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G.R. No. 180784               February 15, 2012

INSURANCE COMPANY OF NORTH AMERICA, Petitioner,
vs.
ASIAN TERMINALs, INC., Respondent.

Facts:
- On November 9, 2002, Macro-Lite Korea Corporation shipped to San Miguel
Corporation, through M/V "DIMI P" vessel, one hundred eighty-five (185) packages
(231,000 sheets) of electrolytic tin free steel
- The carrying vessel arrived at the port of Manila on November 19, 2002, and when
the shipment was discharged therefrom, it was noted that seven (7) packages
thereof were damaged and in bad order.
- The shipment was then turned over to the custody of respondent Asian Terminals,
Inc. (ATI) on November 21, 2002 for storage and safekeeping pending its withdrawal
by the consignee's authorized customs broker, R.V. Marzan Brokerage Corp.
(Marzan).
- On November 22, 23 and 29, 2002, the subject shipment was withdrawn by Marzan
from the custody of respondent.
- Five (5) additional packages were found damaged and in bad condition.
- San Miguel Corporation, filed separate claims against respondent and petitioner for
the damage to 11,200 sheets of electrolytic tin free steel.
- The petitioner, as insurer of the said cargo, paid the consignee for the damage
caused to the shipment. Thereafter, petitioner, formally demanded reparation
against respondent. As respondent failed to satisfy its demand, petitioner filed an
action for damages with the RTC of Makati City.
- the trial court dismissed the complaint on the ground that the petitioner’s claim was
already barred by the statute of limitations. It held that COGSA, embodied in
Commonwealth Act (CA) No. 65, applies to this case, since the goods were shipped
from a foreign port to the Philippines. The trial court stated that under the said law,
particularly paragraph 4, Section 3 (6) thereof, the shipper has the right to bring a
suit within one year after the delivery of the goods or the date when the goods
should have been delivered, in respect of loss or damage thereto.
- However, petitioner contends that the one-year limitation period for bringing a suit in
court under the COGSA is not applicable to this case, because the prescriptive period
applies only to the carrier and the ship. It argues that respondent, which is engaged
in warehousing, arrastre and stevedoring business, is not a carrier as defined by the
COGSA, because it is not engaged in the business of transportation of goods by sea
in international trade as a common carrier.
- Petitioner asserts that since the complaint was filed against respondent arrastre
operator only, without impleading the carrier, the prescriptive period under the
COGSA is not applicable to this case.

ISSUE: Whether the one-year prescriptive period for filing a suit under the COGSA
applies to this action for damages against respondent arrastre operator.

RULING:
NO, IT IS INAPPLICABLE TO THIS CASE.

The prescriptive period for filing an action for the loss or damage of the goods is found
under Section 3 (6) (4) of the COGSA:
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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

From the provision above, the carrier and the ship may put up the defense of prescription if
the action for damages is not brought within one year after the delivery of the goods or the
date when the goods should have been delivered. It has been held that not only the
shipper, but also the consignee or legal holder of the bill may invoke the prescriptive period.

However, the COGSA does not mention that an arrastre operator may invoke the
prescriptive period of one year; hence, it does not cover the arrastre operator. Since the
case at bar involves an arrastre operator, it is inapplicable to this case.

G.R. No. 143133           June 5, 2002

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT
SERVICES, INC., petitioners,
vs.
PHILIPPINE FIRST INSURANCE CO., INC., respondents.

Facts:
- CMC Trading shipped on board the M/V 'Anangel Sky' at Hamburg, Germany 242 coils of
various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the
Philippine Steel Trading Corporation.
- Within subsequent days after arrival of the vessel, the cargo was discharged. Prior to
unloading the cargo, an Inspection Report as to the condition of the goods was prepared and
signed by representatives of both parties and four (4) coils were found to be in bad order.
- Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the
consignee Philippine Steel Trading Corporation declared the same as total loss.
- Despite demand, Belgian Overseas and Jardine Davies refused to submit to the consignee's
claim. As a consequence, Philippine First Insurance Company paid the consignee and was
subrogated to the rights and causes of action of the latter. Subsequently, they instituted a
complaint for the recovery of the amount paid by them.
- However, herein petitioners imputed that the damage and/or loss was due to pre-shipment
damage, defect of the goods, or to accidents of the sea, or insufficiency of packing thereof.
- In addition thereto, Belgian Overseas argued that their liability, if there be any, should not
exceed the limitations of the liability provided for in the bill of lading and other pertinent laws.
- RTC dismissed the complaint
- Upon appeal, the CA ruled that petitioners were liable for the loss or the damage of the
goods shipped, because they had failed to overcome the presumption of negligence
imposed on common carriers.
- The CA further held that as to the extent of petitioners' liability, the package limitation under
COGSA was not applicable, because the words "L/C No. 90/02447" indicated that a higher
valuation of the cargo had been declared by the shipper.

Issues:
1. Whether the notice of loss was timely filed
2. Whether the package limitation of liability is applicable

Ruling:
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1. Yes, the notice was timely filed.

The petitioners assert that pursuant to Section 3, paragraph 6 of the Carriage of

Goods by Sea Act (COGSA), respondent should have filed its Notice of Loss within
three days from delivery. They assert that the cargo was discharged on July 31,
1990, but that respondent filed its Notice of Claim only on September 18, 1990.

First, COGSA provides that the notice of claim need not be given if the state of the
goods, at the time of their receipt, has been the subject of a joint inspection or
survey. In the case at bar, an inspection report was signed by both parties.

Second, as stated in the same provision, a failure to file a notice of claim within three
days will not bar recovery if it is nonetheless filed within one year. This one-year
prescriptive period also applies to the shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading.

Hence, since in the present case, the cargo was discharged on July 31, 1990, while
the Complaint was filed by respondent on July 25, 1991, the filing was done within
the one-year prescriptive period.

2. No, it is not applicable.

Assuming arguendo they are liable, petitioners contend that their liability should be

limited to US$500 per package as provided in the Bill of Lading and by Section
4(5) of COGSA.

On the other hand, respondent argues that Section 4(5) of COGSA is inapplicable,
because the value of the subject shipment was declared by petitioners beforehand,
as there was an insertion of the Letter of Credit in the said Bill of Lading.

COGSA establishes a statutory provision limiting the carrier's liability in the absence
of a shipper's declaration of a higher value in the bill of lading.

In the case before us, there was no stipulation in the Bill of Lading limiting the
carrier's liability. Neither did the shipper declare a higher valuation of the goods to
be shipped. The insertion of the letter of credit cannot be the basis for petitioners'
liability.

A notation in the Bill of Lading which indicated the amount of the Letter of Credit did
not effect a declaration of the value of the goods as required by the bill. That
notation was made only for the convenience of the shipper and the bank processing
the Letter of Credit. Also, a bill of lading is separate from other letter of credit
arrangements.

Thus, petitioners' liability, should be computed based on US$500 per package and
not on the per metric ton price declared in the Letter of Credit.

[G.R. No. 131621. September 28, 1999.]

LOADSTAR SHIPPING CO., INC., Petitioner, v. COURT OF APPEALS and THE

MANILA INSURANCE CO., INC., Respondents.
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Facts:
- Loadstar received on board its vessel “Cherokee” the following items:
a. 705 bales of hardwood;
b. 27 boxes and crates of tilewood; and
c. 49 bundles of mouldings.

- The goods were insured by Manila Insurance Company while the vessel was
insured by Prudential Guarantee and Assurance Inc.
- On November 20, 1984, on its way to Manila from Nasipit, the vessel sank along
with its cargo.
- As a result of the total loss of the shipment, a claim was made against Loadstar
but it was ignored.
- MIC, being the insurer, paid the claim to the consignee and was subrogated to
the rights of the latter.
- On February 4, 1985, filed a complaint against LOADSTAR and PGAI alleging that
the sinking of the vessel was due to the fault and negligence of LOADSTAR and
its employees.
- LOADSTAR denied any liability for the loss of the shipper’s goods and claimed
that the sinking of its vessel was due to force majeure.
- LOADSTAR avers that MIC’s claim had already prescribed, the case having been
instituted beyond the period stated in the bills of lading for instituting the same
— suits based upon claims arising from shortage, damage, or non-delivery of
shipment shall be instituted within sixty days from the accrual of the right of
action. The vessel sank on 20 November 1984; yet, the case for recovery was
filed only on 4 February 1985.
- The RTC ruled in favor of MIC and upon appeal, the CA affirmed the RTC’s
decision.
- The CA: Between MIC and LOADSTAR, the provisions of the Bill of Lading do not
apply because said provisions bind only the shipper/consignee and the carrier.
When MIC paid the shipper for the goods insured, it was subrogated to the
latter’s rights as against the carrier, LOADSTAR.

Issue: Whether the claim of MIC has been barred by prescription.

Ruling:
No, it has not been barred by prescription.

Inasmuch as neither the Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) —
which provides for a one-year period of limitation on claims for loss of, or
damage to, cargoes sustained during transit — may be applied suppletorily to
the case at bar. This one-year prescriptive period also applies to the insurer of
the goods. In this case, the period for filing the action for recovery has not yet
elapsed. Moreover, a stipulation reducing the one-year period is null and void; it
must, accordingly, be struck down.

G.R. No. 226345, August 02, 2017

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PIONEER INSURANCE AND SURETY CORPORATION, Petitioner, v. APL CO. PTE.

LTD., Respondent.

Facts:

- On January 13, 2012, the shipper, Chillies Export House Limited, turned over to
respondent APL Co. (APL) 250 bags of chili pepper for transport from the port of
Chennai, India, to Manila. The shipment was loaded on board M/V Wan Hai 262.
In turn, BSFIL Technologies (BSFIL), as consignee, insured the cargo with
petitioner Pioneer Insurance and Surety Corporation.
- On February 2, 2012, the shipment arrived at the port of Manila and was
temporarily stored at North Harbor, Manila. On February 6, 2012, the bags of
chili were withdrawn 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.
- BSFIL made a claim against APL and Pioneer Insurance. It was found that the
shipment was wet because of the water which seeped inside the container van
APL provided. Pioneer Insurance paid.
- Having been subrogated to all the rights and cause of action of BSFIL, Pioneer
Insurance sought payment from APL, but the latter refused. This prompted
Pioneer Insurance to file a complaint for sum of money against APL.
- Pioneer Insurance insists the action, which was filed on February 1, 2013, was
within the one-year prescriptive period under the COGSA after BSFIL received
the goods on February 6, 2012. It argues that the nine-month period provided
under the Bill of Lading was inapplicable because the Bill of Lading itself states
that in the event that such time period is found to be contrary to any law
compulsorily applicable, then the period prescribed by such law shall then apply.
- MTC ruled in favor of Pioneer Insurance.
- RTC concurred with the MTC. In addition, the RTC stated that under the Carriage
of Goods by Sea Act (COGSA), lack of written notice shall not prejudice the right
of the shipper to bring a suit within one year after delivery of the goods. Further,
the trial court stated that the shorter prescriptive period set in the Bill of Lading
could not apply because it is contrary to the provisions of the COGSA.
- CA: it reversed the decisions of the trial courts and ruled that the present action
was barred by prescription. The appellate court noted that under the Bill of
Lading, the carrier shall be absolved from any liability unless a case is filed
within nine (9) months after the delivery of the goods.
- It explained that a shorter prescriptive period may be stipulated upon, provided
it is reasonable.

Issue: Whether the action of Pioneer Insurance has already been barred by
prescription

Ruling:

No, it has not been barred by prescription.

It is elementary that a contract is the law between the parties and the
obligations it carries must be complied with in good faith.
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In the Bill of Lading, it was categorically stated that the carrier shall in any event
be discharged from all liability whatsoever in respect of the goods, unless suit is
brought in the proper forum within nine (9) months after delivery of the goods or
the date when they should have been delivered. However, when the nine-month
period is contrary to any law compulsory applicable, the period prescribed by the
said law shall apply.

A reading of the Bill of Lading between the parties reveals that the nine-month
prescriptive period is not applicable in all actions or claims. As an exception, the
nine-month period is inapplicable when there is a different period provided by a
law for a particular claim or action.

Hence, strictly applying the terms of the Bill of Lading, the one-year prescriptive
period under the COGSA should govern because the present case involves loss of
goods or cargo.

[G.R. NO. 171337 - July 11, 2012]

BENJAMIN CUA (CUA UlAN TEK), Petitioner, v. WALLEM PHILIPPINES

SHIPPING, INC. and ADVANCE SHIPPING CORPORATION, Respondents.

Facts:
- On November 12, 1990, Cua filed a civil action for damages against Wallem and
Advance Shipping. He sought the payment for damage to 218 tons and for a
shortage of 50 tons of shipment of Brazilian Soyabean which was consigned to
him. He claimed that the loss was due to the failure of respondents to observe
extraordinary diligence in carrying the cargo.
- On the other hand, Wallem, filed its own motion to dismiss, raising the sole
ground of prescription. Section 3(6) of the Carriage of Goods by Sea Act
(COGSA) provides that "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." Wallem alleged that the goods were delivered to Cua on
August 16, 1989, but the damages suit was instituted only on November 12,
1990, which is more than one year than the period allotted under the COGSA.
Hence, action of Cua should have been barred.
- Cua denied the claim of prescription. The manager of the company which insured
the vessel (UK P&I Club), manifested by telex message that Advance Shipping
agreed to extend the commencement of the suit for 90 days (August 14, 1990 to
November 12, 1990) and therefore, the action has not been barred just yet.
After Cua’s reply, Wallem withdrew its motion to dismiss.
- RTC ruled in favor of Cua.
- Upon appeal, the CA found that the claim of prescription is meritorious since the
telex message was not attached to Cua’s opposition to Wallem’s motion to
dismiss.

Issue: Whether the action to file for damages has already been barred by
prescription
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Ruling:
No, the action has not been barred by prescription.

The COGSA is the applicable law for all contracts for carriage of goods by sea to
and from Philippine ports in foreign trade; it is thus the law that the Court shall
consider in the present case since the cargo was transported from Brazil to the
Philippines. Under Section 3(6) of the COGSA, the carrier is discharged from
liability for loss or damage to the cargo "unless the suit is brought within one
year after delivery of the goods or the date when the goods should have
been delivered." Jurisprudence, however, recognized the validity of an
agreement between the carrier and the shipper/consignee extending the one-
year period to file a claim.

Although the complaint was clearly filed beyond the one-year period, Cua
additionally alleged in his complaint (under paragraph 11) that:

"the defendants x x x agreed to extend the time for filing of the action
up to November 12, 1990."

This allegation was not specifically denied by respondents.

As such, the Court considers the extension of the period as an admitted fact.

The respondents expressly admitted in a memorandum the allegation of Cua

which stated that the case was filed on November 12, 1990 which was within
the extended period agreed upon by the parties to file suit.

The above statement is a clear admission by the respondents that there was
indeed an agreement to extend the period to file the claim. In light of this
admission, it would be unnecessary for Cua to present a copy of the August 10,
1990 telex message to prove the existence of the agreement. Thus, Cua timely
filed a claim for the damage to and shortage of the cargo.

G.R. No. 145044             June 12, 2008

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner,

vs.
NEPTUNE ORIENT LINES/OVERSEAS AGENCY SERVICES, INC., respondent.

Facts:
- On September 30, 1993, L.T. Garments Manufacturing shipped from Hong Kong
three sets of warp yarn on returnable beams aboard respondent Neptune Orient
Lines' vessel, M/V Baltimar Orion, for transport and delivery to Fukuyama
Manufacturing Corporation Metro Manila.
- During the course of the voyage, the container with the cargoes fell overboard
and was lost.
- Fukuyama sought payment from its insurer, PCIC, which claim was fully
satisfied.
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- PCIC was subrogated to the rights and causes of action of the Fukuyama and
demanded from the respondents the reimbursement of the entire amount it paid
to Fukuyama, but respondents refused payment.
- As a result, PCIC filed a complaint for damages against respondents.
- Respondents contended that the incident was due to a fortuitous event which
exempted them from any liability, and that their liability, if any, should not
exceed US$500 or the limit of liability in the bill of lading, whichever is lower.
- RTC ruled in favor of PCIC and upon appeal, the CA affirmed the decision of the
RTC.
- Upon a motion for reconsideration by the respondents, the motion was partly
granted in the sense that appellants shall be liable to pay only the value of the
three packages lost computed at the rate of US$500 per package or a total of
US$1,500.00.

Issue: Whether the liability of respondents is limited to the rate of US$500 per
package.

Ruling:

Yes, it is limited to the rate of US$500 per package.

The pertinent provisions of the Civil Code applicable to this case are as follows:

Art. 1749. A stipulation that the common carrier's liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner
or shipper for the loss, destruction, or deterioration of the goods is valid,
if it is reasonable and just under the circumstances, and has been fairly
and freely agreed upon.

In addition, Sec. 4, paragraph (5) of the COGSA, which is applicable to all

contracts for the carriage of goods by sea to and from Philippine ports in foreign
trade, 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.

The bill of lading submitted in evidence by petitioner did not show that the
shipper in Hong Kong declared the actual value of the goods as insured by
Fukuyama before shipment and that the said value was inserted in the Bill of
Lading, and so no additional charges were paid. Hence, the stipulation in the bill
of lading that the carrier's liability shall not exceed US$500 per package applies.
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NOTE: Parties cannot stipulate a value less than 500$ provided that such value is the
value limited to the actual value of the said goods.

G.R. No. 166250               July 26, 2010

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner,

vs.
COURT OF APPEALS and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents.

Facts:

- On August 31, 1992, the shipper Sylvex Purchasing Corporation delivered to UTI
a shipment of 27 drums of various raw materials for pharmaceutical
manufacturing. The subject shipment was insured with private respondent
Pioneer Insurance and Surety Corporation in favor of United Laboratories, Inc.
(consignee) against all risks.
- UTI issued Bill of Lading No. C320/C15991-2, covering the aforesaid shipment.
- On September 30, 1992, the shipment arrived at the port of Manila. On October
6, 1992, petitioner received the said shipment in its warehouse.
- On October 15, 1992, the arrastre Jardine Davies Transport Services, Inc.
(Jardine) issued Gate Pass which stated that "22 drums Raw Materials for
Pharmaceutical Mfg." were loaded on a truck for delivery to Unilab’s warehouse.
The materials were noted to be complete and in good order in the gate pass. On
the same day, the shipment arrived in Unilab’s warehouse and was immediately
surveyed by an independent surveyor, J.G. Bernas Adjusters & Surveyors, Inc.
(J.G. Bernas).
- Consequently, Unilab’s quality control representative rejected one paper bag
containing dried yeast and one steel drum containing Vitamin B Complex as unfit
for the intended purpose.
- On November 7, 1992, Unilab filed a claim for the damages against private
respondent and UTI.
- UTI denied liability on the basis of the gate pass issued by Jardine that the goods
were in complete and good condition.
- Meanwhile, Pioneer Insurance paid the claimed amount. Pioneer then filed a
complaint for Damages against APL, UTI and petitioner.
- RTC ruled in favor of Pioneer Insurance.
- CA affirmed the decision of the RTC and also rejected petitioner’s claim that its
liability should be limited to $500 per package pursuant to the Carriage of Goods
by Sea Act (COGSA) considering that the value of the shipment was declared
pursuant to the letter of credit and the pro forma invoice.
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Issue: Whether the liability should be limited to $500 per package.

Ruling:

Yes, the liability should be limited to $500 per package.

It is to be noted that the Civil Code does not limit the liability of the common
carrier to a fixed amount per package. In all matters not regulated by the Civil
Code, the rights and obligations of common carriers are governed by the Code of
Commerce and special laws. Thus, the COGSA supplements the Civil Code by
establishing a provision limiting the carrier’s liability in the absence of a shipper’s
declaration of a higher value in the bill of lading. Section 4(5) of the COGSA
provides:

(5) 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 of 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 not be conclusive
on the carrier.

In the present case, the shipper did not declare a higher valuation of the goods
to be shipped. Contrary to the CA’s conclusion, the insertion of the Letter of
Credit covering shipment of raw materials for pharmaceutical Mfg. x x x" cannot
be the basis of petitioner’s liability. Furthermore, the insertion of an invoice
number does not in itself sufficiently and convincingly show that petitioner had
knowledge of the value of the cargo.

In light of the foregoing, petitioner’s liability should be limited to $500 per steel
drum.