IRON BULK SHIPPING CO LTD v. REMINGTON INDUSTRIAL SALES CORP.

FACTS:

> Remington Industrial ordered 194 hot rolled steel sheets from Wangs. Wangs forwarded the order to its supplier Burwill. The sheets were loaded on MV Indian Reliance in Poland and shipped to the Philippines under a Bill of Lading. Iron Bulk Shipping represented the charterer in the Philippines.

> Upon discharge of the cargo, the sheets were found to be wet and with rust extending to 50 to 60% of each sheet.

> No one honored the claims of loss and as recourse, Remington filed an action for collection. Both lower and appellate courts ruled in favor of Remington.

> The charterer‘s defense (Iron Bulk) was that the sheets were already rusty when they were loaded on the ship. However, the Bill of Lading it issued was found to be a clean bill of lading (i.e. it does not indicate any defect on the goods covered by it). The sheets were found to be in a ―fair, usually accepted condition‖.

> The supplier‘s defense (Wangs) was that Iron Bulk did not exercise extraordinary diligence in shipping the sheets. 

> The appellate court dismissed the case against Wangs and now, only Iron Bulk raised the case on certiorari.

ISSUES:

1. Whether or not Iron Bulk exercised extraordinary diligence?

No.

> Diligence required: Even if the cargo was already in a damaged condition at the time it was accepted for transportation, the carrier is not relieved from its responsibility to exercise due care in handling the merchandise and in employing the necessary precautions to prevent the cargo from further deteriorating.  Extraordinary diligence requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and delivery.  The common carrier must exercise due diligence to forestall or lessen the loss (by applying additional safety measures to make sure that the cargo is protected from corrosion). 

> Presumption: Except in the cases mentioned under Art. 1734, if the goods are lost, destroyed or deteriorated, common carriers are  presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence.

2. Whether or not the CA erred in relying on the pro forma Bill of Lading? No.

> Two-fold character: A bill of lading operates as both a receipt and a contract. It is a receipt for the goods shipped (dates, place, description, quality and value) and a contract to transport and deliver the same as therein stipulated. 

Estoppel: Since Iron Bulk shipping failed to annotate in the bill of lading the alleged damaged condition of the cargo when it was loaded, they are bound by the description contained therein and they are now estopped from denying the contents of the said bill of lading.