G.R. No. 143133           June 5, 2002 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.

Ruling of the Court of Appeals

The factual antecedents of the case are summarized by the Court of Appeals in this wise:

 CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg, Germany ISSUE
242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. W/N petitioners failed to overcome the presumption of negligence of a common carrier

 M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, This Court's Ruling
discharged the subject cargo.
YES.
 4 coils were found to be in bad order. Finding the 4 coils in their damaged state to
be unfit for the intended purpose, the consignee Philippine Steel Trading
Proof of Negligence
Corporation declared the same as total loss. .

Petitioners contend that the presumption of fault imposed on common carriers should not be applied
 "Despite receipt of a formal demand, defendants-appellees refused to submit to
on the basis of the lone testimony offered by private respondent. The contention is untenable.
the consignee's claim.

Well-settled is the rule that common carriers, from the nature of their business and for reasons of
 Consequently, Philippine First Insurance paid the consignee and was subrogated public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of
to the latter's rights and causes of action against Belgian. the goods and the passengers they transport. Thus, common carriers are required to render service
with the greatest skill and foresight and "to use all reason[a]ble means to ascertain the nature and
 Subsequently, Respondent instituted this complaint for recovery of the amount characteristics of the goods tendered for shipment, and to exercise due care in the handling and
paid by them, to the consignee as insured. stowage, including such methods as their nature requires." The extraordinary responsibility lasts
from the time the goods are unconditionally placed in the possession of and received for
Petitioner Contention. transportation by the carrier until they are delivered, actually or constructively, to the consignee or to
the person who has a right to receive them.

1. Impugning the propriety of the suit against them, petitioner imputed that the damage and/or
loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, Owing to this high degree of diligence required of them, common carriers, as a general rule, are
or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or
act or omission of the shipper of the goods or their representatives. destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the
goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of
proving that they observed such diligence.20
2. In addition thereto, petitioners argued that their liability, if there be any, should not exceed
the limitations of liability provided for in the bill of lading and other pertinent laws.
However, the presumption of fault or negligence will not arise  if the loss is due to any of the
following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an
3. Finally, defendants-appellees averred that, in any event, they exercised due diligence and act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or
foresight required by law to prevent any damage/loss to said shipment. owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5)
an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or
Ruling of the Trial Court deterioration is other than the enumerated circumstances, then the carrier is liable therefor.

The RTC dismissed the Complaint because respondent had failed to prove its claims with the
quantum of proof required by law.
Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and
of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence
against the carrier. If no adequate explanation is given as to how the deterioration, the loss or the
destruction of the goods happened, the transporter shall be held responsible.

That petitioners failed to rebut the prima facie presumption of negligence is revealed in the
case at bar by a review of the records and more so by the evidence adduced by respondent.

Further, petitioners failed to prove that they observed the extraordinary diligence and precaution
which the law requires a common carrier to know and to follow to avoid damage to or destruction of
the goods entrusted to it for safe carriage and delivery.

Package Limitation

Second, in Keng Hua Paper Products v. Court of Appeals, we held that a bill of lading was separate
from the Other Letter of Credit arrangements. We ruled thus:

"(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be
treated independently of the contract of sale between the seller and the buyer, and the
contract of issuance of a letter of credit between the amount of goods described in the
commercial invoice in the contract of sale and the amount allowed in the letter of credit will
not affect the validity and enforceability of the contract of carriage as embodied in the bill of
lading. As the bank cannot be expected to look beyond the documents presented to it by
the seller pursuant to the letter of credit, neither can the carrier be expected to go beyond
the representations of the shipper in the bill of lading and to verify their accuracy vis-à-
vis  the commercial invoice and the letter of credit. Thus, the discrepancy between the
amount of goods indicated in the invoice and the amount in the bill of lading cannot negate
petitioner's obligation to private respondent arising from the contract of transportation."70

In the light of the foregoing, petitioners' liability should be computed based on US$500 per package
and not on the per metric ton price declared in the Letter of Credit. 71 In Eastern Shipping Lines, Inc.
v. Intermediate Appellate Court,72 we explained the meaning of packages:

"When what would ordinarily be considered packages are shipped in a container supplied
by the carrier and the number of such units is disclosed in the shipping documents, each of
those units and not the container constitutes the 'package' referred to in the liability
limitation provision of Carriage of Goods by Sea Act."

Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly
disclosed the contents of the containers, the number of units, as well as the nature of the steel
sheets, the four damaged coils should be considered as the shipping unit subject to the US$500
limitation.