Transportation Law Case Digest

TRANSPORTATION LAW CASE DIGEST
Professor: Atty. Mora
DELSAN TRANSPORT LINES INC. V.

GR No. 149019 |August 15 2006
TICKLER: The discharging of the goods by the carrier has to be completely delivered or finished,
otherwise, it still has in it the responsibility to guard and preserve the goods, a duty incident to its
having the goods transported.
DOCTRINE/S:
FACTS: Delsan owns and operates the vessel MT Larusan. On the other hand, respondent
American Home Assurance Corporation (AHAC for brevity) is a foreign insurance company duly
licensed to do business in the Philippines through its agent, the American-International
Underwriters, Inc. (Phils.).
On August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l
Automotive Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and
delivery to the bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of
Afreightment. The shipment was insured by respondent AHAC against all risks under Inland
Floater Policy No. AH-IF64-1011549P and Marine Risk Note No. 34-5093-6.
On August 7, 1984, the shipment arrived in Bacolod City. Immediately thereafter, unloading
operations commenced. The discharging of the diesel oil started at about 1:30 PM of the same
day. However, at about 10:30 PM, the discharging had to be stopped on account of the discovery
that the port bow mooring of the vessel was intentionally cut or stolen by unknown persons.
Because there was nothing holding it, the vessel drifted westward, dragged and stretched the
flexible rubber hose attached to the riser, broke the elbow into pieces, severed completely the
rubber hose connected to the tanker from the main delivery line at sea bed level and ultimately
caused the diesel oil to spill into the sea. To avoid further spillage, the vessel’s crew tried water
flushing to clear the line of the diesel oil but to no avail. In the meantime, the shore tender, who
was waiting for the completion of the water flushing, was surprised when the tanker signaled a
"red light" which meant stop pumping. Unaware of what happened, the shore tender, thinking
that the vessel would, at any time, resume pumping, did not shut the storage tank gate valve. As
all the gate valves remained open, the diesel oil that was earlier discharged from the vessel into
the shore tank backflowed. Due to non-availability of a pump boat, the vessel could not send
somebody ashore to inform the people at the depot about what happened. After almost an hour,
a gauger and an assistant surveyor from the Caltex’s Bulk Depot Office boarded the vessel. It was
only then that they found out what had happened. Thereafter, the duo immediately went ashore
to see to it that the shore tank gate valve was closed.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan,
but the latter refused to pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage,
and P1,939,575.37 for backflow of the diesel oil.
AHAC, as Caltex’s subrogee, instituted two separate civil cases against Delsan for the loss caused
by the spillage and by the backflow. The cases were later consolidated.
SAN BEDA COLLEGE OF LAW – 2F, AY 2021 – 2022 1
Case digest by: Querubin, Queenie
ISSUE/S: Whether or not delivery was already completed in order to exculpate Delsan of its
liability for the loss of the cargo.
DECISION: NO.
First Ground: Contributory Negligence of Caltex

Delsan failed to prove its claim that there was a contributory negligence on the part of the owner
of the goods – Caltex. It had been established that the proximate cause of the spillage and
backflow of the diesel oil was due to the severance of the port bow mooring line of the vessel and
the failure of the shore tender to close the storage tank gate valve even as a check on the drain
cock showed that there was still a product on the pipeline. The actuation of the gauger and the
escort surveyor, both personnel from the Caltex Bulk Depot, negates the allegation that Caltex
was remiss in its duties. As we see it, the crew of the vessel should have promptly informed the
shore tender that the port mooring line was cut off. However, Delsan did not do so on the lame
excuse that there was no available banca. As it is, Delsan’s personnel signaled a "red light" which
was not a sufficient warning because such signal only meant that the pumping of diesel oil had
been finished. Neither did the blowing of whistle suffice considering the distance of more than 2
kilometers between the vessel and the Caltex Bulk Depot, aside from the fact that it was not the
agreed signal. Had the gauger and the escort surveyor from Caltex Bulk Depot not gone aboard
the vessel to make inquiries, the shore tender would have not known what really happened. The
crew of the vessel should have exerted utmost effort to immediately inform the shore tender that
the port bow mooring line was severed.
Second Ground: There was already actual and legal delivery to Caltex.
Delsan’s argument that it should not be held liable for the loss of diesel oil due to backflow
because the same had already been actually and legally delivered to Caltex at the time it entered
the shore tank holds no water. It had been settled that the subject cargo was still in the custody
of Delsan because the discharging thereof has not yet been finished when the backflow occurred.
Since the discharging of the cargo into the depot has not yet been completed at the time of the
spillage when the backflow occurred, there is no reason to imply that there was actual delivery of
the cargo to the consignee. To be sure, the extraordinary responsibility of common carrier lasts
from the time the goods are unconditionally placed in the possession of, and received by, the
carrier for transportation until the same are delivered, actually or constructively, by the carrier to
the consignee, or to a person who has the right to receive them. The discharging of oil products to
Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the
cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident
to its having the goods transported.
NOTES (if any):
To recapitulate, common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in vigilance over the goods and for the safety
of the passengers transported by them, according to all the circumstances of each case. The mere

proof of delivery of goods in good order to the carrier, and their arrival in the place of destination
in bad order, make out a prima facie case against the carrier, so that if no explanation is given as
to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier
to prove that the loss was due to accident or some other circumstances inconsistent with its
liability.


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TRANSPORTATION LAW CASE DIGEST

Professor: Atty. Mora

DELSAN TRANSPORT LINES INC. V.

First Ground: Contributory Negligence of Caltex

NOTES (if any):

SAN BEDA COLLEGE OF LAW – 2F, AY 2021 – 2022 2

SAN BEDA COLLEGE OF LAW – 2F, AY 2021 – 2022 3

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