SAMAR MINING vs. NORDEUTSCHER

This Transpo Law case arose from an importation made by SAMAR MINING. The cargo was 1 crate of Optima Welded Wedge Wire. The freight-in ship was named M/S Schwabenstein, a German cargo ship owned by NORDEUTSCHER.  Which was represented in the Philippines by its agent CF SHARP.  The shipment was covered by a bill of lading duly issued to consignee SAMAR MINING.  

I hope I made it clear, the consignee in this case is the shipper himself SAMAR MINING.  The cargo was aboard a German vessel. The carrier here or the ship-owner of course  is a German company,  which is NORDEUTSCHER. And wait,  there’s a 3^rd party here. The shipper Samar Mining had availed of the services of a bonded warehouse called AMCYL beforehand. 

So upon arrival of the vessel at the port of Manila, importation was unloaded and delivered in good order and condition to the bonded warehouse AMCYL as was agreed upon.  The goods however was never delivered to and received by consignee Samar at the port of destination which is Davao.

Wait let me get that straight. You see the following are the pertinent ports as provided in the Bill of Lading:

1. Port of Loading – GERMANY
2. Port of Discharge from Ship – MANILA
3. Port of Destination (Discharge of Goods) - DAVAO  

So as plainly indicated on the face of the Bill, vessel  M/S Schwabenstein is to transport the goods only up to Manila.  Thereafter, the goods are to be TRANSHIPPED by the carrier to the port of destination. So what on earth is NORDEUTSCHER thinking?

So there you go, letters of complaint therefore were sent to  NORDEUTSCHER, which failed to elicit the desired response.   SAMAR therefore filed a formal complaint for claims of damage against NORDEUTSCHER, its local agent CF SHARP, and warehouse AMCYL as 3^rd party defendant .  

The lower court CFI of Manila favored SAMAR, but however stated that  NORDEUTSCHER may recoup whatever they may pay Samar by enforcing the judgment against 3^rd Party Defendant AMCYL.  

So what is the ISSUE here:

The issue is whether appellants NORDS, SHARP, and AMCYL were liable for the loss of goods under the bill of lading.

HELD:

The answer is NO.  SC said the Bill of Lading operates both as a:  1. RECEIPT for the goods on board and 2. A CONTRACT to transport and deliver the same as stipulated therein.

Geez what happened?  Say what?

Let’s take a look at the Bill of Lading then.

You see,  in Section 1 of Paragraph 3 of the Bill of Lading the parties stipulated that:

“The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged, transshipped or forwarded. “

Question, was this a valid stipulation? The court said it’s VALID.  We are talking about what is not on carriers actual custody you see.  Therefore the carrier may be exempt from liability for loss or damage, for how can you oblige someone with something that is not in their actual custody?

Here’s an illustration I prepared to make it more clear to you:

Here’s the original deal. The 2 parties SAMAR and NORDEUTSCHER had a meeting of minds, the agreement was to transport and deliver the cargo from Germany to Davao. That is the intent. Manila is just a point of reference between Germany and Davao. And that a TRANSHIPMENT was bound to happen. Either NORDEUTSCHER reloads it from the warehouse into another ship they own which happen to be in the Manila port or hire another ship of local ownership to deliver the goods to the consignee in Davao.  So the bill of lading is very clear, we could infer from it that the shipper-consignee had no wish to obligate itself to handle any booking of further shipment other than the one starting from Germany. It is leaving it all to the carrier’s discretion. All it wanted to do was start the shipment in Germany and wait for the end of shipment in Davao.

If you look at my diagram you can see bold lines and broken lines right? The bold lines is where the carrier  NORDEUTSCHER has actual custody of the goods. And therefore must exercise extra-ordinary diligence as required by law. The broken lines are the moments it has no actual custody and control. And this does not require any kind of diligence, pursuant to what had been stipulated in the bill of lading. Right? So why oblige someone of something he has no control of?

And what the SC had decided upon is the part in the middle where the broken lines landed on the warehouse awaiting transshipment.  This is where this decision was based. SC said there was ACTUAL CONSTRUCTIVE DELIVERY during that time. The goods were discharged from the ship to the warehouse. Therefore the liability now shifts from the carrier to the warehouse. Meaning it is no longer in their custody and control. Therefore the requisite to exercise extra-ordinary diligence ceases, and they are no longer liable for loss or destruction of the goods. Why? Well basically by virtue of the above stipulation. (Section 1 of Paragraph 3 of the Bill of Lading).

Gets?