In Asian Terminals, Inc. v. Simon Enterprises, Inc., the Supreme Court clarified the burden of proof required in cargo shortage claims, particularly concerning the liability of arrastre operators. The Court ruled that before a common carrier or arrastre operator can be held liable for a shortage, the claimant must first establish the actual weight of the shipment at the port of origin. This decision underscores the importance of providing conclusive evidence of the cargo’s original weight to successfully claim damages for alleged shortages.

Unloading Accountability: Who Pays When Cargo Comes Up Short?

This case originated from shipments of U.S. Soybean Meal to Simon Enterprises, Inc. (respondent) via vessels M/V “Sea Dream” and M/V “Tern.” Upon arrival at the Port of Manila, the cargo was discharged to barges operated by Asian Terminals, Inc. (ATI), the arrastre operator. Simon Enterprises claimed significant shortages in both shipments and subsequently filed a lawsuit against ATI and other parties to recover the value of the missing cargo. The central legal question was whether ATI could be held liable for these shortages, given the lack of conclusive evidence regarding the cargo’s initial weight at the port of origin.

The Regional Trial Court (RTC) initially ruled in favor of Simon Enterprises, holding ATI solidarily liable with the carrier for the damages. However, the Court of Appeals (CA) affirmed this decision, leading ATI to escalate the matter to the Supreme Court. At the heart of the legal matter was Article 1734 of the Civil Code, which states that common carriers are responsible for any loss, destruction, or damage unless it arises from very specific causes:

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

The Supreme Court emphasized that while common carriers, including arrastre operators, are presumed to be at fault for lost or damaged goods, the claimant must first demonstrate that a shortage actually occurred. The Court found that the respondent failed to sufficiently prove the weight of the shipment at the port of origin. The Berth Term Grain Bill of Lading stated “Shipper’s weight, quantity and quality unknown,” disclaiming the carrier’s responsibility for the accuracy of the stated weight. This is a crucial point, as the Court has previously held that such clauses mean the carrier is oblivious to the contents of the shipment, as stated in Wallem Philippines Shipping, Inc. v. Prudential Guarantee & Assurance, Inc.:

Indeed, as the bill of lading indicated that the contract of carriage was under a “said to weigh” clause, the shipper is solely responsible for the loading while the carrier is oblivious of the contents of the shipment.

Furthermore, the Proforma Invoice presented by the respondent indicated a possible variance in the shipment quantity, with a clause allowing for a 10% deviation from the stated weight. The respondent’s own witness testified to this potential discrepancy, undermining the claim that the shipment was definitively short upon arrival. Also, the Court pointed out that the genuineness and due execution of crucial documents like the Packing List, Berth Term Grain Bill of Lading, and the Proforma Invoice, were not sufficiently established during trial.

Building on this, the Supreme Court highlighted the inherent characteristics of the soybean meal itself. The Court cited a Kansas State University study that discusses how soybean meal tends to settle or consolidate over time, and can either gain or lose moisture depending on the surrounding air. This natural phenomenon of moisture change could account for some weight difference, particularly over a 36-day voyage from the U.S. to the Philippines. Moreover, the relatively small shortage of 6.05% was within a reasonable range of expected loss for bulk shipments. Because of these factors, it became even more difficult to definitely ascertain a specific amount of shortage.

As the case was presented, the Court also found no clear evidence of negligence on the part of ATI during the unloading operations. The survey reports relied upon by the respondent were deemed unreliable due to the methods used to determine the alleged shortage. The barge displacement method, used to estimate cargo weight, was susceptible to inaccuracies, especially under the slightly rough sea conditions prevailing during the survey. Moreover, there were unexplained discrepancies in the weight calculations within the survey reports themselves, further discrediting the claim of a significant shortage.

The Supreme Court concluded that because the respondent failed to conclusively establish the initial weight of the shipment or demonstrate negligence on ATI’s part, the claim for damages could not be sustained. The court reversed the Court of Appeals’ decision and dismissed the complaint against ATI. The Court emphasized that the burden of proof lies with the claimant to demonstrate both the initial weight of the cargo and any negligence by the arrastre operator.

FAQs

What was the key issue in this case?	The key issue was whether the arrastre operator, ATI, could be held liable for cargo shortages when the initial weight of the shipment was not conclusively proven.
What is an arrastre operator?	An arrastre operator is a company that handles the loading and unloading of cargo at ports and terminals. They are responsible for the safe handling and delivery of goods.
What does “Shipper’s weight, quantity and quality unknown” mean?	This clause in a bill of lading indicates that the carrier does not verify the weight, quantity, or quality of the cargo. The shipper is solely responsible for these aspects.
Why was the bill of lading important in this case?	The bill of lading contained a clause disclaiming the carrier’s knowledge of the cargo’s weight. This meant the respondent had to independently prove the initial weight.
What is the significance of the 10% variance clause?	The 10% variance clause in the Proforma Invoice allowed the supplier to ship a quantity that was plus or minus 10% of the original order, affecting what would have been considered a valid shipment.
What role did the soybean meal’s properties play in the decision?	The soybean meal’s tendency to gain or lose moisture was a factor. It suggested that some weight variation was natural and not necessarily due to negligence.
What evidence did the court find lacking?	The court found that the respondent failed to provide competent evidence of the shipment’s actual weight at the port of origin.
What is the barge displacement method?	It’s a method of estimating cargo weight by measuring the amount of water displaced by barges before and after the cargo is unloaded. This was the method of weight determination used by the Del Pan Surveyors.
What was the court’s final ruling?	The Supreme Court reversed the Court of Appeals’ decision, absolving Asian Terminals, Inc. of liability for the alleged cargo shortage.

The Supreme Court’s decision in this case clarifies the evidentiary requirements for pursuing cargo shortage claims against arrastre operators. Claimants must provide solid proof of the cargo’s original weight and demonstrate negligence on the part of the operator to succeed in their claims.

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: Asian Terminals, Inc. v. Simon Enterprises, Inc., G.R. No. 177116, February 27, 2013