Facts:

Bankers & Manufacturers Assurance Corporation (petitioner) filed a petition for review on certiorari following a decision from the Court of Appeals affirming the dismissal of its complaint for recovery against the Manila arrastre operator, E. Razon, Inc., and the carrier F.E. Zuellig & Co., Inc. This case originated from a shipping incident involving 108 cases of copper tubings imported by Ali Trading Company. The shipment arrived in Manila on November 4, 1978, via the vessel S/S Oriental Ambassador and was turned over to E. Razon, Inc. Upon inspection, the importer discovered that a portion of the shipment had been lost due to theft and pilferage. Consequently, the petitioner compensated the importer in the amount of P31,014.00 based on the assertion that the loss occurred during transit.

In its complaint, the petitioner argued that the burden of proof shifted to the private respondents to demonstrate their non-liability, claiming that they were obligated to exercise ex

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Facts:

Parties Involved

• Petitioner: Bankers & Manufacturers Assurance Corp. (the insurer)
• Respondents:
• F.E. Zuellig & Co., Inc. – acting as the agent for the vessel’s owner
• E. Razon, Inc. – the Manila arrastre operator
• Other Involved Entity: Ali Trading Company, importer and consignee of the shipment

Underlying Transaction and Shipment Details

• The shipment comprised 108 cases of copper tubings imported by Ali Trading Company.
• The goods were insured by the petitioner.
• The shipment was transported on board the vessel S/S Oriental Ambassador, arriving in Manila on November 4, 1978.
• The goods were containerized – packed in three containers prepared by the shipper, sealed at the warehouse, and then picked up by the carrier without any prior inspection by the latter.
• The bill of lading indicated “Shipper’s Load and Count, Full Container Load,” serving only as prima facie evidence of quantity, subject to parol evidence.

Handling, Discharge, and Inspection of the Shipment

• On arrival at Manila:
• The shipment was discharged at the waterfront in apparent good order and condition.
• The containers were taken to the container yard of Pier 3 for safekeeping.
• Subsequent developments:
• Three weeks after arrival, one of the container vans – reportedly containing 19 cases – was stripped in the presence of petitioner’s surveyors.
• During the stripping, three cases were noted to be in bad order; however, these were not the subject of the ensuing claim.
• The other two container vans were not moved or inspected at the container yard.
• Final delivery and post-discharge inspection:
• On December 8, 1978, the cargo was released to the consignee’s authorized customs broker, RGS Customs Brokerage.
• The broker accepted the shipment without noting any exception as to bad order or shortlanding.
• At the consignee’s warehouse in Makati, inspection revealed that Container No. OOLU2559269 was short of seven cases when checked against the packing list.

Insurance Claim and Procedural History

• The petitioner, having compensated the importer the amount of P31,014.00 for the insured loss, filed a complaint seeking recovery of that amount through subrogation.
• The petitioner maintained that a portion of the shipment was lost through theft and pilferage, and consequently argued that the burden of proof shifted to the private respondents to show why they should not be held liable.
• The complaint was initially dismissed by Branch XVI of the Regional Trial Court of Manila.
• The dismissal was subsequently affirmed by the Court of Appeals in CA-G.R. CV No. 08226 (July 8, 1987).
• The petitioner then elevated the case by filing a petition for review on certiorari.

Issue:

Determination of the Occurrence and Timing of the Loss

• Whether the alleged loss (shortlanding of seven cases) occurred while the shipment was still under the custody and control of the carrier or arrastre operator.
• Whether the loss could have happened after the shipment had left the pier, possibly during the handling at the consignee’s warehouse.

Applicability of Carrier’s Duty and Prima Facie Liability

• Whether the doctrine of shifting the burden of proof to the respondents was warranted in view of the alleged theft and pilferage.
• Whether the carrier and the arrastre operator failed in their duty to exercise extraordinary diligence during transport, packaging, or delivery.

Evidentiary Concerns and Notice of Irregularities

• Whether proper inspection and inventory were conducted at the time of discharge and upon delivery to the customs broker.
• Whether any protest or notation of irregularity should have been made by the consignee or its representatives, thereby alerting the involved parties to the possibility of loss or damage.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)