G.R. No. 84680 - Summa Insurance Corp. vs. Court of Appeals

On November 22, 1981, the S/S "Galleon Sapphire," owned by the National Galleon Shipping Corporation (NGSC), arrived at Pier 3, South Harbor, Manila.
The vessel carried a shipment consigned to Caterpillar Far East Ltd. with Semirara Coal Corporation (Semirara) designated as the "notify party."
Among the cargo was a bundle of PC 8 U blades, covered by marine insurance under Certificate No. 82/012-FEZ and documented by Bill of Lading No. SF/MLA 1014.

Upon discharge from the vessel, the shipment was transferred to the custody of the private respondent, formerly known as E. Razon, Inc., the exclusive arrastre operator at South Harbor.
Three good-order cargo receipts were issued by NGSC and duly signed by the ship’s checker and a representative of the private respondent, attesting to the quantity and condition of the shipment at the time of discharge.

On February 24, 1982, Sterling International Brokerage Corporation withdrew the shipment from the pier and loaded it onto the barge "Semirara 8104."
The barge arrived at Semirara Island on March 9, 1982. Upon inspection at Semirara’s warehouse, it was discovered that the bundle of PC8U blades was missing.
On March 15, 1982, the private respondent issued a short-landed certificate stating that the bundle of PC8U blades was already missing when it received the shipment from the vessel.

Semirara filed a claim for P280,969.68—the alleged value of the lost bundle—with petitioner, the private respondent, and NGSC.
On September 29, 1982, petitioner paid Semirara the invoice value of the lost shipment, after which Semirara executed a release of claim and subrogation receipt.
Petitioner then pursued recovery by filing a complaint (Civil Case No. 82-13988) with the Regional Trial Court against NGSC and the private respondent for collection of the loss value, legal interest, attorney’s fees, and costs of the suit.

On August 2, 1984, the trial court absolved NGSC of liability and found the private respondent liable to pay P280,969.68 with additional interest, attorney’s fees, and costs.
In reaching its decision, the trial court gave greater credence to the good-order cargo receipts (signed by both NGSC and the private respondent) over the short-landed certificate issued unilaterally by the private respondent.
The court also discounted the marine report due to the absence of testimony by the attending surveyor and the untimely issuance of the short-landed certificate, which was dated long after the discharge of the cargo.

The Court of Appeals modified the trial court’s decision, reducing the private respondent’s liability to P3,500.00 per package and awarding attorney’s fees of P7,000.00.
Petitioner’s motion for reconsideration was denied by the Court of Appeals, prompting the present petition for review on certiorari.

Whether the private respondent, acting as the arrastre operator, is legally liable for the loss of the shipment while it was in its custody.
The determination of liability centered on establishing the chain of custody evidenced by the shipping documents.

Assuming liability exists, what is the extent of that liability?
Consideration was given to the stipulations of the management contract between the private respondent and the Bureau of Customs, which incorporates a limitation on liability based on the actual invoice value—provided such value is declared in advance.
The issue further involves whether the requirements for notification or declaration of the cargo’s invoice value were complied with, so as to trigger the limitation clause.