Stevedores and the Duty of Care: When Cargo Damage Is Not Negligence

The Supreme Court’s 2009 ruling in Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New York settles an important question in Philippine tort law: what degree of care must a stevedoring company exercise when loading and stowing cargo? The answer matters to shippers, insurers, and cargo handlers alike, because it determines who bears the loss when goods are damaged at sea.

The Facts of the Case

Del Monte Philippines contracted Mindanao Terminal, a stevedoring company, to load and stow a shipment of bananas and pineapples into the cargo hold of the vessel M/V Mistrau at the port of Davao City. The vessel was bound for Inchon, Korea. The cargo owner, Del Monte Produce, had insured the shipment with Phoenix Assurance Company.

Upon arrival in Korea, surveyors found that over 18,000 cartons of fruit were damaged and had lost commercial value. The insurer paid the claim and, through subrogation, sued Mindanao Terminal for negligence. The trial court dismissed the case, but the Court of Appeals reversed, holding Mindanao Terminal liable and imposing on it the same extraordinary diligence required of common carriers and warehousemen.

The Issue

The central question was whether Mindanao Terminal, as a stevedore, should be held to the same high standard of care as a common carrier or warehouseman, and whether it was negligent in loading and stowing the cargo.

The Ruling

The Supreme Court granted the petition and reinstated the trial court’s dismissal of the case, but without the awards for attorney’s fees and actual damages.

Ordinary diligence applies. Under Article 1173 of the Civil Code, when the law or contract does not specify the degree of diligence required, the standard is that of a good father of a family—ordinary diligence. No law imposes a higher standard on stevedoring companies. The Court distinguished a stevedore from an arrastre operator: a stevedore handles cargo only between the ship’s tackle and the holds, while an arrastre operator is the custodian of goods on the wharf. Because Mindanao Terminal was not a custodian, the stricter rules for common carriers and warehousemen did not apply.

No negligence proven. The Court found that Mindanao Terminal loaded the cargo according to a stowage plan prepared by the shipper and the vessel’s officers, and the work was done under the supervision of those officers. Even the lashing materials were provided by the vessel. The survey report attributed the damage to heavy rolling and pitching during a typhoon, not to faulty stowage by the stevedore.

A cause of action existed, but the claim failed on the merits. The Court acknowledged that the insurer could sue under quasi-delict (Article 2176 of the Civil Code) even without a contract with the stevedore, since a negligent act that breaches a contract may also be a tort. However, because no negligence was proven, the claim failed.

Why This Case Matters

The ruling clarifies that not every party in the shipping chain bears the same burden of care. A stevedore is a labor provider, not a custodian of goods. Its responsibility ends once cargo is properly loaded and stowed under the supervision of the vessel’s officers.

Practical Takeaways

• Stevedoring companies are generally held to ordinary diligence (that of a good father of a family) unless a contract expressly requires more.
• The higher standard of extraordinary diligence applies to common carriers and warehousemen, not to stevedores performing purely loading and stowing functions.
• A claim for quasi-delict under Article 2176 can proceed even without a direct contract between the injured party and the defendant, but the plaintiff must still prove negligence by preponderance of evidence.
• Cargo damage caused by sea conditions, such as a typhoon, will not automatically make the stevedore liable if loading was done according to the shipper’s plan and under the vessel officers’ supervision.
• Insurers pursuing subrogation claims should investigate whether the alleged negligence actually caused the damage before filing suit.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.