transit. Moreover, petitioner
goods. was able to immediately inspect the damage while the
matter was still fresh. In so doing, the main objective of the
The shipment was delivered on August 11, 1993. Although prescribed time period was fulfilled. Thus, there was
the letter informing the carrier of the damage was dated substantial compliance with the notice requirement in this
August 15, 1993, that letter, together with the notice of case.
claim, was received by petitioner only on September 21,
1993. But petitioner admits that even before it received the To recapitulate, We have found that respondent, as subrogee
written notice of claim, Mr. Mayo B. Perez, Claims Head of of the consignee, is the real party in interest to institute the
the company, was informed by telephone sometime in claim for damages against petitioner; and pro hac vice, that
August 13, 1993. Mr. Perez then immediately went to the a valid notice of claim was made by respondent.
warehouse and to the delivery site to inspect the goods in
behalf of petitioner.34 We now discuss petitioner's liability for the damages
sustained by the shipment. The rule as stated in Article
In the case of Philippine Charter Insurance Corporation 1735 of the Civil Code is that in cases where the goods
(PCIC) v. Chemoil Lighterage Corporation,35the notice was are lost, destroyed or deteriorated, common carriers are
allegedly made by the consignee through telephone. The presumed to have been at fault or to have acted
claim for damages was denied. This Court ruled that such a negligently, unless they prove that they observed
5
extraordinary diligence required by law.38 Extraordinary show that the crate was properly stored indoors during the
diligence is that extreme measure of care and caution which time when it exercised custody before shipment to Cebu. As
persons of unusual prudence and circumspection use for amply explained by the CA:
securing and preserving their own property rights.39 This
standard is intended to grant favor to the shipper who is at On the other hand, the supplemental report
the mercy of the common carrier once the goods have been submitted by the surveyor has confirmed that it was
entrusted to the latter for shipment.40 rainwater that seeped into the cargo based on
official data from the PAGASA that there was,
Here, the shipment delivered to the consignee sustained indeed, rainfall in the Port Area of Manila from
water damage. We agree with the findings of the CA that July 26 to 31, 1993. The Surveyor specifically
petitioner failed to overturn this presumption: noted that the subject cargo was under the custody
of appellee carrier from the time it was delivered
x x x upon delivery of the cargo to the consignee by the shipper on July 26, 1993 until it was stuffed
Don Bosco Technical High School by a inside Container No. ACCU-213798-4 on July 31,
representative from Trabajo Arrastre, and the crates 1993. No other inevitable conclusion can be
opened, it was discovered that the workbenches deduced from the foregoing established facts that
and work tools suffered damage due to "wettage" damage from "wettage" suffered by the subject
although by then they were already physically cargo was caused by the negligence of appellee
dry. Appellee carrier having failed to discharge the carrier in grounding the shipment outside causing
burden of proving that it exercised extraordinary rainwater to seep into the cargoes.
diligence in the vigilance over such goods it
contracted for carriage, the presumption of fault or Appellee's witness, Mr. Mayo tried to disavow any
negligence on its part from the time the goods were responsibility for causing "wettage" to the subject
unconditionally placed in its possession (July 26, goods by claiming that the notation "GROUNDED
1993) up to the time the same were delivered to the OUTSIDE WHSE." actually refers to the container
consignee (August 11, 1993), therefore stands. The and not the contents thereof or the cargoes. And yet
presumption that the carrier was at fault or that it it presented no evidence to explain where did they
acted negligently was not overcome by any place or store the subject goods from the time it
countervailing evidence. x x x41 (Emphasis added) accepted the same for shipment on July 26, 1993
up to the time the goods were stripped or
The shipment arrived in the port of Manila and was received transferred from the container van to another
by petitioner for carriage on July 26, 1993. On the same day, container and loaded into the vessel M/V Supercon
it was stripped from the container van. Five days later, on Carrier I on August 1, 1993 and left Manila for
July 31, 1993, it was re-stuffed inside another container van. Cebu City on August 2, 1993. x x x If the subject
On August 1, 1993, it was loaded onto another vessel bound cargo was not grounded outside prior to shipment
for Cebu. During the period between July 26 to 31, 1993, to Cebu City, appellee provided no explanation as
the shipment was outside a container van and kept in storage to where said cargo was stored from July 26, 1993
by petitioner. to July 31, 1993. What the records showed is that
the subject cargo was stripped from the container
van of the shipper and transferred to the container
The bill of lading issued by petitioner on July 31, 1993
contains the notation "grounded outside warehouse," on August 1, 1993 and finally loaded into the
suggesting that from July 26 to 31, the goods were kept appellee's vessel bound for Cebu City on August 2,
1993. The Stuffing/Stripping Report (Exhibit "D")
outside the warehouse. And since evidence showed that rain
at the Manila port did not indicate any such defect
fell over Manila during the same period, We can conclude
or damage, but when the container was stripped
that this was when the shipment sustained water damage.
upon arrival in Cebu City port after being
discharged from appellee's vessel, it was noted that
To prove the exercise of extraordinary diligence, petitioner only one (1) slab was slightly broken at the bottom
must do more than merely show the possibility that some allegedly hit by a forklift blade (Exhibit
other party could be responsible for the damage. It must "F").43 (Emphasis added)
prove that it used "all reasonable means to ascertain the
nature and characteristic of the goods tendered for transport
and that it exercised due care in handling Petitioner is thus liable for the water damage sustained by
the goods due to its failure to satisfactorily prove that it
them.42 Extraordinary diligence must include safeguarding
exercised the extraordinary diligence required of common
the shipment from damage coming from natural elements
carriers.
such as rainfall.

Aside from denying that the "grounded outside warehouse" WHEREFORE, the petition is DENIED and the appealed
Decision AFFIRMED.
notation referred not to the crate for shipment but only to the
carrier van, petitioner failed to mention where exactly the
goods were stored during the period in question. It failed to
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