GR No.

184513, March 9, 2016

12) Designer Baskets v. Air Sea Transport Inc. and Asia Cargo Container Lines
Inc.

FACTS:

DBI is a domestic corporation engaged in the production of housewares and

handicrafts items for export. Ambiente, a foreign based company ordered from DBI
223 cartons of assorted wooden items. Ambiente designated Asia Cargo Container
Lines, Inc. (ACCLI) to ship out its order from the Philippines to United States.
ACCLI is a domestic corporation acting as an agent of Air Sea Transport, Inc.
(ASTI), a US based corporation engaged in carrier transport business in the
Philippines.

DBI delivered the shipment to ACCLI to transport from Manila to Ambiente. To

acknowledge receipt and to serve as the contract of sea carriage, ACCLI issued
to BPI triplicate copies of Bill of Lading of ASTI. DBI retained possession of the
originals of the bills pending the payment of the goods by Ambiente. The bill of
lading does not contain a provision requiring the carrier to release or deliver the
shipment to the consignee only upon the surrender of the original bill of lading.

Meanwhile, Ambiente and ASTI entered into an Indemnity Agreement where the
former obligated the latter to deliver the shipment without the surrender of the bill
of lading and in return the buyer agreed to indemnify the carrier free from any
liability as a result of the release of the shipment.

DBI made several demands to Ambiente for the payment of the shipment, but
failed to pay DBI. Consequently, the latter filed a complaint against ASTI, ACCLI,
Ambiente and ACCLFs incorporators-stockholders for the payment of the
shipment.

ISSUE:

Whether or not the common carrier is liable on the release of the goods to a
consignee even without the surrender of the bill of lading.

HELD:

No.
A common carrier may release the goods to the consignee even without the
surrender of the bill of lading. Although the general rule is that upon receipt of the
goods, the consignee surrenders the bill of lading, Article 353 of the Code of
Commerce provides two exceptions: When the bill of lading gets lost or for other
cause. In either case, the consignee must provide a receipt to the carrier for the
goods delivered.
The DBI’s retention of the bill coupled with the indemnity agreement entered into
by the buyer and the carrier resulted in substantial compliance with Article 353 of
the Code of Commerce.

The Supreme Court further held that Art. 1733, 1734 & 1735 of the NCC, which
speaks of the carrier’s liability for the loss, destruction, or deterioration of the goods
and the presumption of negligence do not apply. The responsibility of the carrier
under these provisions lasts from the time the goods are unconditionally placed in
possession of, and received by the carrier for transportation, until the goods are
delivered by the carrier to the consignee. In this case it is undisputed that the goods
were timely delivered to the proper consignee.

Finally, the SC said that the carrier cannot be held liable for the unpaid value of
the goods, as it is not a party to the contract of sale. Hence, ASTI and its agent
ACCLI were not liable to DBI. Only Ambiente, as the buyer of the goods, has the
obligation to pay the value of shipment.

Parties:

Designer Baskets, Inc. (DBI) – Seller/ Petitioner

Ambiente- Buyer/ Respondent
Air Sea Transport, Inc. (ASTI) – Common carrier/Respondent
Asia Cargo Container Lines, Inc. (ACCLI) – Agent of ASTI/
Respondent

Cause of action:

The payment of the value of the goods and for the release of goods
without the surrender of the bill of lading

RTC ruling:

The trial court found ASTI, ACCLI, and Ambiente solidarily liable to
DBI for the value of the shipment.

Rationale:

The liability of Ambiente, as a buyer, it has an obligation to pay for

the value of the shipment because it is a contract of sale which had
been perfected by the delivery.

With respect to ASTI, as a common carrier, it is bound to observe

extraordinary diligence in the vigilance of the goods yet was remiss
in its duty when it allowed the release of the shipment to Ambiente.
 ACCLI, as the agent of ASTI, was well aware that the goods cannot
be delivered to the defendant Ambiente since DBI retained
possession of the originals of the bill of lading.

As regards ACCLFs incorporators-stockholders, they were absolved

from liability

Who appealed the case:

DBI, ASTI, and ACCLI appealed to the CA

CA ruling:

Affirmed the finding of the trial court with modifications. Ambiente is

liable to DBI but absolved ASTI and ACCLI from liability.

Rationale:

As for ASTI, its only obligation as a common carrier was to deliver

the shipment in good condition. It did not include ascertaining the
payment of the goods.

The fact that ASTI is given the option to simply require a receipt for
the goods delivered suggests that the surrender of the bill of lading
may be dispensed with when it cannot be produced by the consignee
for whatever cause.

An agency between ASTI and ACCLI was established, hence, the

latter as a mere agent is not liable. No evidence presented that the
agent exceeded its authority.

SC ruling:

Affirmed the ruling of the CA.

Rationale:

It is clear that the moment the carrier has delivered the subject
goods, its responsibility ceases to exist and it is therefore freed from
all the liabilities arising from the transaction. Any question regarding
the payment of the buyer to the seller is no longer the concern of the
carrier.

The contract between DBI and ASTI is a contract of carriage of

goods. Hence, not being a party to the contract of sale between DBI
 and Ambiente, ASTI cannot be held liable for the payment of the
shipment.

Only Ambiente is liable to pay for the value of the shipment.

Doctrine/ Applicable provision:

Article 353 of the Code of Commerce

“After the contract has been complied with, the bill of lading which
the carrier has issued shall be returned to him, and by virtue of the
exchange of this title with the thing transported, the respective
obligations shall be considered cancelled xxx In case the consignee,
upon receiving the goods, cannot return the bill of lading subscribed
by the carrier because of its loss or of any other cause, he must give
the latter a receipt for the goods delivered, this receipt producing the
same effects as the return of the bill of lading.

Simply put, the surrender of the bill of lading is not an absolute and
mandatory requirement for the release of the goods to the consignee.

Definition of Bill of Lading:

A written acknowledgment of the receipt of goods and an agreement

to transport and to deliver them at a specified place to a person
named or on his order.