The Supreme Court’s decision in National Trucking and Forwarding Corporation v. Lorenzo Shipping Corporation clarifies the extent of a common carrier’s responsibility in delivering goods, especially concerning the standard of extraordinary diligence required. The Court ruled that Lorenzo Shipping Corporation (LSC) had sufficiently demonstrated that it exercised extraordinary diligence in the delivery of goods, thereby overturning the presumption of negligence typically applicable to common carriers. This ruling underscores the importance of documented procedures and acknowledgments of receipt in mitigating liability for common carriers.

Lost in Transit? Navigating Carrier Diligence and Delivery Disputes

This case arose from a claim by National Trucking and Forwarding Corporation (NTFC) against Lorenzo Shipping Corporation (LSC) for the alleged non-delivery of 4,868 bags of non-fat dried milk. These goods were intended for distribution by the Department of Health (DOH) and the Cooperative for American Relief Everywhere, Inc. (CARE) as part of a donation program. NTFC, contracted to transport the goods, engaged LSC for shipping. Upon reaching Zamboanga City, the goods were delivered to NTFC’s branch supervisor, Abdurahman Jama. However, NTFC claimed that they never received the goods, leading to a lawsuit against LSC for breach of contract of carriage.

At the heart of the dispute was whether LSC had indeed delivered the goods and whether it had exercised the necessary diligence in doing so. The key point of contention revolved around the delivery process: LSC’s agent, Efren Ruste Shipping Agency, had delivered the goods to NTFC’s warehouse, and each delivery was acknowledged by Abdurahman Jama or his subordinates. These acknowledgments were in the form of signed delivery receipts and the presentation of certified true copies of the original bills of lading, since the originals were not surrendered. This practice became the focal point of the court’s evaluation regarding the fulfillment of LSC’s obligations as a common carrier. This is where the rubber meets the road, especially considering that Article 1733 of the Civil Code places a high standard of care on common carriers.

The Regional Trial Court (RTC) initially ruled in favor of LSC, finding that the goods were delivered to Abdurahman Jama. The Court of Appeals affirmed this decision. NTFC then appealed to the Supreme Court, arguing that LSC failed to meet the extraordinary diligence required of common carriers, and thus, should be presumed negligent. The Supreme Court, however, sided with LSC. According to the Court, LSC had sufficiently proven that it exercised extraordinary diligence in ensuring the delivery of the goods, thereby overturning the presumption of negligence.

The Supreme Court emphasized the importance of the procedures followed by LSC’s agents in Zamboanga City. Before releasing the goods, LSC’s agents required Abdurahman Jama to present certified true copies of the bills of lading, and upon each delivery, they secured signed delivery receipts from Jama or his designated subordinates. This, the Court found, was a reasonable and sufficient practice, particularly in the absence of the original bills of lading. As stated in Article 353 of the Code of Commerce:

ART. 353. . . .

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 and actions shall be considered cancelled, ….

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

Building on this principle, the Court found that the actions of LSC’s agents were sufficient to fulfill their obligations, despite the absence of the original bills of lading. Furthermore, the Court noted the curious timing of Abdurahman Jama’s resignation, which occurred after the investigation into the missing goods.

As the Court clarified the award of damages and attorney’s fees, they stated that while common carriers are bound to extraordinary diligence, a claim’s dismissal should not ipso facto mean fees are awarded to the prevailing party. Here, the Court found the petitioner did not act in bad faith, but from an erroneous but honest belief of their claim. More so, respondent failed to prove they suffered actual pecuniary loss that would warrant actual damages. The court clarified that an adverse ruling does not automatically mean the suit was malicious. Therefore, an award of attorney’s fees and damages must be rooted on actual proof, and not just based on a claim being dismissed. In light of all the facts, the court partially granted the petition.

FAQs

What was the key issue in this case?	The main issue was whether Lorenzo Shipping Corporation (LSC) exercised the extraordinary diligence required of a common carrier in delivering goods to National Trucking and Forwarding Corporation (NTFC). The Supreme Court needed to determine if LSC was negligent in its delivery procedures.
What does “extraordinary diligence” mean for a common carrier?	Extraordinary diligence is an extreme measure of care that very cautious people use to secure their own property or rights, imposing a high standard on common carriers to protect the shipper’s interests. If goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently.
What evidence did Lorenzo Shipping Corporation (LSC) use to prove they delivered the goods?	LSC presented evidence that their agents required NTFC’s branch supervisor, Abdurahman Jama, to provide certified true copies of the bills of lading and sign delivery receipts for each delivery. They argued that this adhered to standard procedure, especially as the original bills of lading were not surrendered.
Why was Abdurahman Jama’s role important in this case?	Abdurahman Jama was NTFC’s branch supervisor and the consignee of the goods. His acknowledgment of receiving the goods, even through subordinates signing delivery receipts, was critical to the court’s decision that LSC fulfilled its delivery obligations.
What is the significance of Article 353 of the Code of Commerce in this ruling?	Article 353 states that if the consignee can’t return the original bill of lading, a receipt for the delivered goods has the same effect. This supported LSC’s argument that signed delivery receipts were sufficient proof of delivery.
Did National Trucking and Forwarding Corporation (NTFC) succeed in their claims?	NTFC partially succeeded. The Court affirmed denial of NTFC’s claims for damages. However, it granted LSC their claim to attorney’s fees and damages.
What does this case suggest about the responsibilities of consignees?	This case highlights that consignees (or their authorized representatives) must properly acknowledge receipt of goods. Such acknowledgment can protect the carrier from liability.
What is the key takeaway for common carriers from this case?	Common carriers should maintain diligent delivery procedures, including obtaining receipts or acknowledgments from consignees, even if original bills of lading aren’t available. Properly documenting deliveries is critical.

In conclusion, National Trucking and Forwarding Corporation v. Lorenzo Shipping Corporation serves as an essential guide on the standards of diligence expected from common carriers. This decision emphasizes that while common carriers bear a high burden of care, proper procedures and documentation can effectively demonstrate compliance with this responsibility. This approach contrasts with the absolute presumption of negligence, offering a more balanced perspective on carrier liability.

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: National Trucking and Forwarding Corporation v. Lorenzo Shipping Corporation, G.R. No. 153563, February 07, 2005