UCPB GENERAL INSURANCE CO VS.

ABOITIZ SHIPPING CORPORATION

G.R. No. 168433 | February 10, 2009
Facts: Three units of waste water treatment plant with accessories was purchased by units of
San Miguel Corp (SMC) from Taiwan. The goods came from the USA and arrived at the port of
Manila and were transported to Cebu on board M/V Aboitiz SUPERCON II ship. After its arrival
in Cebu and clearance from the Bureau of Customs, the goods were delivered to SMC on
August 2, 1991 and it was then discovered that one electrical motor was damaged.
In the insurance agreement, UCPB paid SMC and the former became the subrogee of the latter.
UCPB then filed a complaint for recovery of money against Aboitiz. The RTC ruled in favor of
UCPB. But the CA reversed and ruled that UCPB’s right of action did not accrue because UCPB
failed to file a formal notice of claim within 24 hours from the receipt of SMC of the damaged
merchandise as required by Art 366 of the Code of Commerce.
In response, UCPB asserted that the claim requirement under Article 366 of the Code of
Commerce does not apply here because the damage to the merchandise had already been
known to the carrier as its representative was present when the cargo was found damaged
upon discharge from the foreign carrier. Furthermore, UCPB claimed that pursuant to the
Carriage of Goods by Sea Act (COGSA), notice of loss need not be given if the condition of the
cargo has been the subject of joint inspection such as, in this case, the inspection in the
presence of the Eagle Express representative at the time the cargo was opened at the ICTSI.
Aboitiz stated that it cannot be held liable for the damage to the cargo which was not incurred
during the transshipment to Cebu on board of one of its vessel but it was already existing at the
time of unloading. It further argued that Article 366 of the Code of Commerce is applicable and it
is a condition precedent to UCPB’s cause of action.
Issue: Whether or not the formal notice of claim within 24 hrs. I a condition precedent fort he
accrual of a right of action against Aboitiz and other respondents.
Ruling: NO.
Article 366. Within twenty-four hours following the receipt of the merchandise, the claim against
the carrier for damage or average which may be found therein upon opening the packages, may
be made, provided that the indications of the damage or average which gives rise to the claim
cannot be ascertained from the outside part of such packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no
claim shall be admitted against the carrier with regard to the condition in which the goods
transported were delivered.
The law clearly requires that the claim for damage or average must be made within 24 hours
from receipt of the merchandise if, as in this case, damage cannot be ascertained merely from
the outside packaging of the cargo.
The requirement to give notice of loss or damage to the goods is not an empty formalism. The
fundamental reason or purpose of such a stipulation is reasonably to inform the carrier that the
shipment has been damaged, it is charged with liability and to give it an opportunity to examine
the nature and extent of the injury.
We have construed the 24-hour claim requirement as a condition precedent to the accrual of a
right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee
must allege and prove the fulfillment of the condition. Otherwise, no right of action against the
carrier can accrue in favor of the former.
In the present case, the shipment was received by SMC on August 2, 1991. However, as found
by the Court of Appeals, the claims were dated October 30, 1991, more than three (3) months
from receipt of the shipment and, at that, even after the extent of the loss had already been
determined by SMC’s surveyor. The claim was, therefore, clearly filed beyond the 24-hour time
frame prescribed by Art. 366 of the Code of Commerce.
The Request for Bad Order Survey and Turn Over Survey of Bad Order Cargoes, respectively
dated June 17, 1999 and June 28, 1991, evince the fact that the damage to the cargo was
already made known to Eagle Express and, possibly, SMC, as of those dates.
Sec. 3(6) of the COGSA provides a similar claim mechanism as the Code of Commerce but
prescribes a period of three (3) days within which notice of claim must be given if the loss or
damage is not apparent. It states:
“Sec. 3(6). Unless notice of loss or damage and the general nature of such loss or damage be
given in writing to the carrier or his agent at the port of discharge or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods
as descibed in the bill of lading. If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt of the goods given by the
person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.”
It should be noted at this point that the applicability of the above-quoted provision of the
COGSA was not raised as an issue by UCPB before the trial court and was only cited by UCPB
in its Memorandum in this case.
UCPB, however, is ambivalent as to which party Eagle Express represented in the transaction.
By its own manifestation, East Asiatic, and not Eagle Express, acted as the agent through which
summons and court notices may be served on DAMCO. It would be unjust to hold that Eagle
Express’s knowledge of the damage to the cargo is such that it served to preclude or dispense
with the 24-hour notice to the carrier required by Art. 366 of the Code of Commerce. Neither did
the inspection of the cargo in which Eagle Express’s representative had participated lead to the
waiver of the written notice under the Sec. 3(6) of the COGSA. Eagle Express, after all, had
acted as the agent of the freight consolidator, not that of the carrier to whom the notice should
have been made.
 PHILAM VS. HEUNG-A
G.R. No. 187701 & G.R. No. 198812 | JULY 23, 2014
Facts: 19 pellets of 200 rolls of Ovaltin Power 18 Glaminated plastic packaging materials was
imported by Novartis Consumer Health Philippines, Inc. from Jinsuk Trading Co. Ltd. in South
Korea. To ship the goods the Philippines, Jinsuk engaged the services of Protop Shipping
Corporation to forward the goods to Novartis. Through the agent Dognama owned by Heung-A
Shipping Corporation, Wallem Philippines Shipping, Protop shipped the cargo. Norvatis insured
the shipment with Philam Insurance Company.
On January 25, 2001, the shipment reached Norvatis’ premises and was inspected by the
company’s Senior Laboratory Technician Caparoso. Upon inspection, the latter discovered that
the boxes of the shipment were wet and damp. The boxes on one side of the van were in
disarray while others were opened or damaged due to the dampness. She further observed that
parts of the container van were damaged and rusty. As result, ashe rejected the entire
shipment for the damaged packaging materials for this might contaminate the product they were
meant to hold.

Norvatis demanded indemnification for the lost an damaged shipment from respondents but was
denied. It claimed insurance thus, Philam, as subrogee, filed a complaint for damages against
the respondents for reimbursement of the insurance claims paid to Norvatis.
Respondents denied their liability. Wallem averred that any liability which may be imputed to it is
limited only to US$8,500.00 pursuant to the Carriage of Goods by Sea Act (COGSA)
Issues:
1. Whether the shipment sustained damage while in the possession and custody of
HEUNG-A, and if so, whether HEUNG-A’s liability can be limited to US$500 per package
pursuant to the COGSA.
2. Whether or not NOVARTIS/PHILAM failed to file a timely claim against HEUNG-A and/or
WALLEM.
Ruling:
1. YES.
Since the subject shipment was being transported from South Korea to the Philippines, the Civil
Code provisions shall apply. In all matters not regulated by the Civil Code, the rights and
obligations of common carriers shall be governed by the Code of Commerce and by special
laws such as the COGSA.
While the Civil Code contains provisions making the common carrier liable for loss/damage to
the goods transported, it failed to outline the manner of determining the amount of such liability.
Article372 of the Code of Commerce fills in this gap, thus:
Article 372. The value of the goods which the carrier must pay in cases if loss or misplacement
shall be determined in accordance with that declared in the bill of lading, the shipper not being
allowed to present proof that among the goods declared therein there were articles of greater
value and money.
In case, however, of the shipper’s failure to declare the value of the goods in the bill of
lading, Section 4, paragraph 5 of the COGSA provides:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to
or in connection with the transportation of goods in an amount exceeding $500 per package
lawful money of the United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading shall be prima facie evidence but shall be conclusive
on the carrier.
Hence, when there is a loss/damage to goods covered by contracts of carriage from a foreign
port to a Philippine port and in the absence a shipper’s declaration of the value of the goods in
the bill of lading, as in the present case, the foregoing provisions of the COGSA shall apply. The
CA, therefore, did not err in ruling that HEUNG-A, WALLEM and PROTOP’s liability is limited to
$500 per package or pallet.
The Court likewise affirms the CA in pronouncing HEUNG-A, WALLEM and PROTOP liable only
for the lost/damaged 17 pallets instead of 19 pallets stated in the bill of lading. This is because,
per the "Shipper’s Load and Count" arrangement, the contents are not required to be checked
and inventoried by the carrier at the port of loading or before said carrier enters the port of
unloading in the Philippines since it is the shipper who has the sole responsibility for the
quantity, description and condition of the cargoes shipped in container vans. As such, the carrier
cannot be held responsible for any discrepancy if the description in the bill of lading is different
from the actual contents of the container.
2. YES.
Consonant with the ruling in the recent Asian Terminals, Inc. v. Philam Insurance Co., Inc., the
prescriptive period for filing an action for lost/damaged goods governed by contracts of
carriage by sea to and from Philippine ports in foreign trade is governed by paragraph
6,Section 3 of the COGSA which states:
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in
writing to the carrier or his agent at the port of discharge before or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods
as described in the bill of lading. If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the
person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection. In any event the carrier and the ship shall be
discharged from all liability in respect of loss or damage unless suit is brought within one year
after delivery of the goods or the date when the goods should have been delivered: Provided,
That if a notice of loss or damage, either apparent or concealed, is not given as provided for in
this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one
year after the delivery of the goods or the date when the goods should have been delivered.
It was further ruled in Asian Terminals that pursuant to the foregoing COGSA provision, failure
to comply with the notice requirement shall not affect or prejudice the right of the shipper to
bring suit within one year after delivery of the goods.
The consignee, Norvatis, received the subject shipment on January 5, 2001. PHILAM, as the
subrogee of NOVARTIS, filed a claim against PROTOP on June 4, 2001, against WALLEM on
October 12, 2001 and against HEUNG-A on December 11, 2001, or all within the one-year
prescriptive period. Verily then, despite NOV AR TIS' failure to comply with the three-day notice
requirement, its subrogee PHILAM is not barred from seeking reimbursement from PROTOP,
HEUNG-A and WALLEM because the demands for payment were timely filed