In a claim for cargo shortage against a carrier, the claimant must first prove that the shipment was indeed short upon arrival. The Supreme Court has ruled that absent clear and convincing evidence to prove the quantity of cargo loaded on the vessel at the port of origin, the carrier cannot be held liable for the alleged shortage. The insurance company, acting as a subrogee, has the burden to prove the loss and the extent of the insurance coverage to successfully claim against the carrier.

Navigating the High Seas of Evidence: Who Pays When Cargo Goes Missing?

This case revolves around a shipment of “Indian Toasted Soyabean Extraction Meal, Yellow” from a foreign port to Batangas, Philippines. General Milling Corporation (GMC) insured the shipment with Prudential Guarantee & Assurance Inc. (Prudential). Upon arrival, GMC claimed a shortage in the delivered quantity. Prudential, as the insurer, paid GMC for the shortage and then sought to recover this amount from Wallem Philippines Shipping, Inc. (Wallem), the carrier. The central question is: Did Prudential sufficiently prove that Wallem was responsible for the missing cargo, given discrepancies in the evidence and a “said to weigh” clause in the bill of lading?

The lawsuit began when Prudential filed a claim against Wallem, seeking P995,677.00 for the alleged cargo shortage. Wallem denied liability, arguing that the complaint lacked a cause of action, the action had prescribed, and any loss was due to factors beyond their control. A key point of contention was the bill of lading, which contained a “said to weigh” clause, indicating that the weight was based on the shipper’s declaration, not the carrier’s verification. Prudential presented testimony from its claims processor and a cargo surveyor to support their claim. However, the claims processor admitted to having no direct involvement in preparing the critical shipping documents, and the surveyor’s findings were based on potentially flawed weighing scales.

The Regional Trial Court (RTC) sided with Wallem, finding that Prudential failed to provide clear and convincing evidence of the shortage. The RTC highlighted the questionable genuineness of the bill of lading and the unreliable weight measurements. In contrast, the Court of Appeals (CA) reversed the RTC’s decision, concluding that the bill of lading served as prima facie evidence of the cargo’s quantity and that the shortage occurred due to the carrier’s fault during loading operations. However, the Supreme Court disagreed with the CA’s assessment.

Building on this principle, the Supreme Court emphasized that the burden of proof rests on Prudential to demonstrate the actual weight of the cargo when loaded onto the vessel. The Court noted several weaknesses in Prudential’s evidence. Josephine Suarez, Prudential’s claims processor, relied solely on documents prepared by others, lacking personal knowledge of the cargo’s actual weight. This testimony was deemed hearsay. Furthermore, the genuineness and due execution of the critical shipping documents were not sufficiently established, casting doubt on the claimed initial weight of the shipment.

This approach contrasts with the CA’s reliance on the bill of lading as conclusive evidence. The Supreme Court pointed to the “said to weigh” clause and other evidence presented by Wallem that challenged the accuracy of the stated weight. A private and confidential final report suggested that any shortage likely occurred before loading, due to spillage during transport and handling. Moreover, the weighing scales used to measure the cargo upon arrival were found to be defective, further undermining the accuracy of the shortage claim. These factual discrepancies were enough to relieve Wallem of liability, considering the “said to weigh” clause that implies that the carrier is unaware of the contents and weight of the shipment.

Furthermore, the Supreme Court addressed the issue of subrogation. Prudential claimed to be subrogated to GMC’s rights under their insurance contract. However, Prudential failed to present the insurance contract itself or a copy of it. Without the insurance contract, the Court could not determine the extent of Prudential’s rights or GMC’s entitlements. The subrogation receipt alone was insufficient to prove Prudential’s claim. Thus, the Court invoked the precedent set in Home Insurance Corporation v. Court of Appeals, which similarly required the presentation of the insurance contract to establish the subrogee’s rights.

FAQs

What was the central issue in this case?	The primary issue was whether the insurer, Prudential, provided sufficient evidence to prove a shortage in the delivered cargo and thus hold the carrier, Wallem, liable. This hinged on proving the weight of the cargo at the port of origin and establishing the cause of the shortage.
What is a “said to weigh” clause in a bill of lading?	A “said to weigh” clause indicates that the carrier relies on the shipper’s declared weight and does not independently verify the cargo’s weight. This clause shifts the responsibility for proving the accuracy of the weight to the shipper or the consignee.
What is the significance of the insurer’s subrogation in this case?	Subrogation allows the insurer, after paying the insured’s claim, to step into the insured’s shoes and pursue a claim against the party responsible for the loss. However, the insurer can only exercise the rights that the insured possessed under the insurance contract, which must be presented as evidence.
Why was the presentation of the insurance contract crucial?	The insurance contract defines the terms of coverage and the rights of the insured, as well as any limitations or conditions. Without the contract, the extent of the insurer’s subrogation rights and the validity of the claim cannot be determined.
What kind of evidence is needed to prove a cargo shortage?	To prove a cargo shortage, the claimant must present clear and convincing evidence of the cargo’s quantity when loaded onto the vessel, as well as evidence of the quantity received at the destination. This may include verified shipping documents, weight certificates, and survey reports.
What role did hearsay evidence play in the court’s decision?	The court found that the claims processor’s testimony regarding the contents of shipping documents was hearsay because she lacked personal knowledge of their preparation. Hearsay evidence is generally inadmissible as proof of a fact unless an exception applies.
What was the consequence of the weighing scale being defective?	The defective weighing scale cast doubt on the accuracy of the measured weight of the cargo upon arrival, making it difficult to definitively prove a shortage. This was critical in undermining the claim against the carrier.
What does this case teach us about the burden of proof in cargo claims?	This case highlights the stringent requirements for proving a cargo claim against a carrier. The claimant bears the burden of presenting credible and substantial evidence to support each element of the claim, including the existence and extent of the loss.

In conclusion, this case serves as a stark reminder of the importance of thorough documentation and verifiable evidence in maritime cargo claims. Insurers seeking to recover losses from carriers must diligently establish the factual basis of their claims, particularly the initial weight of the cargo and any subsequent discrepancies. Absent such evidence, the carrier cannot be held liable for the alleged shortage.

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: Wallem Philippines Shipping Inc. v. Prudential Guarantee & Assurance Inc., G.R. No. 152158, February 7, 2003