FACTS:

On April 4, 1989, Benito Macam (petitioner) shipped watermelons and fresh mangoes on board the vessel Nen Jiang, owned and operated by China Ocean Shipping Co., through local agent Wallem Philippines Shipping, Inc. (respondent). The shipment was bound for Hongkong, with Pakistan Bank as the consignee and Great Prospect Company (GPC) as the notify party. The bills of lading for the shipment contained a provision stating that one of the bills of lading must be surrendered duly endorsed in exchange for the goods or delivery order.

Upon arrival in Hongkong, the shipment was delivered by respondent Wallem directly to GPC, without the required bill of lading being surrendered. Consequently, Pakistan Bank, the consignee, refused to pay petitioner through Consolidated Banking Corporation, which had already pre-paid petitioner the value of the shipment. Petitioner demanded payment from Wallem, but was refused. Petitioner then sought the collection of the value of the shipment from respondents before the Regional Trial Court of Manila.

Respondents argued that the shipment was delivered to GPC without the presentation of the bills of lading and bank guarantee, as per petitioner's request, because the goods were perishable. Respondents claimed that it was a standard maritime practice to deliver the goods to the buyer upon arrival without requiring presentation of the bill of lading. Respondents also contended that Pakistan Bank refused to pay Consolidated Banking Corporation due to its failure to submit a Certificate of Quantity and Quality.

ISSUES:

1. Whether respondents are liable for delivering the goods to Great Prospect Company (GPC) without the required bills of lading or bank guarantee.

RULING:

1. No. The Supreme Court ruled that the delivery of the cargoes to GPC, as the buyer/importer, was proper given the circumstances. The petitioner's practice and admission that perishable goods were released to GPC without the bills of lading or bank guarantee when pre-paid through telegraphic transfer supported respondents' action. The court found the instruction in the telex of 5 April 1989 legitimate, indicating delivery to respective consignees, which included GPC. Thus, there was no breach by the respondents that would render them liable.

PRINCIPLES:

1. Extraordinary Responsibility of Common Carriers As per Article 1736 of the Civil Code, the extraordinary responsibility of common carriers continues until actual or constructive delivery to the consignee or the person who has the right to receive the goods.

2. Bill of Lading Requirements The general rule for requiring a bill of lading and/or bank guarantee can be overridden by established practice and special instructions, especially for perishable goods.

3. Contractual Obligations and Privity Responsibility primarily lies with the consignee or buyer/importer as evidenced by naming conventions and contractual documents.