TRASPO TABACALERA INSURANCE CO VS NORTH FRONT SHIPPING SERVICES case digest

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:

Sacks of grains were loaded on board a vessel owned by North Front Shipping (common carrier); the consignee: Republic Floor Mills. The vessel was inspected by representatives of the shipper prior to the transport and was found fitting to carry the cargo; it was also issued a Permit to Sail. The goods were successfully delivered but it was not immediately unloaded by the consignee. There were a shortage of 23.666 metric tons and some of the merchandise was already moldy and deteriorating. Hence, the consignee rejected all the cargo and demanded payment of damages from the common carrier. Upon refusal, the insurance companies (petitioners) were obliged to pay. Petitioners now allege that there was negligence on the part of the carrier. The trial court ruled that only ordinary diligence was required since the charter-party agreement converted North Front Shipping into a private carrier.

 Issues:

WON North Front Shipping is a common carrier. If indeed, did it fail to exercise the required diligence and thus should be held liable?

 Held:

 North Front Shipping is a common carrier. Thus, it has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo.

The charter-party agreement between North Front Shipping Services, Inc., and Republic Flour Mills Corporation did not in any way convert the common carrier into a private carrier. A “charter-party” is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or usex x x

Having been in the service since 1968, the master of the vessel would have known at the outset that corn grains that were farm wet and not properly dried would eventually deteriorate when stored in sealed and hot compartments as in hatches of a ship. Equipped with this knowledge, the master of the vessel and his crew should have undertaken precautionary measures to avoid or lessen the cargo’s possible deterioration as they were presumed knowledgeable about the nature of such cargo.

 But none of such measures was taken.

It did not even endeavor to establish that the loss, destruction or deterioration of the goods was due to the following: (a) flood, storm, earthquake, lightning, or other natural disaster or calamity; (b) act of the public enemy in war, whether international or civil; © act or omission of the shipper or owner of the goods; (d) the character of the goods or defects in the packing or in the containers; (e) order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier is rightly liable therefor.

However, the destruction, loss or deterioration of the cargo cannot be attributed solely to the carrier. The consignee Republic Flour Mills Corporation is guilty of contributory negligence. It was seasonably notified of the arrival of the barge but did not immediately start the unloading operations.