G.R. No. 94151 ; April 30, 1991
EASTERN SHIPPING LINES, INC., petitioner, vs. THE COURT OF APPEALS and THE FIRST NATIONWIDE ASSURANCE CORPORATION, respondents.

FACTS

Eastern Shipping Lines, Inc. shipped thirteen coils of wire strand from Kobe, Japan, to Manila. During the voyage, the vessel encountered very rough seas and stormy weather for about three days. The coils, stored in the lower hold, were exposed to fresh water that flooded the hatch to about one foot deep. Upon arrival, a bad order cargo survey at the pier revealed seven coils were rusty on one side. A subsequent survey at the consignee’s warehouse confirmed all thirteen coils were extremely rusty and unsuitable for their purpose due to wetting from fresh water that entered the hatch. The consignee was indemnified by its insurer, First Nationwide Assurance Corporation, which was subrogated to the consignee’s rights.
The insurer filed a complaint for damages against the carrier, Eastern Shipping, and the arrastre operator, E. Razon, Inc. The trial court dismissed the complaint. On appeal, the Court of Appeals reversed the trial court, holding both defendants liable and apportioning their shares. Only Eastern Shipping elevated the case to the Supreme Court, arguing it should be relieved of liability because the cargo was discharged to the arrastre operator under clean tally sheets, indicating delivery in good order.

ISSUE

Whether Eastern Shipping Lines, Inc., as a common carrier, is liable for the damage to the cargo sustained during the voyage despite the issuance of clean tally sheets upon delivery to the arrastre operator.

RULING

Yes, the carrier is liable. The Supreme Court affirmed the appellate court’s decision. The legal logic centers on the presumption of fault under Article 1735 of the Civil Code and the failure to prove the exercise of extraordinary diligence or a fortuitous event. The clean tally sheets create only a prima facie presumption of good order delivery, but this was conclusively overturned by the evidence. The surveys established that the damage—rusting from fresh water ingress—occurred while the cargo was aboard the carrier’s vessel during the voyage.
The heavy weather encountered was not a caso fortuito that would exempt the carrier from liability. As explained by the Court of Appeals, such conditions are normal, foreseeable occurrences for an ocean-going vessel, especially in September. The entry of rainwater into the hold indicated a lack of due care in securing the hatches. Consequently, the carrier failed to rebut the statutory presumption of negligence. Since it did not prove it observed the extraordinary diligence required by Article 1733 of the Civil Code, it cannot escape liability. The award of legal interest from the date of judicial demand was also upheld as correct under the Civil Code.