Transpo COGSA Digests

COGSA Transportation Law Atty Glenn Capanas
Domingo Ang vs. American Steamship ISSUE:

Agencies Inc. Whether or not the American Steamship
Agencies Inc. punishable under carriage of
FACTS: goods by Sea act for misdelivery of goods?
Yau Yae comerical Bank LTD of Hongkong
represented by Yau Yae agreed to sell 140 HELD:
packages of galvanized steel dursink sheets to When the delivery of articles carried by the
one Herminio G Teves. Said agreement was h e r e i n d e fe n d a n t - a p p e l l e e ( A m e r i c a n
subject to the terms and arrangements. steamship agencies Inc) on May 9, 1961 to
Herminio Teves but supposedly to Mr Domingo
Pursuant to said terms and arrangements, Yau Ang ,plaintiff-appellant and upon knowing by
Yae through Tokyo boeki LTD of Tokyo Japan, the plaintiff-appellant that the articles intended
shipped the articles at Yakata, Japan and later to him was misdelivered to other person, he
to Manila which was processed by American filed in court of first instance of Manila on
Staemship Agencies INC. in which under a October 30, 1963 against American Steamship
shipping agreement or bill of lading it consigned agencies Inc for allegedly wrongful delivery of
to order of the shipper with Mr Teves. goods belonging to him.
On May 9, 1961 the article arrived in manila, The defendant-appellee filed motion to dismiss
and under the bill of lading of the arrival of the with the contention that the ground of the
goods and requested payments of the demand plaitiff’s caused of action is prescribed under
draft representing the purchased price of the the carriage of goods by sea act particular
article, however, Mr Teves did not pay the section 3(6) paragraph 4, which provides that;
demand draft to Hongkong and Shanghai bank “In any event, the carrier and the ship shall be
where it was to be processed the payments. discharge from all liability in respect to loss or
Prompting the bank to make corresponding damage unless suit is brought within one
protest and the bank likewise returned the bill year, after delivery of the goods or date when
of lading and demand draft to Yau Yae which the goods should have been delivered”
later endorsed the bill of lading to Domingo
Ang. The defendant further contented that the action
of the plaintiff-appellant even allowing a
Meanwhile, despite his non-payments of the reasonable time from the date of delivery on
purchase price of the articles. Teves was able to May 9, 1961, still initiated his action on October
obtain a bank guaranty in favor of American 30, 1963 which beyond the prescribed period
Steamship agencies INC. as carriers agent to of One (1) year under the preceding paragraph.
the effect that he would surrender the The court rendered it decision dismissing the
negotiable bill of lading duly endorsed by Yau complaint of the plaintiff-appellant for the
Yae on the strength of this guaranty. Teves ground of prescription, however the provision
succeded in securing a permit to deliver involved in this case as mentioned earlier
imported goods from the carriers agent, which speaks ”loss or damage” despite that the
he presented to Bureau of customs which in plaintiff filed motion for reconsideration and it
turn release to him the articles covered by the has been denied by the lower court, afterwards,
bill of lading. the plaintiff directly appealed to the higher
court for the matter that; has plaintiff-appellant
Subsequently, Domingo Ang claimed for the cause of action prescribed under section 3(6)
articles from the American steamship agencies paragraph 4 of the carriage of goods by sea
Inc. by presenting the indorsed bill of lading, act?
but he was informed by the latter that the
articled he claimed was already delivered to Mr. The court ruled that, the word” loss or damage
Teves. “as speaks to the provision in this case did not
transpire because only the misdelivery of goods
occurred to the defendant, and upon admitted
by the defendant in motion to dismissed that
Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 1

the articles belongs for Mr. Ang has been or damage unless it is brought within one year
misdelivered to Mr. Teves. after delivery of the goods or the date of when
the goods should have been delivered," does
Therefore it clearly shows that the defendant not apply. The reason is not difficult to see.
violates the provision of civil code of the Said one-year period of limitation is designed to
Philppines particular in Article 1144, which meet the exigencies of maritime hazards. In a
provides that actions must be brought within case where the goods shipped were neither lost
ten (10) years from the time the right of the nor damaged in transit but were, on the
action accrues, paragraph (1) upon a written contrary, delivered in port to someone who
contract and Article 1146, the following action claimed to be entitled thereto, the situation is
must be instituted within four (4) years, different, and the special need for the short
paragraph (2) quasi delict, wherein it supplies period of limitation in case of loss or damage
the deficiency provided in article 18 of the caused by maritime perils does not obtain.
same code. To read” in matters which are
governed by the code of commerce and special It follows that for suits predicated not upon
laws, their deficiency shall be supplied by the loss or damage but on alleged misdelivery (or
provision of this code.” conversion) of the goods, the applicable rule on
prescription is that found in the Civil Code,
The goods covered by the two shipments namely, either ten years for breach of a written
subject matter of these appealed cases were contract or four years for quasi-delict (Arts.
also delivered to the notify parties, Davao 1144[1], 1146, Civil Code).
Merchandising Corporation and Herminio Teves,
despite the latter's inability to present the American Insurance Co. vs Compania
proper bills of lading and without the knowledge Maritima
and consent of plaintiff-appellant Domingo Ang
to whom were endorsed said bills of lading. FACTS:
There is therefore likewise misdelivery not On August 11, 1962, a certain cargo insured
nondelivery. Finally, the recipients of said goods with plaintiff corporation was shipped in New
did not file any complaint with defendant York, U.S. aboard "M/S TOREADOR", of which
regarding any damage to the same. No loss nor the general agent in the Philippines is appellee
damage is therefore involved in these cases. Macondray & Co., Inc. (hereinafter referred to
And thus the prescriptive period under Section as Macondray). The cargo, with an invoice value
3(6), paragraph 4 of the Carriage of Goods by of $3,539.61 CIF Cebu, was consigned to the
Sea Act does not apply. The applicable order of the importer Atlas Consolidated Mining
prescriptive period is that found in the Civil and Development Corporation.
Code, namely, either ten years for breach of a
written contract or four years for quasi-delict Inasmuch as the final port of call of the " M/S
(Arts. 1144[1] and 1146). Since the complaints TOREADOR" was Manila, the carrier, in
in these appealed cases were filed two years accepting the cargo at the point of shipment,
and five months (as to Davao Merchandising agreed to transship the same, after its
Corp. shipment) and 2 years and 8 months (as discharge in Manila, aboard an inter-island
to Teves shipment), from the arrival of the two vessel to its destination in Cebu.
shipments, it is clear that the causes of action
have not yet prescribed. On September 18, 1962, the " M/S TOREADOR"
arrived at the port of Manila and on the same
The point that matters here is that the situation date discharged the cargo in question.
is either delivery or misdelivery, but not non- Pursuant to the arrangement the cargo was
delivery. Thus, the goods were either rightly subsequently loaded aboard the "SS SIQUIJOR",
delivered or misdelivered, but they were not an inter-island vessel. The shipment was finally
lost. There being no loss or damage to the discharged in Cebu on September 24, 1962.
goods, the aforequoted provision of the
Carriage of Goods by Sea Act stating that "In When the consignee took delivery of the
any event, the carrier and the ship shall be shipment it was found to be short of two (2)
discharged from all liability in respect of loss

pieces of tractor parts worth $2,834.88, or goods or the date when the goods should
P11,063.12 at the exchange rate of P3.9025. have been delivered. . . .
Plaintiff paid the insured value of the lost
merchandise to the consignee. To recover the The transshipment of the cargo from Manila to
said sum of P11,063.12 plaintiff, as subrogee Cebu was not a separate transaction from that
of the consignee rights, filed on September 24, originally entered into by Macondray, as general
1963 a complaint against the Compañia agent for the "M/S TOREADOR". It was part of
Maritima and the Visayan Cebu Terminal Co., Macondray's obligation under the contract of
Inc. as alternative defendants. The former was carriage and the fact that the transshipment
sued as operator and owner of "SS SIQUIJOR" was made via an inter-island vessel did not
and the latter as operator of the arrastre operate to remove the transaction from the
service at the port of Cebu charged with the operation of the Carriage of Goods by Sea Act.
care and custody of all cargo discharged there. (See Go Chang & Co., Inc. vs. Aboitiz & Co., Inc.,
98 Phil. 197).
ISSUE:
Whether or not the action had already (NOTE: The SC ruled that the one-year
prescribed under the provisions of the Carriage prescriptive period under COGSA applies in this
of Goods by Sea Act. case and not the prescriptive periods in the
NCC.)
HELD:
We do not see that the use of the term Union Carbide Phils vs Manila Railroad
"forwarding agent of the shipper" is decisive of Co.
the issue. According to paragraph 4 of the
amended complaint the cargo was loaded on FACTS:
board the "M/S TOREADOR" in New York, On December 18, 1961 the vessel Daishin
"freight prepaid to Cebu City . . . pursuant to the Maru arrived in Manila with a cargo of 1,000
bill of lading No. 13." In other words, the action bags of synthetic resin consigned to General
is based on the contract of carriage up to the Base Metals, Inc. which later sold the cargo to
final port of destination, which was Cebu City, Union Carbide Philippines, Inc.
for which the corresponding freight had been
prepaid. The following provisions of the bill of On the following day, December 19, that cargo
lading are the ones directly in point: was delivered to the Manila Port Service in
1. This bill of lading shall have effect subject good order and condition except for twenty- five
to the provisions of the Carriage of Goods by bags which were in bad order (Par. IV and
Sea Act of the United States of America, Annexes C to C-25 of Stipulation of Facts).
approved April 16, 1936, which shall be On January 20 and February 6 and 8, 1962
deemed to be incorporated herein and eight hundred ninety-eight (898) bags of resin
nothing herein contained shall be deemed a (out of the 1,000 bags) were delivered by the
surrender by the Carrier of any of its rights or customs broker to the consignee. One hundred
immunities or an increase of any of its two bags were missing. The contents of twenty-
responsibilities or liabilities under said Act. five bags were damaged or pilfered while they
The provisions stated in said Act (except as were in the custody of the arrastre operator
may be otherwise specifically provided (Par. XII and Annexes D and H of Stipulation of
herein) shall govern before the goods are Facts All in all fifty bags out of the 898 bags
loaded on and after they are discharged were damaged.
from the ship and throughout the entire time
the goods are in the custody of the Carrier. . . The 152 bags of resin (102 missing and 50
. damaged) were valued at $12.65 a bag or a
total value of $1,992.80, which amount at the
19. In any event the Carrier and the ship prevailing rate of exchange of P3.85 to the
shall be discharged from all liability in American dollar, is equivalent to P7,402.78.
respect of loss or damage unless suit is
brought within one year after delivery of the

The consignee, through the customs broker, Apparently, section 3(6) adheres to the
filed on January 3, 1962 with the Manila Port common-law rule that the duty imposed water
Service, as arrastre operator, and the American carriers was merely to transport from wharf to
Steamship Agencies, Inc., as agent of the wharf and that the carrier was not bound to
carrier, a provisional claim advising them that deliver the goods at the warehouse of the
the shipment in question was "shorthanded, consignee (Tan Hi vs. United States, 94 Fed.
short delivered and/or landed in bad order". Supp. 432,435).
Formal claims dated June 11, 1962 were made Under the facts of this case, we held that the
by the consignee with the arrastre operator and one-year period was correctly reckoned by the
the agent of the carrier (Annexes I and I-1 of trial court from December 19, 1961, when, as
Stipulation of Facts The claims were reiterated agreed upon by the parties and as shown in the
by the consignee's lawyer in his letters dated tally sheets, the cargo was discharged from the
September 26, 1962 which were received by carrying vessel and delivered to the Manila
the carrier's agent and the arrastre operator on Port Service. That one-year period expired on
October 4, 1962. December 19, 1962. Inasmuch as the action
was filed on December 21, 1962, it was barred
As the claims were not paid, Union Carbide by the statute of limitations.
Philippines, Inc. filed a complaint on December
21, 1962 in the Court of First Instance of Defendant American Steamship Agencies, Inc.,
Manila against the Manila Railroad Company, as agent of the carrier, has no more liability to
the Manila Port Service and the American the consignee's assignee, Union Carbide
Steamship Agencies, Inc. for the recovery of Philippines, Inc., in connection with the
damages amounting to P7,402.78 as the value damaged twenty-five bags of resin.
of the undelivered 102 bags of resin and the
damaged 50 bags plus legal rate of interest Prescription was duly pleaded by the said
from the filing of the complaint and P1,000 as defendant in its answer and motion to dismiss.
attorney's fees. That defense was correctly entertained by trial
court.
ISSUE:
Whether or not the action had already Claim against the arrastre operator. — The
prescribed under the provisions of the Carriage liability of the arrastre contractor has a factual
of Goods by Sea Act. and legal basis different from that of the
carrier's. The management contract between
HELD: the Manila Port Service and the Bureau of
The sensible and practical interpretation is that Customs provides:
delivery within the meaning of section 3(6) of
the Carriage of Goods by Sea Law means The action against the arrastre operator to
delivery to the arrastre operator. That delivery enforce liability for loss of the cargo or damage
is evidenced by tally sheets which show thereto should be filed within one year from
whether the goods were landed in good order or the date of the discharge of the goods or from
in bad order, a fact which the consignee or the date when the claim for the value of such
shipper can easily ascertain through the goods has been rejected or denied by the
customs broker. arrastre operator.
To use as basis for computing the one-year However, before such action can be filed a
period the delivery to the consignee would be condition precedent should be complied with
unrealistic and might generate confusion and that is, that a claim (provisional or final)
between the loss or damage sustained by the shall have been previously filed with the
goods while in the carrier's custody and the arrastre operator within fifteen days from the
loss or damage caused to the goods while in date of the discharge of the last package from
the arrastre operator's possession. the carrying vessel.

In this case, the consignee's customs broker EASTERN AND AUSTRALIAN STEAMSHIP
filed with the Manila Port Service as provisional CO., LTD. AND F.E. ZUELLIG, INC vs. GREAT
claim advising the latter that the cargo was AMERICAN INSURANCE CO.
"short, short delivered and/or landed in bad
order". That claim was filed on January 3, 1962 SYNOPSIS:
or on the fifteenth day following December 19, When a vessel owned and operated by
1961, the date of the discharge of the last petitioners failed to deliver to the consignee
package from the carrying vessel. That claim Benguet Consolidated Inc., goods shipped from
was never formally rejected or denied by the Australia and insured against all risks with
Manila Port Service. respondent Great American Insurance Co. for
P35,921.81, the latter was compelled to pay
Having complied with the condition precedent the aforesaid amount to the consignee. As
for the filing of a claim within the fifteen- day subrogee, respondent insurer filed a complaint
period, Union Carbide could file the court against petitioners for the recovery of said
action within one year, either from December amount but the latter were willing to pay only
19, 1961 or from December 19, 1962. This the amount of t 100 Sterling or its peso
second date is regarded as the expiration of the equivalent of P1,544.00 per package as stated
period within which the Manila Port Service in the bill of Lading. The court a quo declared
should have acted on the claim. said stipulation as void, for being contrary to
Section 4(5) of the Carriage of Goods By Sea
In other words, the claimant or consignee has a Act which fixes in the absence of a declaration
two-year prescriptive period, counted from the in the Bill of Lading of the value of the goods
date of the discharge of the goods, within which shipped, a maximum liability of $500.00 or its
to file the action in the event that the arrastre peso equivalent of P3 ,217.50 per package.
contractor, as in this case, has not rejected nor Petitioners were held liable for the amount
admitted liability. provided for in the Act.
Since the action in this case against the On review by certiorari, the Supreme Court in
arrastre operator was filed on December 21, finding petitioners liable for t 100 Sterling only,
1962, or within the two-year period expiring on ruled that there is no inconsistency between
December 19, 1963, that action was filed on Section 4(5) of the Carriage of Goods By Sea
time. The trial court erred in dismissing the Act and Clause 17 of the questioned Bill of
action against the Manila Port Service and its Lading, for in providing that $500.00 is the
principal, the Manila Railroad Company. maximum liability, the law does not disallow an
agreement for liability at a lesser amount.
As shown in the statement of facts, the arrastre Decision of court a quo, reversed.
operator is responsible for the value of 102
bags of resin which were not delivered, and FACTS:
twenty-five bags, which were damaged, or a On December 10, 1971, the Jackson and Spring
total of one hundred twenty-seven bags valued (Sydney) Pty. Ltd. shipped from Sydney,
at P6,185.22. Australia, one (1) case of impellers for warman
pump on board the SS "Chitral," a vessel owned
The arrastre operator should pay attorney's fees and operated in the Philippines by Eastern &
to the plaintiff for not having satisfied its plainly Australian Steamship Co., Ltd., thru its agent
valid, just and demandable claim (Art. 2208, F.E. Zuellig, Inc. under Bill of Lading No. 31, for
Civil Code). We fix the attorney's fees and the delivery to Manila, Philippines in favor of
litigation expenses in the sum of one thousand consignee Benguet Consolidated, Inc. The
pesos. shipment was insured with Great American
Insurance, Co. for P35,921.81 against all risks.
On December 22, 1971 the SS "Chitral" arrived
in Manila but failed to discharge the shipment
or any part thereof. Demand was made on
herein petitioners for the delivery of said

shipment, but having failed to make delivery, a apparent that there had been no agreement
claim was presented against them for the value between the parties, and hence, Clause 17 of
of the shipment. Petitioners, likewise, failed to the Bill of Lading shall prevail. Petitioners' stand
make good the claim. As a consequence of the that the condition imposed in Clause 17 of the
loss of the shipment, private respondent Great Bill of Lading should not be read in the light of
American Insurance Co. was compelled to pay second paragraph of Section 4 (5) of the
the consignee P35,921.81. As subrogee, said Carriage of Goods by Sea Act, is well taken.
private respondent filed a complaint dated Nov. Indeed, it would be to render ineffective the
20, 1972 against herein petitioners for recovery very intent of the law setting the sum of
of the said amount with legal interest and $500.00 as the maximum liability of the
attorney's fees.pr vessel/carrier, per package, in the absence of a
higher valuation of the goods as indicated in
ISSUE: the Bill of Lading. By providing that $500.00 is
Whether petitioners' liability is limited to 100 the maximum liability, the law does not disallow
Sterling or its peso equivalent of P1,544.40 as an agreement for liability at a lesser amount.
stipulated in Clause 17 of the Bill of Lading or
whether petitioners' liability should be $500 or UNIVERSAL SHIPPING LINES, INC vs.
its peso equivalent in the sum of P3,217.50 INTERMEDIATE APPELLATE COURT
pursuant to Sec. 4(5) of the Carriage of Goods
by Sea Act. FACTS:
On or about March 22, 1974, SEVALCO, Limited,
RULING: owned and operated by the petitioner, shipped
Clause 17 of the Bill of Lading prevails. There is from Rotterdam, Netherlands, to Bangkok,
no inconsistency between Section 4 (5) of the Thailand, aboard its M/V "TAIWAN", two (2)
Carriage of Goods by Sea Act and Clause 17 of cargoes of 50 palletized cartons consisting of
the Bill of Lading. The first part of the provision 2,000 units of 25-kilogram bags of Statex R
of Section 4 (5) of the Carriage of Goods by Sea Brand carton black, with a declared gross
Act limits the maximum amount that may be weight of 53,000 kilos each. They were
recovered by the shipper in the absence of an respectively consigned to S. Lersen Company,
agreement as to the nature and value of goods Ltd. and Muang Ngarm Retreads, Ltd., per Bills
shipped. Said provision does not prescribe the of Lading Nos. RB-15 and RB-16. Both
minimum and hence, it could be any amount shipments were insured with the private
which is below $500.00. Clause 17 of the respondent, Alliance Assurance Company, Ltd.,
questioned Bill of Lading also provides the a foreign insurance company domiciled in
maximum for which the carrier is liable. It London, England, which had withdrawn from
prescribes that the carrier may only be held the Philippine market on June 30, 1951 yet.
liable for an amount not more than 100 Sterling Despite the arrival of the vessel on June 28,
which is below the maximum limit required in 1974 at Bangkok, the cargo covered by Bill of
the Carriage of Goods by Sea Act. Lading No. RB-15 was not unloaded nor
delivered to the consignee, S. Lersen Company,
It should be noted that both the Carriage of Ltd. The shipment under Bill of Lading No.
Goods by Sea Act and Clause 17 of the Bill of RB-16 was delivered to Muang Ngarm
Lading allow the payment beyond the Retreads, Ltd. with a total weight shortage of
respective maximum limit imposed therein, 11,070 kilos because the cargoes had been
provided that the value of the goods have been either totally or partially dissolved in saltwater
declared in the Bill of Lading. which flooded Hatch No. 2 of the vessel where
they had been stored. Upon arrival in Manila on
The second paragraph of Section 4 (5) of the July 4, 1974, Arturo C. Saavedra, master of M/V
Carriage of Goods by Sea Act prescribing the TAIWAN, filed a marine protest.
maximum amount shall not be less than
$500.00 refers to a situation where there is an ISSUES:
agreement other than that set forth in the Bill of Whether or not:
Lading providing for a maximum higher than
$500.00 per package. In the case at bar, it is

A) petitioner is liable for the damage/loss circumstances of each case (Medco Industrial
suffered by the subject shipments; Corp., et al. vs. Court of Appeals, et al., 167
B) private respondent has capacity to sue in SCRA 838). In this case, the award of P10,000
this jurisdiction: as attorney's fees was reasonable and justified
C) private respondent's cause of action has because the defendant's rejection of the private
not yet prescribed; d) awarding attorney's respondent's demand, compelled the latter to
fees without stating any factual, legal and litigate and incur expenses to protect and
equitable justification. enforce its just and valid claim.
The petition is not meritorious. MAYER STEEL PIPE CORPORATION vs.

COURT OF APPEALS
RULING:
First assignment of error raises a factual issue FACTS:
which we decline to review as this Court may In 1983, petitioner Hongkong Government
review only legal issues which must be distinctly Supplies Department (Hongkong) contracted
set forth in the petition (Sec. 2, Rule 45, Rules petitioner Mayer Steel Pipe Corporation (Mayer)
of Court). to manufacture and supply various steel pipes
and fittings. From August to October, 1983,
On the issue of jurisdiction, we uphold the Mayer shipped the pipes and fittings to
appellate court's ruling that the private Hongkong.
respondent may sue in Philippine courts upon
the marine insurance policies issued by it Prior to the shipping, petitioner Mayer insured
abroad to cover international-bound cargoes the pipes and fittings against all risks with
shipped by a Philippine carrier, even if it has no private respondents South Sea Surety and
license to do business in this country, for it is Insurance Co., Inc. (South Sea) and Charter
not the lack of the prescribed license (to do Insurance Corp. (Charter). The pipes and fittings
business in the Philippines) but doing business covered by Invoice Nos. MSPC-1014, 1015 and
without such license, which bars a foreign 1025 with a total amount of US$212,772.09
corporation from access to our courts. (Pacific were insured with respondent South Sea, while
Vegetable Oil Corporation vs. Singzon, L-7919, those covered by Invoice Nos. 1020, 1017 and
April 29, 1955; Eastboard Navigation, Ltd. vs. J. 1022 with a total amount of US$149,470.00
Ysmael & Co., Inc., L- 9090, Sept. 10, 1957.) were insured with respondent Charter.
Anent the issue of prescription of the action Petitioners Mayer and Hongkong jointly
under Section 3(6), Title I, of the Carriage of appointed Industrial Inspection (International)
Goods by Sea Act (Commonwealth Act No. 65) Inc. as third-party inspector to examine whether
which provides that: the pipes and fittings are manufactured in
". . . the carrier and the ship shall be accordance with the specifications in the
discharged from all liability in respect of loss contract. Industrial Inspection certified all the
or damage unless suit is brought within one pipes and fittings to be in good order condition
year after delivery of the goods or the date before they were loaded in the vessel.
when the goods should have been delivered. . Nonetheless, when the goods reached
. ." Hongkong, it was discovered that a substantial
portion thereof was damaged.
This provision of the law admits of an exception:
if the one-year period is suspended by express Petitioners filed a claim against private
agreement of the parties (Chua Kay vs. Everett respondents for indemnity under the insurance
Steamship Corporation, L-5554, May 27, 1953; contract. Respondent Charter paid petitioner
Tan Liao vs. American President Lines, Ltd., Hongkong the amount of HK$64,904.75.
L-7280, January 20, 1956) for in such a case, Petitioners demanded payment of the balance
their agreement becomes the law for them of HK$299,345.30 representing the cost of
repair of the damaged pipes. Private
An award of attorney's fees lies within the respondents refused to pay because the
discretion of the court and depends upon the

insurance surveyor's report allegedly showed B) Court of Appeals committed an error in

that the damage is a factory defect. dismissing the complaint.
On April 17, 1986, petitioners filed an action RULING:

against private respondents to recover the sum The petition is impressed with merit.
of HK$299,345.30. For their defense, private Respondent court erred in applying Section
respondents averred that they have no 3(6) of the Carriage of Goods by Sea Act.
obligation to pay the amount claimed by
petitioners because the damage to the goods is Section 3(6) of the Carriage of Goods by Sea
due to factory defects which are not covered by Act states that the carrier and the ship shall be
the insurance policies. discharged from all liability for loss or damage
to the goods if no suit is filed within one year
The trial court ruled in favor of petitioners. It after delivery of the goods or the date when
found that the damage to the goods is not due they should have been delivered. Under this
to manufacturing defects. It also noted that the provision, only the carrier's liability is
insurance contracts executed by petitioner extinguished if no suit is brought within one
Mayer and private respondents are "all risks" year. But the liability of the insurer is not
policies which insure against all causes of extinguished because the insurer's liability is
conceivable loss or damage. The only based not on the contract of carriage but on the
exceptions are those excluded in the policy, or contract of insurance. A close reading of the law
those sustained due to fraud or intentional reveals that the Carriage of Goods by Sea Act
misconduct on the part of the insured. governs the relationship between the carrier on
the one hand and the shipper, the consignee
Court of Appeals affirmed the finding of the trial and/or the insurer on the other hand. It defines
court that the damage is not due to factory the obligations of the carrier under the contract
defect and that it was covered by the "all risks" of carriage. It does not, however, affect the
i n s u r a n c e p o l i c i e s i s s u e d by p r i v a te relationship between the shipper and the
respondents to petitioner Mayer. However, it set insurer. The latter case is governed by the
aside the decision of the trial court and Insurance Code
dismissed the complaint on the ground of
prescription. It held that the action is barred Filipino Merchants Insurance Co., Inc. v.
under Section 3(6) of the Carriage of Goods by Alejandro and the other cases cited therein
Sea Act since it was ︎led only on April 17, 1986, does not support respondent court's view that
more than two years from the time the goods the insurer's liability prescribes after one year if
were unloaded from the vessel. Section 3(6) of no action for indemnity is filed against the
the Carriage of Goods by Sea Act provides that carrier or the insurer. In that case, the shipper
"the carrier and the ship shall be discharged filed a complaint against the insurer for
from all liability in respect of loss or damage recovery of a sum of money as indemnity for the
unless suit is brought within one year after loss and damage sustained by the insured
delivery of the goods or the date when the goods. The insurer, in turn, ︎led a third-party
g o o d s s h o u l d h av e b e e n d e l i v e r e d . " complaint against the carrier for reimbursement
Respondent court ruled that this provision of the amount it paid to the shipper. The insurer
applies not only to the carrier but also to the filed the third-party complaint on January 9,
insurer, citing Filipino Merchants Insurance Co., 1978, more than one year after delivery of the
Inc. v. Alejandro. goods on December 17, 1977. The court held
that the Insurer was already barred from filing a
ISSUES: claim against the carrier because under the
A) Whether Court of Appeals erred in holding Carriage of Goods by Sea Act, the suit against
that petitioners' cause of action had already the carrier must be filed within one year after
prescribed on the mistaken application of delivery of the goods or the date when the
the Carriage of Goods by Sea Act and the goods should have been delivered. Court said
doctrine of Filipino Merchants Co., Inc. v. that "the coverage of the Act includes the
Alejandro (145 SCRA 42); insurer of the goods."

HELD:
The Filipino Merchants case is different from No. As defined in the Civil Code and as applied
the case at bar. In Filipino Merchants, it was the to Section 3(6), paragraph 4 of the Carriage of
insurer which filed a claim against the carrier Goods by Sea Act, "loss" contemplates merely a
for reimbursement of the amount it paid to the situation where no delivery at all was made by
shipper. In the case at bar, it was the shipper the shipper of the goods because the same has
which ︎led a claim against the insurer. The basis p e r i s h e d , g o n e o u t o f c o m m e rc e , o r
of the shipper's claim is the "all risks" insurance disappeared in such a way that their existence
policies issued by private respondents to is unknown or they cannot be recovered.
petitioner Mayer.
Conformably with this concept of what
The ruling in Filipino Merchants should apply constitutes "loss" or "damage," this Court held
only to suits against the carrier ︎led either by the in another case that the deterioration of goods
shipper, the consignee or the insurer. When the due to delay in their transportation constitutes
court said in Filipino Merchants that Section "loss" or "damage" within the meaning of §3(6),
3(6) of the Carriage of Goods by Sea Act applies so that as suit was not brought within one year
to the insurer, it meant that the insurer, like the the action was barred.
shipper, may no longer ︎le a claim against the
carrier beyond the one-year period provided in In Ang v. American Steamship Agencies, Inc.
the law. But it does not mean that the shipper the question was whether an action for the
may no longer ︎le a claim against the insurer value of goods which had been delivered to a
because the basis of the insurer's liability is the party other than the consignee is for "loss or
insurance contract. damage" within the meaning of §3(6) of the
COGSA. It was held that there was no loss
b e c a u s e t h e g o o d s h a d s i mp l y b e e n
MISTUI OSK VS COURT OF APPEALS
misdelivered. "Loss" refers to the deterioration
[G.R. No. 119571, March 11, 1998] or disappearance of goods.
FACTS: In the case at bar, there is neither deterioration
Mitsui O.S.K Lines is a foreign corporation nor disappearance nor destruction of goods
represented by its agent, Magsaysay Agencies. caused by the carrier's breach of contract.
It entered into a contract of carriage with Whatever reduction there may have been in the
private respondent Lavine Mfg. Co. to transport value of the goods is not due to their
goods of the latter from Manila to France. deterioration or disappearance because they
Petitioner failed in its undertaking to transport had been damaged in transit. Indeed, what is in
the goods in 28 days from initial loading, hence, issue in this petition is not the liability of
private respondent filed a case for the recovery petitioner for its handling of goods as provided
of damages before the RTC. by Section 3(6) of the COGSA, but its liability
under its contract of carriage with private
Petitioner moved for the dismissal of the respondent as covered by laws of more general
complaint alleging that private respondent application.
cause of action had prescribed under the
Carriage of Goods by Sea Act (COGSA). It was Precisely, the question before the trial court is
denied by the RTC. not the particular sense of "damages" as it
refers to the physical loss or damage of a
On petition for certiorari, the Court of Appeals shipper's goods as specifically covered by
sustained the trial court's order. Hence this Section 3(6) of COGSA but petitioner's potential
petition. liability for the damages it has caused in the
general sense and, as such, the matter is
ISSUE: governed by the Civil Code, the Code of
WON private respondent's action is for "loss or Commerce and COGSA, for the breach of its
damage" to goods shipped, within the meaning contract of carriage with private respondent.
of COGSA The Court concluded by holding that as the suit
is not for "loss or damage" to goods

contemplated in §3(6), the question of leaking condition; while the rest of the eggs in
prescription of action is governed not by the 1,413 cases were in a state of deterioration.
COGSA but by Art. 1144 of the Civil Code which
provides for a prescriptive period of ten years. Upon recommendation of the surveyors,
plaintiff immediately disposed of the eggs,
LIAO VS AMERICAN PRESIDENT LINES realizing from the sale only the amount of
[G.R. No. L-7280, January 20, 1956] P27,300. He argued that had there been no
delay, plaintiff would have been able to sell
FACTS: each case of egg for P60, or the entire
Plaintiff on July 30 1946, entered into a shipment for the total sum of P120,000 thereby
contract for the importation of 2,000 cases of realizing a profit of P92,755 on his total
fresh hen eggs with Kent Sales Co. Inc, through investment.
the latter’s agent in Manila (People’s Trading). It
was to be shipped on the S.S “Marine Leopard” Having sold it only for P27,300, he suffered a
sailing from New York on August 7, 1946. loss of 92,700 plus the sum of P55 which he
paid the marine surveyors who inspected the
Upon notification and payment, the Kent Sales cargo.
Co., Inc. issued on August 6, 1946 Invoice No.
5070 in favor of plaintiff, and on the same day Defendant, upon the other hand, alleged in
contracted with the defendant shipping defense that under the terms of the Bill of
company to have the eggs shipped to Manila on Lading Exhibit B, it was at liberty to tranship the
the vessel S.S “Marine Leopard. On same day, cargo in question on any other vessel.
the defendant through its captain received at
the pork of New York 2,000 cases of eggs and It also claimed that when the eggs were
loaded them on the ship for delivery to plaintiff discharged in San Francisco, they were
in Manila. immediately brought to the storage plant of the
National Ice and Cold Storage. Hence, if they
Upon arrival in San Francisco, California, on arrived in Manila in deteriorated condition, it
August 30, 1946, the defendant unloaded the was because of the inherent nature or defect of
2,000 cases of eggs from the S.S. "Marine the eggs. On the issue of delay in the
Leopard", which resumed its voyage, arriving in transshipment of the cargo, it raised that was
Singapore in September, 1946. due to the strike of the union of longshoremen
in the western coast of the United States from
The eggs were later shipped on another of September to November, 1947, although when
defendant's ships, the S.S. "General Meigs"on the goods were unloaded in San Francisco,
November 27, 1946, which arrived in Manila on there was yet no threat of a strike; and that
December 26, 1946. immediately after the strike, the cargo was
loaded and transported on the S.S. "General
Plaintiff claimed that the discharge of the cargo Meigs."
at the Port of San Francisco was wrongful and The defendant also alleged by special defense
unjustified and a violation of the bill of lading while plaintiff received the goods in question on
which provided that the eggs would be shipped December 26, 1946, he filed a claim with
to Manila on the S.S “Marine Leopard”; defendant for damages only on July 25, 1947
(denied on February 16, 1948), and brought
Plaintiff further claimed that the eggs were suit on May 25, 1948 which is more than a year
exposed to the hot summer weather without from the receipt of the goods. Being filed more
having placed in refrigeration and that because than a year from the time the plaintiff received
of the delay in the shipment and the careless the goods, the defendant argues that plaintiff's
and repeated handling of the cases of eggs by action had prescribed under section 3,
mechanical devices, a substantial number of paragraph 6 of the Carriage of Goods by Sea
them arrived broken and damaged; 587 were Act.
broken, with the eggs contained therein in
The trial court found that the plaintiff suffered a
loss of P25,896.81 by reason of the delayed

arrival of his cargo of eggs. The court however As long as it is claimed, therefore, as it is done
found defendant’s defense of prescription here, that the losses or damages suffered by
meritorious and so dismissed the case. From the shipper or consignee were due to the arrival
the dismissal, plaintiff appealed to this Court. of the goods in damaged or deteriorated
condition, the action is still basically one for
ISSUE: damage to the goods, and must be filed within
Whether or not the present case does not fall the period of one year from delivery or receipt,
within the prescriptive period provided in under the above-quoted provision of the
Section 3 of the Carriage of the Goods by Sea Carriage of Goods by Sea Act.
Act
Lastly, the appellant argues that assuming that
RULING: his action against the defendant prescribes in
Appellant argues that section 3 of COGSA only one year, it accrued not upon the receipt of his
applies to a suit or action for loss or damage, goods, but upon denial of his claim for
either apparent or concealed and does not damages by the defendant on February 16,
apply for a breach of contract of carriage on the 1498.
part of the carrier, as in this case, where it is
guilty of delay in the shipment of the goods, This claim is clearly without merit, for the law in
causing losses or damages to the consignee question clearly requires that the suit must be
brought “within one year after delivery of the
The distinction drawn is more apparent than goods or the date when the goods should have
real. Any and all injury or damages suffered by been delivered.”
the goods, while in transit and in the custody of
the carrier amounts to a breach of the contract Decision is affirmed.
of carriage, unless due to fortuitous event. Thus
the carrier is bound to transport the goods PHILIPPINE CHARTER INSURANCE VS
safely and so breaches its contract if it neglects NEPTUNE ORIENT LINES
such duty. [G.R. No. 145044, June 12, 2008]
Appellant furthermore urges that the action or FACTS:
suit referred to in the provision in question L.T. Garments Manufacturing Corp. Ltd. shipped
refers only to loss or damage to the goods in from Hong Kong three sets of warp yarn on
relation to their "loading, handling, storage, returnable beams aboard respondent Neptune
carriage, custody, care, and discharge" Orient Lines' vessel, M/V Baltimar Orion, for
t r a n s p o r t a n d d e l i v e r y t o Fu ku y a m a
The argument is equally untenable. The Manufacturing Corporation (Fukuyama) of No. 7
obligation of the carrier to carry the goods Jasmin Street, AUV Subdivision, Metro Manila.
naturally includes the duty not to delay their
transportation, so unjustified delay, the carrier The said cargoes were loaded in Container No.
is held liable therefore liable. IEAU-4592750 in good condition under Bill of
Lading No. HKG-0396180. Fukuyama insured
The appellant also argues by making a the shipment against all risks with petitioner
distinction between damage to the goods and Philippine Charter Insurance Corporation (PCIC)
damages to the shipper or consignee, and under Marine Cargo Policy No. RN55581 in the
claims that while the former falls within the amount of P228,085.
prescriptive period in question, the latter is
governed by the provisions of the Code of During the course of the voyage, the container
Commerce on limitation of actions. with the cargoes fell overboard and was lost.
We see no difference. Whatever damage or Thus, Fukuyama wrote a letter to respondent
injury is suffered by the goods while in transit Overseas Agency Services, Inc. (Overseas
would result in loss or damage to either the Agency), the agent of Neptune Orient Lines in
shipper or consignee. Manila, and claimed for the value of the lost

cargoes. However, Overseas Agency ignored the

claim. Hence, Fukuyama sought payment from Since the subject cargoes were lost while being
its insurer, PCIC, for the insured value of the transported by respondent common carrier
cargoes in the amount of P228,085, which from Hong Kong to the Philippines, Philippine
claim was fully satisfied by PCIC. law applies pursuant to the Civil Code which
provides:
On February 17, 1994, Fukuyama issued a Art. 1753. The law of the country to which
Subrogation Receipt to petitioner PCIC for the the goods are to be transported shall govern
latter to be subrogated in its right to recover its the liability of the common carrier for their
losses from respondents. loss, destruction or deterioration.
PCIC demanded from respondents Art. 1766. In all matters not regulated by this
reimbursement of the entire amount it paid to Code, the rights and obligations of common
Fukuyama, but respondents refused payment. carriers shall be governed by the Code of
Commerce and by special laws.
Respondents filed an Answer with Compulsory
Counterclaim denying liability. They alleged that The rights and obligations of respondent
during the voyage, the vessel encountered common carrier are thus governed by the
strong winds and heavy seas making the vessel provisions of the Civil Code, and the COGSA,
pitch and roll, which caused the subject which is a special law, applies suppletorily.
container with the cargoes to fall overboard.
Respondents contended that the occurrence The bill of lading submitted in evidence by
was a fortuitous event which exempted them petitioner did not show that the shipper in
from any liability, and that their liability, if any, Hong Kong declared the actual value of the
should not exceed US$500 or the limit of goods as insured by Fukuyama before
liability in the bill of lading, whichever is lower. shipment and that the said value was inserted
in the Bill of Lading, and so no additional
RTC held that respondents failed to prove that charges were paid. Hence, the stipulation in the
they observed the required extraordinary bill of lading that the carrier’s liability shall not
diligence to prevent the loss of the subject exceed US$500 per package applies.
cargoes. CA affirmed the RTC’s decision with
modification. Such stipulation in the bill of lading limiting
respondents' liability for the loss of the subject
ISSUE: cargoes is allowed under Art. 1749 of the Civil
WON respondents are subject to the US$500 Code, and Sec. 4, paragraph (5) of the COGSA.
per package limitation since the vessel Everett Steamship Corporation v. Court of
committed a “quasi deviation” when it Appeals held:
intentionally threw overboard the container A stipulation in the bill of lading limiting the
common carrier's liability for loss or
RULING: destruction of a cargo to a certain sum,
Yes. Respondents are subject to the US$500 unless the shipper or owner declares a
per package limitation. greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the
The records show that the subject cargoes fell Civil Code
overboard the ship and petitioner should not
vary the facts of the case on appeal. This Court PHILIPPINE FIRST INSURANCE CO VS
is not a trier of facts, and, in this case, the
WALLEM PHILS SHIPPING
factual finding of the RTC and the CA, which is
supported by the evidence on record, is [G.R. No. 165647, March 26, 2009]
conclusive upon this Court.
FACTS:
As regards the issue on the limited liability of October 1995, Anhui Chemicals Import and
respondents, the Court upholds the decision of Export Corp. loaded on board M/S Offshore
the CA. Master a shipment consisting of sodium

sulphate anhydrous, complete and in good

order for transportation to and delivery at the HELD:
port of Manila for consignee, covered by a clean The first and second issue will be resolved
bill of lading. concurrently.
On October 16, 1995, the shipment arrived in Yes, the vessel is a common carrier, and thus
port of manila and was discharged which the determination of the existence or absence
caused various degrees of spillage and losses of liability will be gauged on the degree of
as evidence by the turn over survey of the diligence required of a common carrier.
arrastre operator. Asia Star Freight delivered
the shipments from pier to the consignees in The shipment was damaged prior to its receipt
Quezon City, during the unloading, it was found by the insured consignee. The damage to the
by the consignee that the shipment was shipment was documented by the turn-over
damaged and in bad condition. survey and Request for Bad Order Survey.
April 29, 1996, the consignee filed a claim with With these documents, petitioner insists that
Wallem for the value of the damaged shipment, the shipment incurred damage or losses while
to no avail. Since the shipment was insured still in the care and responsibility of Wallem and
with Phil. First Insurance against all risks in the before it was turned over and delivered to the
amount of P2,470,213.50. The consignee filed arrastre operator. However, RTC found the
a claim against the First Insurance. First testimony of Mr. Talens (cargo surveyor) that
insurance after examining the turn-over survey, the loss was caused by the mishandling of the
the bad order certificate and other documents arrastre operator.
paid the consignee but later on sent a demand
letter to Wallem for the recovery of the amount Specifically, that the torn cargo bags resulted
paid to the consignee (in exercise of its right of from the use of steel hooks/spikes in piling the
subrogation). Wallem did not respond to the cargo bags to the pallet board and in pushing
claim. the bags by the stevedores of the arrastre
operator to the tug boats then to the ports. This
First Insurance then instituted an action before mishandling was affirmed by the CA which was
RTC for damages against Wallem. RTC held the the basis for declaring the arrastre operator
shipping company and the arrastre operator solely liable for the damage.
solidarily liable since both are charged with the
obligation to deliver the goods in good order It is established that damage or losses were
condition. incurred by the shipment during the unloading.
Common carriers, from the nature of their
The CA reversed and set aside the RTC's business and for reasons of public policy, are
decision. CA says that there is no solidary bound to observe extraordinary diligence in the
liability between the carrier and the arrastre vigilance over the goods transported by them.
because it was clearly established that the Subject to certain exceptions enumerated
damage and losses of the shipment were under Article 1734 of the Civil Code, common
attributed to the mishandling by the arrastre carriers are responsible for the loss,
operator in the discharge of the shipment. destruction, or deterioration of the goods. The
extraordinary responsibility of the common
carrier lasts from the time the goods are
ISSUE:
unconditionally placed in the possession of,
(a) WON CA erred in holding that as a common
and received by the carrier for transportation
carrier, the carrier's duties extend to the
until the same are delivered, actually or
obligation to safely discharge the cargo
constructively, by the carrier to the consignee,
from the vessel — YES
or to the person who has a right to receive
(b) WON the carrier should be held liable for
them.
the cost of the damaged shipment; — YES
The court also discussed the doctrines for
marine vessels found in Article 6191 of the Code

of Commerce, and Section 2 and 3(2) of operator who were then under the supervision
Carriage of Good by Sea Act for the liability of of Wallem.
c a r r i e r s , w h i c h a r e i n fa c t ex p r e s s l y
incorporated in the bill of lading4 between the It is settled in maritime law jurisprudence that
shipper Shanghai Fareast Business Co., and the cargoes while being unloaded generally remain
consignee. under the custody of the carrier. In the instant
case, the damage or losses were incurred
On the other hand, being the custodian of the during the discharge of the shipment while
goods discharged from a vessel, an arrastre under the super vision of the carrier.
operator's duty is to take good care of the Consequently, the carrier is liable for the
goods and to turn them over to the party damage or losses caused to the shipment.
entitled to their possession. The functions of an
arrastre operator involve the handling of cargo UCPB General Insurance Co., Inc. vs
deposited on the wharf or between the Aboitiz Shipping Corp. Eagle Express
establishment of the consignee or shipper and Lines, et al.
the ship's tackle. Handling cargo is mainly the [G.R. No. 168433, February 10, 2009]
arrastre operator's principal work so its drivers/
operators or employees should observe the FACTS:
standards and measures necessary to prevent On June 1991, 3 units of waste water treatment
losses and damage to shipments under its plant with accessories were purchased by San
custody. Miguel Corp from Super Max Engineering. The
goods came from Charleston, USA and arrived
In Firemans Fund Insurance Co. v. Metro Port in port of Manila on board MV Scandutch Star.
Service, Inc., the Court ruled that both the From Manila it was transported to Cebu on
ARRASTRE and the CARRIER are therefore board of Aboitiz Supercon II. In Cebu, with
charged with and obligated to deliver the goods clearance from the Bureau of Customs, the
in good condition to the consignee. While in goods were delivered and received by San
Eastern Shipping Lines, Inc. v. CA, the Court Miguel at its plant site. It was then discovered
clarified that the arrastre operator and the that the motor of the unit was damaged.
carrier are not always and necessarily solidarily
liable as the facts of a case may vary the rule. Pursuant to the insurance agreement, UCPB
General Insurance paid San Miguel
Thus, in this case the appellate court is correct P1,703,381.40 representing the value of the
insofar as it ruled that an arrastre operator and damaged unit. In turn, San Miguel executed a
a carrier may not be held solidarily liable at all subrogation form in favor of UCPB. Then, UCPB
times. filed a complaint on July 1992 as subrogee of
San Miguel seeking to recover from Aboitiz.
In Nichimen Company v. M./V. Farland, it was Aboitiz moved to admit East Asiatic Co. as
ruled that like the duty of seaworthiness, the general agent of DAMCO Intermodal System.
duty of care of the cargo is non-delegable, and RTC held Aboitiz, East Asiatic and DAMCO
the carrier is accordingly responsible for the solidarily liable.
acts of the master, the crew, the stevedore, and
his other agents. It has also been held that it is CA reversed the decision of the RTC and ruled
ordinarily the duty of the master of a vessel to that UCPBs right of action did not accrue
unload the cargo and place it in readiness for because UCPB failed to file a formal notice
delivery to the consignee,…And the fact that a within 24 hours from the damaged. In a
consignee is required to furnish persons to memorandum, UCPB asserts that the claim
assist in unloading a shipment may not relieve requirement does not apply to cases
the carrier of its duty as to such unloading. concerning damages to the merchandise had
already been known to the carrier. UCPB
The records are replete with evidence which revealed that the damage to the cargo was
show that the damage to the bags happened found upon discharge from the foreign carrier
before and after their discharge and it was witnessed by the carrier’s representative who
caused by the stevedores of the arrastre

signed the request for bad order survey and the accrual of a right of action against a carrier for
turnover of bad order cargoes. This knowledge, loss of, or damage to, the goods. The shipper or
UCPB argues, pursuant to the Carriage of consignee must allege and prove the fulfilment
Goods by Sea Act (COGSA), dispenses with the of the condition. Otherwise, no right of action
need to give the carrier a formal notice of claim. against the carrier can accrue in favor of the
Incidentally, the carrier’s representative former.
mentioned by UCPB as present at the time the
merchandise was unloaded was in fact a The shipment in this case was received by SMC
representative of respondent Eagle Express on August 2, 1991. However, as found by the
Lines (Eagle Express). Court of Appeals, the claims were dated
October 30, 1991, more than three (3) months
Eagle Express, in its Memorandum dated from receipt of the shipment and, at that, even
February 7, 2007, asserts that it cannot be after the extent of the loss had already been
held liable for the damage to the merchandise determined by SMCs surveyor. The claim was,
as it acted merely as a freight forwarders agent therefore, clearly filed beyond the 24-hour time
in the transaction. It allegedly facilitated the frame prescribed by Art. 366 of the Code of
transshipment of the cargo from Manila to Cebu Commerce. (Sec. 3 (6) of the COGSA provides a
but represented the interest of the cargo owner, similar claim mechanism as the Code of
and not the carriers. Commerce but prescribes a period of three (3)
days within which notice of claim must be given
Aboitiz, on the other hand, points out, in its if the loss or damage is not apparent.
Memorandum dated March 29, 2007, that it
obviously cannot be held liable for the damage UCPB, however, is ambivalent as to which party
to the cargo which, by UCPBs admission, was Eagle Express represented in the transaction.
incurred not during transshipment to Cebu on By its own manifestation, East Asiatic, and not
board one of Aboitiz’s vessels, but was already Eagle Express, acted as the agent through
existent at the time of unloading in Manila. which summons and court notices may be
Aboitiz also argues that Art. 366 of the Code of served on DAMCO. It would be unjust to hold
Commerce is applicable and serves as a that Eagle Express's knowledge of the damage
condition precedent to the accrual of UCPBs to the cargo is such that it served to preclude or
cause of action against it. dispense with the 24-hour notice to the carrier
required by Art. 366 of the Code of Commerce.
ISSUE: Neither did the inspection of the cargo in which
Whether any of the remaining parties may still Eagle Express's representative had participated
be held liable by UCPB. lead to the waiver of the written notice under
the Sec. 3 (6) of the COGSA. Eagle Express,
HELD: after all, had acted as the agent of the freight
No. When the cargo was finally received by SMC consolidator, not that of the carrier to whom the
at its Mandaue City warehouse, it was found in notice should have been made – Petition was
bad order, thereby confirming the damage denied. CA's decision was affirmed.
already uncovered in Manila – In charging
Aboitiz with liability for the damaged cargo, the Wallem Philippines Shipping, Inc. vs S.R.
trial court condoned UCPB's wrongful suit Farms, Inc.
against Aboitiz to whom the damage could not [G.R. No. 161849. July 7, 2010]
have been attributable since there was no
evidence presented that the cargo was further FACTS:
damaged during its transshipment to Cebu. On March 25, 1992, Continental Enterprises,
Even by the exercise of extraordinary diligence, Ltd. loaded on board the vessel M/V “Hui
Aboitiz could not have undone the damage to Yang,” a shipment of Indian Soya Bean Meal
the cargo that had already been there when the weighing 1,100 metric tons, for transportation
same was shipped on board its vessel. and delivery from India to Manila, with SR
Farms as consignee.
We have construed the 24-hour claim
requirement as a condition precedent to the

The vessel is owned and operated by Conti-

Feed, with petitioner Wallem as its ship agent. Unsworth Transport International Inc. v
C.A., et al.
On April 11, 1992, the said vessel, M/V “Hui [G.R. No. 166250. July 26, 2010]
Yang” arrived at the port of Manila and was
discharged and transferred into the custody of FACTS:
the receiving barges. Upon checking the cargo, On August 31, 1992, the shipper Sylvex
a shortage in the shipment of 80.467 metric Purchasing Corporation delivered to UTI a
tons was found. shipment of 27 drums of various raw materials
for pharmaceutical manufacturing – UTI issued
Petitioner then filed a Complaint for damages Bill of Lading No.C320/C15991-2, covering the
against Conti-Feed and on June 7, 1993, aforesaid shipment.
respondent filed an Amended Complaint
impleading herein petitioner as defendant. The subject shipment was insured with private
respondent Pioneer Insurance and Surety
Petitioner denied the allegations of respondent Corporation in favor of Unilab. On the same day
claiming, among others, that respondent’s that the bill of lading was issued, the shipment
claim is already barred by laches and/or was loaded in a sealed 1x40 container van,
prescription. RTC dismissed the petition. The CA with no. APLU-982012, boarded on APL’s vessel
reversed the decision of the RTC. Hence, this M/V "Pres. Jackson," Voyage 42, and
petition. transshipped to APL’s M/V "Pres. Taft" for
delivery to petitioner in favor of the consignee
ISSUE: United Laboratories, Inc. (Unilab).
Whether or not the claim against petitioner was
timely filed. On September 30, 1992, the shipment arrived
at the port of Manila. On October 15, 1992, the
HELD: arrastre Jadin Davies Transport Services Inc.
No. Under Section 3 (6) of the COGSA, notice of issued Gate Pass No. 7614 which stated that
loss or damages must be filed within three (3) “22 drums” were loaded – the materials were
days of delivery. Admittedly, respondent did not noted to be in good order in the gate pass. On
comply with this provision. Under the same the same day, the shipment arrived in Unilab’s
provision, however, a failure to file a notice of warehouse and was immediately surveyed –
claim within three days will not bar recovery if a The report stated:
suit is nonetheless filed within one year from i. 1 drum was punctured and retaped on the
delivery of the goods or from the date when the bottom side and the content was lacking; and
goods should have been delivered. There is no ii.there was a short delivery of 5 drums.
dispute that the vessel carrying the shipment
arrived at the Port of Manila on April 11, 1992 Consequently, Unilab’s quality control
and that the cargo was completely discharged representative rejected one steel drum
therefrom on April 15, 1992. However, containing Vitamin B Complex as unfit for the
respondent erred in arguing that the complaint intended purpose.
for damages, insofar as the petitioner is
concerned, was filed on March 11, 1993.In the By virtue of the Loss and Subrogation Receipt
instant case, petitioner was only impleaded in issued by Unilab in favor of private respondent
the amended Complaint of June 7, 1993, or (Pioneer Insurance), the latter filed a complaint
one (1) year, one (1) month and twenty-three for Damages against APL, UTI and petitioner
(23) days from April 15, 1992, the date when with the RTC of Makati.
the subject cargo was fully unloaded from the
vessel. The filing of an amended pleading does RTC held petitioners liable for P76,231.27; CA
not retroact to the date of the filing of the affirmed the lower court’s decision and rejected
original; the statute of limitation runs until the petitioner’s claim that its liability should be
submission of the amendment. Hence, limited to $500 per package pursuant to the
reckoned from April 15, 1992, the one-year Carriage of Goods by Sea Act (COGSA).
prescriptive period had already lapsed.

NEW WORLD INTERNATIONAL

ISSUE: DEVELOPMENT INC VS SEABOARD-
Whether or not the provisions of COGSA find EASTERN CO., INC
application in the present case. [G.R. No. 174241, August 24, 2011]
HELD: FACTS:
It is to be noted that the Civil Code does not These consolidated petitions involve a cargo
limit the liability of the common carrier to a owner's right to recover damages from the loss
fixed amount per package. In all matters not of insured goods under the Carriage of Goods
regulated by the Civil Code, the rights and by Sea Act and the Insurance Code.
obligations of common carriers are governed by
the Code of Commerce and special laws. Thus, Petitioner New World International
the COGSA supplements the Civil Code by Development (Phils.), Inc. (New World) bought
establishing a provision limiting the carrier's from DMT Corporation (DMT) through its agent,
liability in the absence of a shipper's Advatech Industries, Inc. (Advatech) three
declaration of a higher value in the bill of emergency generator sets worth
lading. Section 4 (5) of the COGSA provides: US$721,500.00.
(5) Neither the carrier nor the ship shall in any DMT shipped the generator sets by truck from
event be or become liable for any loss or Wisconsin, United States, to LEP Profit
damage to or in connection with the International, Inc. (LEP Profit) in Chicago,
transportation of goods in an amount exceeding Illinois. From there, the shipment went by train
$500 per package of lawful money of the to Oakland, California, where it was loaded on
United States, or in case of goods not shipped S/S California Luna V59, owned and operated
in packages, per customary freight unit, or the by NYK Fil-Japan Shipping Corporation (NYK) for
equivalent of that sum in other currency, unless delivery to petitioner New World in Manila. NYK
the nature and value of such goods have been issued a bill of lading, declaring that it received
declared by the shipper before shipment and the goods in good condition.
inserted in the bill of lading. This declaration, if
embodied in the bill of lading, shall be prima NYK unloaded the shipment in Hong Kong and
facie evidence, but shall not be conclusive on transshipped it to S/S ACX Ruby V/72 that it
the carrier. also owned and operated. On its journey to
Manila, however, ACX Ruby encountered
In the present case, the shipper did not declare typhoon Kadiang whose captain filed a sea
a higher valuation of the goods to be shipped. protest on arrival at the Manila South Harbor on
Contrary to the CA's conclusion, the insertion of October 5, 1993 respecting the loss and
the words "L/C No. LC No. 1-187-008394/ NY damage that the goods on board his vessel
69867 covering shipment of raw materials for suffered.
pharmaceutical Mfg.
. . ." cannot be the basis of petitioner's liability. Marina Port Services, Inc. (Marina), the Manila
Furthermore, the insertion of an invoice number South Harbor arrastre or cargo-handling
does not in itself sufficiently and convincingly operator, received the shipment on October 7,
show that petitioner had knowledge of the 1993. Upon inspection of the three container
value of the cargo. vans separately carrying the generator sets, two
vans bore signs of external damage while the
In light of the foregoing, petitioner's liability third van appeared unscathed.
should be limited to $500 per steel drum. In
this case, as there was only one drum lost, An examination of the three generator sets in
private respondent is entitled to receive only the presence of petitioner New World's
$500 as damages for the loss. representatives, Federal Builders (the project
contractor) and surveyors of petitioner New
World's insurer, Seaboard-Eastern Insurance
Company (Seaboard), revealed that all three

sets suffered extensive damage and could no CA Decision

longer be repaired. For these reasons, New On appeal, the Court of Appeals (CA) rendered
World demanded recompense for its loss from judgment on January 31, 2006, 2 affirming the
respondents NYK, DMT, Advatech, LEP Profit, RTC's rulings except with respect to Seaboard's
LEP International Philippines, Inc. (LEP), liability. The CA held that petitioner New World
Marina, and Serbros. can still recoup its loss from Seaboard's marine
insurance policy, considering a) that the
A formal claim was sent to Seaboard (insurer) submission of the itemized listing is an
on November 16, 1993. In its reply, Seaboard unreasonable imposition and b) that the one-
required petitioner New World to submit to it an year prescriptive period under the COGSA did
itemized list of the damaged units, parts, and not affect New World's right under the
accessories, with corresponding values, for the insurance policy since it was theInsurance
processing of the claim. But petitioner New Code that governed the relation between the
World did not submit what was required of it, insurer and the insured.
insisting that the insurance policy did not
include the submission of such a list in On August 17, 2006 the CA rendered an
connection with an insurance claim. Reacting to amended decision, reversing itself as regards
this, Seaboard refused to process the claim. the claim against Seaboard. The CA held that
the submission of the itemized listing was a
On October 11, 1994 petitioner New World filed reasonable requirement that Seaboard asked
an action for specific performance and of New World. Further, the CA held that the one-
damages against all the respondents before the year prescriptive period for maritime claims
Regional Trial Court (RTC) of Makati City. applied to Seaboard, as insurer and subrogee
of New World's right against the vessel owner.
RTC decision New World's failure to comply promptly with
It rendered a decision absolving the various what was required of it prejudiced such right.
respondents from liability with the exception of
NYK. The RTC found that the generator sets ISSUES:
were damaged during transit while in the care G.R. 171468
of NYK's vessel, ACX Ruby. The latter failed, WON the CA erred in affirming the RTC's release
according to the RTC, to exercise the degree of from liability of respondents DMT, Advatech,
diligence required of it in the face of a foretold LEP, LEP Profit, Marina, and Serbros who were
raging typhoon in its path. at one time or another involved in handling the
shipment. — NO
That petitioner New World filed its claim against
the vessel owner NYK beyond the one year G.R. 174241:
provided under the Carriage of Goods by Sea (a) WON the CA erred in ruling that Seaboard's
Act (COGSA). New World filed its complaint on request from petitioner New World for an
October 11, 1994 when the deadline for filing itemized list is a reasonable imposition and
the action (on or before October 7, 1994) had did not violate the insurance contract
already lapsed. The one-year period should be between them
counted from the date the goods were delivered (b) WON the CA erred in failing to rule that the
to the arrastre operator and not from the date one-year COGSA prescriptive period for
they were delivered to petitioner's job site. marine claims does not apply to petitioner
New World's prosecution of its claim against
As regards petitioner New World's claim against Seaboard, its insurer.
Seaboard, its insurer, the RTC held that the
latter cannot be faulted for denying the claim HELD:
against it since New World refused to submit G.R. 171468
the itemized list that Seaboard needed for The Court DENIES the petition in G.R. 171468
assessing the damage to the shipment. and AFFIRMS the Court of Appeals decision of
Likewise, the belated filing of the complaint January 31, 2006 insofar as petitioner New
prejudiced Seaboard's right to pursue a claim World International Development (Phils.), Inc.
against NYK in the event of subrogation. is not allowed to recover against respondents

DMT Corporation, Advatech Industries, Inc., Seaboard had been unable to explain how it
LEP International Philippines, Inc., LEP Profit could not verify the damage that New World's
International, Inc., Marina Port Services, Inc. goods suffered going by the documents that it
and Serbros Carrier Corporation. already submitted. Seaboard's own marine
surveyor attended the inspection of the
The Court will not disturb the finding of the RTC, generator sets.
affirmed by the CA, that the generator sets were
totally damaged during the typhoon which beset Seaboard cannot pretend that the above
the vessel's voyage from Hong Kong to Manila documents are inadequate since they were
and that it was her negligence in continuing precisely the documents listed in its insurance
with that journey despite the adverse condition policy. Being a contract of adhesion, an
which caused petitioner New World's loss. insurance policy is construed strongly against
the insurer who prepared it. The Court cannot
That the loss was occasioned by a typhoon, an read a requirement in the policy that was not
exempting cause under Article 1734 of there.
the Civil Code, does not automatically relieve
the common carrier of liability. The latter had It was Seaboard’s fault that the suit against
the burden of proving that the typhoon was the NYK, the common carrier, was not brought to
proximate and only cause of loss and that it court on time. The record shows that petitioner
exercised due diligence to prevent or minimize New World filed its formal claim for its loss with
such loss before, during, and after the Seaboard, its insurer, a remedy it had the right
disastrous typhoon. As found by the RTC and to take, as early as November 16, 1993 or
the CA, NYK failed to discharge this burden. about 11 months before the suit against NYK
would have fallen due. If Seaboard had
G.R. 174241 processed that claim and paid the same,
The Court GRANTS the petition and REVERSES Seaboard would have been subrogated to
and SETS ASIDE the Court of Appeals Amended petitioner New World's right to recover from
D e c i s i o n o f A u g u s t 17 , 2 0 0 6 . T h e NYK. And it could have then filed the suit as a
Court DIRECTS Seaboard-Eastern Insurance subrogee
Company, Inc. to pay petitioner New World
International Development (Phils.), Inc. Under Section 243, the insurer has 30 days
US$721,500.00 under Policy MA-HO-000266, af ter proof of loss is received and
with 24% interest per annum for the duration ascertainment of the loss or damage within
of delay in accordance with Sections 243 and which to pay the claim. If such ascertainment is
244 of the Insurance Code and attorney's fees not had within 60 days from receipt of evidence
equivalent to 10% of the insurance proceeds. of loss, the insurer has 90 days to pay or settle
Seaboard shall also pay, from finality of the claim. And, in case the insurer refuses or
judgment, a 12% interest per annum on the fails to pay within the prescribed time, the
total amount due to petitioner until its full insured shall be entitled to interest on the
satisfaction. proceeds of the policy for the duration of delay
at the rate of twice the ceiling prescribed by the
The record shows that petitioner New World Monetary Board. Notably, Seaboard already
complied with the documentary requirements incurred delay when it failed to settle petitioner
evidencing damage to its generator sets. The New World's claim as Section 243 required.
marine open policy that Seaboard issued to
New World was an all-risk policy. Such a policy INSURANCE CO. OF NORTH AMERICA VS
insured against all causes of conceivable loss ASIAN TERMINALS, INC.
or damage except when otherwise excluded or [G.R. No.180784, February 15, 2012
when the loss or damage was due to fraud or
intentional misconduct committed by the Doctrine:
insured. The policy covered all losses during The term “carriage of goods” in the Carriage of
the voyage whether or not arising from a Goods by Sea Act (COGSA) covers the period
marine peril. from the time the goods are loaded to the

vessel to the time they are discharged For the failure of the Respondent to satisfy the
therefrom. demand of the Petitioner, the Petitioner filed for
an action for damages with the RTC of Makati. 
The carrier and the ship shall be discharged
from all liability in respect of loss or damage The trial court found that indeed, the shipment
unless suit is brought within one year after suffered additional damage under the custody
delivery of the goods or the date when the of the Respondent prior to the turn over of the
goods should have been delivered. said shipment to San Miguel. 
FACTS: As to the extent of liability, Respondent invoked

  the Contract for Cargo Handling Services
On November 9, 2002, Macro-Lito Corporation, executed between the Philippine Ports Authority
through M/V “DIMI P” vessel, 185 packages of and the Respondent. Under the contract, the
electrolytic tin free steel, complete and in good Respondent’s liability for damage to cargoes in
condition. its custody is limited to PhP5,000 for each
package, unless the value of the cargo
The goods are covered by a bill of lading, had a shipment is otherwise specified or manifested
declared value of $169,850.35 and was in writing together with the declared Bill of
insured with the Insuracne Company of North Lading. The trial Court found that the shipper
America (Petitioner) against all risk.  and consignee with the said requirements. 
The carrying vessel arrived at the port of Manila However, the trial court dismissed the
on November 19, 2002, and when the complaint on the ground that the Petitioner’s
shipment was discharged therefrom, it was claim was barred by the statute of limitations. It
noted that 7 of the packages were damaged held that the Carriage of Goods by Sea Act
and in bad condition.  (COGSA), embodied in Commonwealth Act No.
65 is applicable. The trial court held that under
On Novermber 21, 2002, the shipment was the said law, the shipper has the right to bring a
then turned over to the custody of Asian suit within one year after the delivery of the
Terminals. Inc. (Respondent) for storage and goods or the date when the goods should have
safekeeping pending its withrawal by the been delivered, in respect of loss or damage
consignee.  thereto. 
On November 29, 2002, prior to the withrawal Petitioner then filed before the Supreme Court
of the shipment, a joint inspection of the said a petition for review on certiorari assailing the
cargo was conducted. The examination report trial court’s order of dismissal.
showed that an additional 5 packages were  
found to be damaged and in bad order.  ISSUE/S:
(a) WON the trial court committed an error in
On January 6, 2003, the consignee, San Miguel dismissing the complaint of the petitioner
Corporation filed separate claims against both based on the one-year prescriptive period
the Petioner and the Respondent for the for filing a suit under the COGSA to an
damage caused to the packages.  arrastre operator? YES.
(b) WON the Petitioner is entitled to recover
T h e Pet i t i on er t h en p a i d S a n M i g ue l actual damages against the Respondent?
Corporation the amound of PhP 431,592.14 YES, but only PhP164,428.76
which is based on a report of its independent
adjuster.  HELD:
The term “carriage of goods” covers the period
The Petitioner then formally demanded from the time when the goods are loaded to the
reparation against the Respondent for the time when they are discharged from the ship.
amount it paid San Miguel Corporation.  Thus, it can be inferred that the period of time
when the goods have been discharged from the

ship and given to the custody of the arrastre as damages toCua. The CA Set Aside
operator is not covered by the COGSA. the decision of RTC because it found that the
August 10, 1990 telex message,extending the
The Petitioner, who filed the present action for period to file an action, was neither attached to
the 5 packages that were damaged while in the Cua’s opposition to Wallem’s motion to
custody of the respondent was not fortright in dismiss, nor presented during trial. A motion for
its claim, as it knew that the damages it sought, reconsideration filed by Cua was then denied by
based on the report of its adjuster covered 9 CA hence this petition.
packages. Based on the report, only four of the
nine packages were damaged in the custody of ISSUE:
the Respondent. The Petitioner can be granted Whether or not Cua’s claim for payment of
only the amount of damages that is due to it. damages against the respondents has
prescribed.
BENJAMIN CUA VS WALLEM PHILIPPINES RULING:
SHIPPING, INC. ET AL The Supreme Court set aside the decision of
[G.R. No. 171337, July 11, 2012] the Court of Appeals and REINSTATED the
decision of the Regional Trial Court of Manila.
FACTS: The claim of Cua has was not prescribed. The
Cua filed a civil action for damages against CA failed to appreciate the admissions made by
Wallem and Advance Shipping before the RTC the respondents in their pleadings that negate
of Manila. Cua sought the payment for damage a finding of prescription of Cua’s claim.
of shipment of Brazilian Soyabean consigned to
him. He claimed that the loss was due to the Respondent s admitted the agreement
respondents’ failure to observe extraordinary extending the period to file the claim.
diligence in carrying the cargo. Advance Under Section 3(6) of the COGSA, the carrier is
Shipping (a foreign corporation) was the owner discharged from liability for loss or damage to the
and manager of M/V Argo Trader that carried cargo "unless the suit is brought within one year after
the cargo, while Wallem was its local delivery of the goods or the date when the goods should
agent.Wallem filed its own motion to dismiss, have been delivered."
raising the sole ground of prescription which is
under section3(6) of the Carriage of Goods by Jurisprudence, however, recognized the validity
Sea Act (COGSA). of an agreement between the carrier and the
shipper/consignee extending the one-year
Wallem alleged that the goods were delivered to period to file a claim.
Cua on August 16, 1989, but the damages suit
was instituted only on November 12, 1990- A review of the pleadings submitted by the
more than one year than the period allotted respondents discloses that they failed
under the COGSA. Since the action was filed to specifically deny Cua’s allegation of an
beyond the one year prescriptive period, agreement extending the period to file an action
Wallem argued that Cua’s action has been to November 12, 1990.
barred. Cua then filed an opposition to
Wallem’s motion to dismiss, denying the latter’s Wallem’s motion to dismiss simply referred to
claim of prescription by referring to the August the fact that Cua’s complaint was filed more
10, 1990 telex message sent by Mr. A.R. Filder than one year from the arrival of the vessel, but
of Thomas Miller, manager of the UK P&I Club, it did not contain a denial of the
which stated that Advance Shipping agreed to extension. Advance Shipping’s motion to
extend the commencement of suit for 90 days, dismiss, on the other hand, focused solely on
from August 14, 1990 to November 12, 1990; its contention that the action was premature for
the extension was made with the concurrence failure to first undergo arbitration. While the
of the insurer of the vessel, the UK P&I Club. joint answer submitted by the respondents
denied Cua’s allegation of an extension, they
The RTC issued its decision ordering the made no further statement other than a bare
respondents jointly and severally liable to pay and unsupported contention that Cua’s

"complaint is barred by prescription and/or On August 4, 1995, Universal Motors filed a

laches. “The respondents did not provide in formal claim for damages in the amount of
their joint answer any factual basis for their P643,963.84 against Westwind, ATI and R.F.
belief that the complaint had prescribed. Revilla Customs Brokerage, Inc. When Universal
Motors’ demands remained unheeded, it
Given the respondents’ failure to specifically sought reparation from and was compensated
deny the agreement on the extension of the in the sum of P633,957.15 by Philam.
period to file an action, the Supreme Court Accordingly, Universal Motors issued a
considers the extension of the period as an Subrogation Receipt dated November 15, 1995
admitted fact. in favor of Philam.
ASIAN TERMINALS, INC VS PHILAM On January 18, 1996, Philam, as subrogee of

INSURANCE CO., INC Universal Motors, filed a Complaint for damages
[G.R. No. 181163, July 24, 2013 against Westwind, ATI and R.F. Revilla Customs
Brokerage, Inc. before the RTC of Makati City. .
FACTS
On April 15, 1995, Nichimen Corporation ISSUE:
shipped to Universal Motors Corporation Who is liable for the damages sustained by the
(Universal Motors) 219 packages containing cargo?
120 units of brand new Nissan Pickup Truck
Double Cab 4x2 model, without engine, tires HELD:
and batteries, on board the vessel S/S "Calayan The Court holds that petitioner Philam has
Iris" from Japan to Manila. The shipment, which adequately established the basis of its claim
had a declared value of US$81,368 or against petitioners ATI and Westwind. Philam,
P29,400,000, was insured with Philam against as insurer, was subrogated to the rights of the
all risks under Marine Policy No. consignee, Universal Motors Corporation,
708-8006717-4. pursuant to the Subrogation Receipt executed
by the latter in favor of the former. The right of
The carrying vessel arrived at the port of Manila subrogation accrues simply upon payment by
on April 20, 1995, and when the shipment was the insurance company of the insurance claim.
unloaded by the staff of ATI, it was found that We have held that payment by the insurer to the
the package marked as 03-245-42K/1 was in insured operates as an equitable assignment to
bad order. The Turn Over Survey of Bad Order the insurer of all the remedies that the insured
Cargoes dated April 21, 1995 identified two may have against the third party whose
packages, labeled 03-245-42K/1 and negligence or wrongful act caused the loss. The
03/237/7CK/2, as being dented and broken. right of subrogation is not dependent upon, nor
Thereafter, the cargoes were stored for does it grow out of, any privity of contract. It
temporary safekeeping inside CFS Warehouse accrues simply upon payment by the insurance
in Pier No. 5. company of the insurance claim. The doctrine
of subrogation has its roots in equity. It is
On May 11, 1995, the shipment was withdrawn designed to promote and accomplish justice;
by R.F. Revilla Customs Brokerage, Inc., the and is the mode that equity adopts to compel
authorized broker of Universal Motors, and the ultimate payment of a debt by one who, in
delivered to the latter’s warehouse in justice, equity, and good conscience, ought to
Mandaluyong City. Upon the request of pay.
Universal Motors, a bad order survey was
conducted on the cargoes and it was found that Neither do we find support in petitioner
one Frame Axle Sub without LWR was deeply Westwind’s contention that Philam’s right of
dented on the buffle plate while six Frame action has prescribed. The Carriage of Goods by
Assembly with Bush were deformed and Sea Act (COGSA) or Public Act No. 521 of the
misaligned. Owing to the extent of the damage 74th US Congress, was accepted to be made
to said cargoes, Universal Motors declared applicable to all contracts for the carriage of
them a total loss. goods by sea to and from Philippine ports in

foreign trade by virtue of Commonwealth Act d a m a g e d b y AT I s t e v e d o r e s d u e t o

(C.A.) No. 65. The prescriptive period for filing overtightening of a cable sling hold during
an action for the loss or damage of the goods discharge from the vessel’s hatch to the pier.
under the COGSA is found in paragraph (6), Since the damage to the cargo was incurred
Section 3, thus: during the discharge of the shipment and while
(6) Unless notice of loss or damage and the under the supervision of the carrier, the latter is
general nature of such loss or damage be given liable for the damage caused to the cargo.
in writing to the carrier or his agent at the port
of discharge before or at the time of the This is not to say, however, that petitioner ATI is
removal of the goods into the custody of the without liability for the damaged cargo. The
person entitled to delivery thereof under the functions of an arrastre operator involve the
contract of carriage, such removal shall be handling of cargo deposited on the wharf or
prima facie evidence of the delivery by the between the establishment of the consignee or
carrier of the goods as described in the bill of shipper and the ship’s tackle. Being the
lading. If the loss or damage is not apparent, custodian of the goods discharged from a
the notice must be given within three days of vessel, an arrastre operator’s duty is to take
the delivery. good care of the goods and to turn them over to
the party entitled to their possession.
Common carriers, from the nature of their
business and for reasons of public policy, are Handling cargo is mainly the arrastre operator’s
bound to observe extraordinary diligence in the principal work so its drivers/operators or
vigilance over the goods transported by them. employees should observe the standards and
Subject to certain exceptions enumerated measures necessary to prevent losses and
under Article 1734 of the Civil Code, common damage to shipments under its custody.
carriers are responsible for the loss,
destruction, or deterioration of the goods. The While it is true that an arrastre operator and a
extraordinary responsibility of the common carrier may not be held solidarily liable at all
carrier lasts from the time the goods are times, the facts of these cases show that apart
unconditionally placed in the possession of, from ATI’s stevedores being directly in charge of
and received by the carrier for transportation the physical unloading of the cargo, its foreman
until the same are delivered, actually or picked the cable sling that was used to hoist
constructively, by the carrier to the consignee, the packages for transfer to the dock. Moreover,
or to the person who has a right to receive the fact that 218 of the 219 packages were
them. unloaded with the same sling unharmed is
telling of the inadequate care with which ATI’s
The court a quo, however, found both stevedore handled and discharged Case No.
petitioners Westwind and ATI, jointly and 03-245-42K/1.
severally, liable for the damage to the cargo. It
observed that while the staff of ATI undertook With respect to petitioners ATI and Westwind’s
the physical unloading of the cargoes from the liability, we agree with the CA that the same
carrying vessel, Westwind’s duty officer should be confined to the value of the one
exercised full supervision and control over the piece Frame Axle Sub without Lower.
entire process. The appellate court affirmed the
solidary liability of Westwind and ATI, but only However, there is nothing in the records to show
for the damage to one Frame Axle Sub without conclusively that the six Frame Assembly with
Lower. Bush were likewise contained in and damaged
inside Case No. 03-245-42K/1. In the
It is settled in maritime law jurisprudence that Inspection Survey Repor t of Char tered
cargoes while being unloaded generally remain Adjusters, Inc., it mentioned six pieces of
under the custody of the carrier. The Damage chassis frame assembly with deformed body
Survey Report of the survey conducted by Phil. mounting bracket. However, it merely noted the
Navtech Services, Inc. from April 20-21, 1995 same as coming from two bundles with no
reveals that Case No. 03-245-42K/1 was identifying marks.

Lastly, we agree with petitioner Westwind that Laboratory Technician. 

the CA erred in imposing an interest rate of
12% on the award of damages. Under Article Caparoso found the container van locked with
2209 of the Civil Code, when an obligation not its load intact. After opening the same, she
constituting a loan or forbearance of money is inspected its contents and discovered that the
breached, an interest on the amount of boxes of the shipment were wet and damp.
damages awarded may be imposed at the Caparoso rejected the entire shipment. All 17
discretion of the court at the rate of 6% per pallets of the 184 cartons/rolls contained in
annum.  the sea van were found wet/water damaged.
NOVARTIS demanded indemnification for the
PHILAM INSURANCE COMPANY, INC. VS lost/damaged shipment from PROTOP, SAGAWA,
HEUNG-A SHIPPING CORPORATION ATI and STEPHANIE but was denied. Insurance
[G.R. No. 226345, August 2, 2017] claims were, thus, filed with PHILAM which paid
the insured value of the shipment. PHILAM sent
FACTS: a demand letter to WALLEM for reimbursement
Novartis Consumer Health Philippines, Inc. of the insurance claims paid to NOVARTIS.
(NOVARTIS) imported from Jinsuk Trading Co. When WALLEM ignored the demand, PHILAM
Ltd., (JINSUK) in South Korea, 19 pallets of 200 impleaded it as additional defendant in an
rolls of Ovaltine Power 18 Glaminated plastic Amended Complaint. 
packaging material. In order to ship the goods
to the Philippines, JINSUK engaged the services PROTOP, SAGAWA, ATI, STEPHANIE, WALLEM
of Protop Shipping Corporation (PROTOP), a and HEUNG-A denied liability for the lost/
freight forwarder likewise based in South Korea, damaged shipment. RTC ruled that the damage
to forward the goods to their consignee, to the shipment occurred onboard the vessel
NOVARTIS. Based on Bill of Lading issued by while in transit from Korea to the Philippines.
PROTOP, the cargo was on freight prepaid basis The RTC discounted the slot charter agreement
and on "shipper’s load and count" which means between HEUNG-A and DONGNAMA, and held
that the "container [was] packed with cargo by that it did not bind the consignee who was not a
one shipper where the quantity, description and party thereto. The RTC further observed that
condition of the cargo is the sole responsibility HEUNG-A failed to present evidence showing
of the shipper." Likewise stated in the bill of that it exercised the diligence required of a
lading is the name Sagawa Express Phils., Inc., common carrier in ensuring the safety of the
(SAGAWA) designated as the entity in the shipment. CA agreed with the RTC that PROTOP,
Philippines which will obtain the delivery HEUNG-A and WALLEM are liable for the
contract.  damaged shipment. The fact that HEUNG-A was
not a party to the bill of lading did not negate
PROTOP shipped the cargo through Dongnama the existence of a contract of carriage between
Shipping Co. Ltd. (DONGNAMA) which in turn HEUNG-A and/or WALLEM and NOVARTIS. A bill
loaded the same on M/V Heung-A Bangkok of lading is not indispensable for the creation of
V-019 owned and operated by Heung-A a contract of carriage. By agreeing to transport
Shipping Corporation, (HEUNG-A). Wallem the goods contained in the sea van provided by
Philippines Shipping, Inc. (WALLEM) is the ship DONGNAMA, HEUNG-A impliedly entered into a
agent of HEUNG-A in the Philippines. NOVARTIS contract of carriage with NOVARTIS with whom
insured the shipment with Philam Insurance the goods were consigned. Hence, it assumed
Company, Inc. (PHILAM, now Chartis Philippines the obligations of a common carrier to observe
Insurance, Inc.) under All Risk Marine Open extraordinary diligence in the vigilance over the
Insurance Policy against all loss, damage, goods transported by it. Further the Slot Charter
liability, or expense before, during transit and Agreement did not change HEUNG-A’s character
even after the discharge of the shipment from as a common carrier.
the carrying vessel until its complete delivery to
the consignee’s premises. The shipment ISSUE:
reached NOVARTIS’ premises and was (a) Whether shipment sustained damage while
thereupon inspected by the company’s Senior in the possession and custody of HEUNG-
A ,and if so,

(b) Whether or not CA erred in applying the master and the crew, who are his servants.
provisions of COGSA specifically , the rule of The charterer mans the vessel with his own
Package Liability limitation people and becomes, in effect, the owner
(c) Whether or not Nortis/Philam failed to file a for the voyage or service stipulated and
timely claim against HEUNG-a and /or hence liable for damages or loss sustained
WALLEM.   by the goods transported.
RULING: Clearly then, despite its contract of

(a) The court reasonable concluded that affreightment with DONGNAMA, HEUNG-A
negligence occured while the container van remained responsible as the carrier, hence,
was in transit , in Heung-a’s possession , answerable for the damages incurred by the
control and custody as the carrier. Although goods received for transportation.
the container van had defects , they were
not, however, so severe as to accommodate (b) CA did not err in applying the provisions of
heavy saturation of sea water. The holes COGSA specifically , the rule of Package
were tiny and the rusty portions did not Liability limitation
cause gaps or tearing. Hence, the van was
still suitable condition to hold the goods While the civil code contains provisions
and protect them from natural weather making the common carrier liable for loss/
elements or even the normal flutter of damage to the goods transported, it failed
waves in the seas. Since the presence of to outline the manner of determining the
sea water is highly concentrated in the high amount of such liability. Article 372 of the
seas and considering Heung-a’s failure to Code of Commerce fills in this gap, thus:
demonstrate how it exercised due diligence Article 372. The value of the goods which
in handling and preserving the container the carrier must pay in cases if loss or
van while in transit , it is liable for the misplacement shall be determined in
damages sustained thereby. accordance with that declared in the bill of
lading, the shipper not being allowed to
As the carrier of the subject shipment, present proof that among the goods
Heung-a was bound to exercise declared therein there were articles of
extraordinary diligence in conveying the greater value and money. Horses, vehicles,
same and its slot charter agreement with vessels, equipment and all other principal
Dongnama did not divest it of such and accessory means of transportation
characterization nor relieve it of any shall be especially bound in favor of the
accountability for the shipment.   shipper, although with respect to railroads
said liability shall be subordinated to the
The charter-party provides for the hire of provisions of the laws of concession with
vessel only, either for a determinate period respect to the property, and to what this
of time (time charter) or for a single or Code established as to the manner and
consecutive voyage (voyage charter). The form of effecting seizures and attachments
ship owner supplies the ship’s stores, pay against said companies. (Emphasis ours)
for the wages of the master and the crew,
and defray the expenses for the In case, however, of the shipper's failure to
maintenance of the ship. The voyage declare the value of the goods in the billof
remains under the responsibility of the lading, Section 4, paragraph 5 of the COGSA
carrier and it is answerable for the loss of provides:
goods received for transportation. The Neither the carrier nor the ship shall in
charterer is free from liability to third any event be or become liable for any loss
persons in respect of the ship. Second, or damage to or in connection with the
charter by demise or bareboat charter transportation of goods in an amount
under which the whole vessel is let to the exceeding $500 per package lawful
charterer with a transfer to him of its entire money of the United States, or in case of
command and possession and consequent goods not shipped in packages, per
control over its navigation, including the customary freight unit, or the equivalent

of that sum in other currency, unless the independent insurance adjuster which found
nature and value of such goods have been that the shipment was met because of the
declared by the shipper before shipment water which seeped inside the container van
and inserted in the bill of lading. This APL provided. Pioneer insurance paid BSFIL
declaration, if embodied in the bill of 195,505 after evaluating the claim.
lading shall be prima facie evidence, but
shall be conclusive on the carrier. Having been subrogated to all the rights and
cuase of action of BSFIL, Pioneer Insurance
Hence, when there is a loss/damage to sought payment from APL, but the latter
goods covered by contracts of carriage refused. This prompted Pioneer Insurance to
from a foreign port to a Philippine port file a complaint for sum of money against APL.
and in the absence of a shipper’s
declaration of the value of the goods in ISSUES
the bill of lading,as in the present case, (a) WON the CA erred when it ruled that
the forgoing provisions of the COGSA petitioners claim against the repondent is
should apply. already barred by prescription; and
(b) WON CA erred in holding that the one year
(c) The prescriptive period for filing an action prescriptive period provided under the
for lost/damaged goods governed by COGSA is not applicable in the instant case
contracts of carriage by sea to and from or the nine-month prescriptive period under
Philippine ports in foreign trade is the Bill of Lading applies.
governed by paragraph 6 , Sec. 3 of the
COGSA. And failure to comply with the
notice requirement shall not affect the RULING
right of the shipper to bring suit within one The one-year prescriptive period under the
year after delivery of goods.  COGSA should govern because the present
case involves loss of goods or cargo.  
PIONEER INSURANCE AND SURETY CORP  
VS APL CO. PTE LTD. A reading of the BOL between the parties
[G.R. No. 226345, August 2, 2017] reveals that th nine-month prescriptive period
is NOT applicable in all actions or claims. As an
FACTS: exception, the nine-month period is inapplicable
On January 13, 2012, the shipper , Chillies when there is a different period provided by a
Export House Limited , turn over to respondent law for a particular claim or action. Thus, it s is
APL Co. 250 bags of chilli pepper for transport readily apparent that the exception under the
from the port of Chennai, India to Manila. The BOL became operative because there was a
shipment was a total declared value of compulsory law applicable which provides for a
$12,272.50, was loaded on board M/V Wan different prescriptive period.
Hai 262. In turn, BSFIL as consignee , insured
with petitioner Pioneer Insurance.
On Feb.2, 2012, the shipment arrived at the

port of manila and was temporarily stored at
North Harbor, Manila. On Feb. 6,2012, the bags
of chili were withdraw and delivered to BSFIL.
Upon receipt thereof, it discovered that 76 bags
were wet and heavily infested with molds. The
shipment was declared unfit for human
consumption and was eventually declared as a
total loss.
As a result, BSFIL made a formal claim against

APL and Pioneer INsurance. The latter hired an

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COGSA Transportation Law Atty Glenn Capanas

Domingo Ang vs. American Steamship ISSUE:

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 1

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 2

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 3

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 4

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 5

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 6

The petition is not meritorious. MAYER STEEL PIPE CORPORATION vs.

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 7

insurance surveyor's report allegedly showed B) Court of Appeals committed an error in

On April 17, 1986, petitioners filed an action RULING:

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 8

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 9

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 10

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 11

cargoes. However, Overseas Agency ignored the

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 12

sulphate anhydrous, complete and in good

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 13

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 14

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 15

The vessel is owned and operated by Conti-

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 16

NEW WORLD INTERNATIONAL

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 17

sets suffered extensive damage and could no CA Decision

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 18

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 19

FACTS: As to the extent of liability, Respondent invoked

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 20

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 21

"complaint is barred by prescription and/or On August 4, 1995, Universal Motors filed a

ASIAN TERMINALS, INC VS PHILAM On January 18, 1996, Philam, as subrogee of

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 22

foreign trade by virtue of Commonwealth Act d a m a g e d b y AT I s t e v e d o r e s d u e t o

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 23

Lastly, we agree with petitioner Westwind that Laboratory Technician.

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 24

RULING: Clearly then, despite its contract of

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 25

On Feb.2, 2012, the shipment arrived at the

As a result, BSFIL made a formal claim against

Culaban | Geonzon | Gloria | Polito | Torres | Ybarita Page 26

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Lastly, we agree with petitioner Westwind that Laboratory Technician. 