G.R. No. L-16629. January 31, 1962. SOUTHERN LINES, INC., petitioner, vs. COURT OF APPEALS and CITY OF ILOILO, respondents.
FACTS

In 1948, the City of Iloilo requisitioned rice from the National Rice and Corn Corporation (NARIC). NARIC shipped 1,726 sacks on board petitioner Southern Lines, Inc.’s vessel, consigned to the City. The bill of lading stated a total weight of 129,450 kilos, and the City paid the full invoiced amount of P63,115.50 upon the shipment order. Upon delivery on September 3, 1948, the City received only 1,685 sacks with an actual gross weight of 116,131 kilos, resulting in a shortage of 13,319 kilos valued at P6,486.35.
The City of Iloilo filed a complaint in 1951 against NARIC and Southern Lines for recovery of the shortage’s value. The trial court absolved NARIC but held Southern Lines liable, ordering it to pay P4,931.41 after deducting its counterclaim for freight and handling charges. The Court of Appeals affirmed this decision, prompting Southern Lines to elevate the case via certiorari.

ISSUE

Whether the carrier, Southern Lines, Inc., is liable for the shortage in the shipped rice.

RULING

Yes, the carrier is liable. Under Articles 361 and 362 of the Code of Commerce, the general rule is that goods are transported at the shipper’s risk, but the carrier assumes liability if the loss results from its negligence or failure to take customary precautions. The carrier bears the burden to prove that the loss was due to fortuitous event, force majeure, or the inherent nature or defect of the goods to be exempt.
The Court found the carrier failed to discharge this burden. The Court of Appeals’ factual findings, binding in this review, established that the shortage resulted from the carrier’s negligence. Petitioner admitted the rice sacks were in poor condition upon receipt—with broken strings, holes, and spillage inside the vessel—and its crew even collected and distributed spilled rice. By accepting the shipment in such apparent defective condition without objection, the carrier assumed responsibility for any resulting loss and cannot now invoke improper packing as a defense.
Petitioner’s alternative defense—that the City’s claim was barred for not being filed within 24 hours as required by Article 366 of the Code of Commerce—was deemed waived for not being pleaded in its answer. Furthermore, the Court distinguished this case from prior jurisprudence, noting the action was essentially for the refund of an overpayment made upon delivery, not a pure claim for damages from loss, to which the 24-hour notice stipulation typically applies. The bill of lading contained no time limit for filing such a refund action, which was commenced within a reasonable period. Therefore, the decision of the Court of Appeals was affirmed.