The Supreme Court held that a common carrier remains liable for misdelivered goods if it fails to prove extraordinary diligence, even after the goods are discharged to a port authority. This decision underscores the high standard of care expected of common carriers under Philippine law, emphasizing that their responsibility extends until actual or constructive delivery to the consignee or authorized recipient. The ruling serves as a crucial reminder of the obligations of carriers to protect goods under their custody, especially in international transport where goods may pass through multiple jurisdictions and handlers.

From Manila to Panama: Who Bears the Risk of Forged Documents in International Shipping?

This case revolves around a shipment of garments transported from Manila to Colon, Panama, by Nedlloyd Lijnen B.V. Rotterdam and its local agent, East Asiatic Co., Ltd. (collectively referred to as “petitioners”). Glow Laks Enterprises, Ltd. (“respondent”), the shipper, filed a claim when the goods, valued at US$53,640.00, were released to unauthorized individuals in Panama using forged bills of lading. The central legal question is whether the common carrier’s responsibility ceased when the goods were turned over to the Panamanian port authority, or whether their liability extended until proper delivery to the consignee.

The petitioners argued that under Panamanian law, their responsibility ended upon transferring the goods to the National Ports Authority of Panama, where government collection of dues and taxes becomes effective. They claimed that the unauthorized withdrawal based on falsified documents should not be attributed to their negligence. However, the respondent contended that the failure to deliver the shipments to the consignee or a designated party constituted misdelivery, presuming fault or negligence on the part of the common carrier.

The Regional Trial Court (RTC) initially ruled in favor of the petitioners, citing the purported applicability of Panamanian law. However, the Court of Appeals reversed this decision, emphasizing that the foreign laws were not properly proven according to Philippine rules of evidence. The appellate court invoked the doctrine of processual presumption, which presumes foreign laws to be identical to Philippine law in the absence of sufficient proof. According to the New Civil Code of the Philippines, a common carrier’s extraordinary responsibility lasts until actual or constructive delivery to the consignee.

The Supreme Court affirmed the Court of Appeals’ decision, firmly stating that foreign laws must be properly pleaded and proven as facts in Philippine courts. In the absence of such proof, Philippine law applies. This principle is critical because it determines which set of regulations and standards will govern the obligations and liabilities of parties involved in international transactions within the Philippine legal system.

SEC. 24. Proof of official record. — The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice- consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.

The petitioners failed to comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court, which outline the requirements for proving foreign official records. The photocopy of the Gaceta Official of the Republica de Panama, which contained the foreign statute they relied upon, was not accompanied by the required attestation and certification. The Court emphasized that compliance with these requirements is not a mere technicality but is crucial for ensuring the genuineness of foreign documents.

Moreover, the Supreme Court highlighted the extraordinary diligence required of common carriers under Article 1733 of the New Civil Code. Extraordinary diligence is defined as “that extreme care and caution which persons of unusual prudence and circumspection use for securing or preserving their own property or rights.” This high standard of care aims to protect shippers who are particularly vulnerable once their goods are entrusted to the carrier. As a result, common carriers are presumed to be at fault or negligent in cases of loss or damage to goods in transit.

Article 1736. The extraordinary responsibility of the 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 the person who has a right to receive them, without prejudice to the provisions of article 1738.

The Court clarified that the extraordinary responsibility of the common carrier continues until the goods are actually or constructively delivered to the consignee or authorized recipient. The petitioners’ argument that their responsibility ceased upon delivery to the Panamanian port authority was rejected. The Supreme Court emphasized that the contract of carriage remains in full force and effect until delivery to the consignee or their agent. In this case, the goods fell into the hands of unauthorized persons using falsified documents, leading to a presumption of negligence against the carrier.

When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods.

The petitioners failed to provide sufficient evidence of their extraordinary diligence in preventing the unauthorized withdrawal of the shipments. The Court noted that neither the consignee nor the notify party was informed of the goods’ arrival at the Port of Cristobal, which indicated a failure to exercise the required care. The Court also cited Article 353 of the Code of Commerce, which stipulates that the bill of lading serves as legal evidence of the contract between the shipper and the carrier. The return of the bill of lading to the carrier signifies the cancellation of obligations upon fulfillment of the contract. In this case, the original bills of lading remained with the consignee, further supporting the conclusion that the contract of carriage was not fully executed.

The ruling underscores the importance of carriers implementing stringent verification procedures to ensure that goods are released only to authorized parties. This includes verifying the authenticity of documents presented for claiming goods and promptly notifying consignees upon arrival of shipments. The Supreme Court’s decision serves as a critical precedent for holding common carriers accountable for misdelivery and reinforces the need for them to exercise the highest degree of care in protecting the goods entrusted to them.

FAQs

What was the key issue in this case?	The key issue was whether the common carrier’s responsibility for the goods ceased upon their discharge to the Panama Ports Authority, or if it continued until actual delivery to the consignee.
What is the doctrine of processual presumption?	The doctrine of processual presumption states that if a foreign law is not properly proven in a local court, it is presumed to be identical to the domestic law.
What level of diligence is required of common carriers under Philippine law?	Common carriers are required to exercise extraordinary diligence in the vigilance over goods, which is the extreme care and caution that persons of unusual prudence use for securing their own property.
What happens when goods are lost or damaged while in the custody of a common carrier?	The common carrier is presumed to have been negligent and is liable for the loss or damage, unless it can prove that it exercised extraordinary diligence.
What is the significance of the bill of lading in this case?	The bill of lading serves as legal evidence of the contract between the shipper and the carrier. Its surrender to the carrier signifies the fulfillment of the contract and cancellation of obligations.
How did the Court rule regarding the applicability of Panamanian law?	The Court ruled that Panamanian law could not be applied because it was not properly proven in accordance with Philippine rules of evidence.
What must a common carrier do to be released from liability?	A common carrier must deliver the goods to the consignee or to the person who has a right to receive them, and must exercise extraordinary diligence until such delivery is made.
Can a common carrier be excused from liability by delivering the goods to a port authority?	No, delivering the goods to a port authority does not automatically excuse the common carrier from liability. Their responsibility continues until the goods are properly delivered to the consignee or authorized recipient.

In conclusion, this case underscores the stringent responsibilities placed upon common carriers under Philippine law. By requiring a high standard of care and emphasizing the need for proper delivery to the consignee, the Supreme Court has reinforced the importance of protecting the interests of shippers in international trade. This ruling will likely influence future cases involving loss or misdelivery of goods and highlights the need for carriers to implement robust procedures to prevent unauthorized release of shipments.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Nedlloyd Lijnen B.V. Rotterdam vs. Glow Laks Enterprises, Ltd., G.R. No. 156330, November 19, 2014