82. PHILAMGEN v.
SWEET LINES  Shipments were discharged from the interisland carrier into the custody of the
G.R. No. 87434 / August 5, 1992 / Bills of Lading
PETITIONERS: Philippine American General Insurance Co. Inc. and Tagum Plastics Inc.
RESPONDENTS: Sweet Lines Inc., Davao Veterans Arrastre and Port Services Inc. and CA
SUMMARY. TAGUM, from Davao, imported polyethylene [basic plastic material] from F.
E. Zuellig in America. Co-petitioner PHILAMGEN is its insurer. The shipment has to first
arrive in Manila before it can be interisland shipped to Davao. Respondent Sweet Lines was
hired to ferry said shipment to Davao. Upon arrival at Davao, it was found that some of the
imported plastics were undelivered or damaged. Petitioners filed suit on the basis of the
bills of lading. Unfortunately, said bills of lading contain prescriptive periods of sixty (60)
days to file for claims of loss/damages. It also required notice to respondent carrier before
judicial claims may be had. The bills of lading, however, were not formally presented as
evidence during trial. The RTC ruled in favor of importer-petitioner, but the CA reversed
on the basis of prescription. The SC upheld the CA, saying that even though the bills of lading
were not formally presented as evidence, the same were sufficiently referred to in the
pleadings of both parties. Hence, it was deemed judicially admitted and no evidence was
required to prove its existence.
DOCTRINE. In the absence of any statutory limitation and subject only to the requirement
on the reasonableness of the stipulated limitation period, the parties to a contract of
carriage may fix by agreement a shorter time for the bringing of suit on a claim for the loss
of or damage to the shipment than that provided by the statute of limitations.
FACTS.
 Petitioners Philippine American General Insurance Co. Inc. (Philamgen) and Tagum
Plastics Inc. commenced an action against private respondents Sweet Lines Inc. (SLI)
and Davao Veterans Arrastre and Port Services Inc. (DVAPSI), along with SCI Line and
F.E. Zuellig Inc. as co-defendants
. The litigation obviously revolves on such bills of lading which are practically the documents or
 The vessel SS VISHVA YASH belonging to or operated by foreign common carrier took
on board at Baton Rouge, LA, two consignments of cargoes for shipment to Manila and
later for transshipment to Davao. It consisted 600 bags Low Density Polyethylene 631
and another 6,400 bags Low Density Polyethylene 647. The cargoes were insured by
the Tagum Plastics Inc. with Philamgen.
 The vessel arrived at Manila and discharged its cargoes in the Port of Manila for
transshipment to Davao City. For the transshipment, the service of the vessel MV Sweet
Love owned by Sweet Lines was used.
consignee. A survey was conducted, and it was found that, of the cargo covered by Bill of
Lading no. 25 and 26, supposed to contain 6,400 bags of Low Density Polyethylene 647,
but only 5, 413 bags were in good order and out of the 600 bags of Low Density
Polyethylene 631, only 507 bags were in good condition. Only a total of 5,820 bags were
delivered to the consignee in good order, leaving a balance of 1,080 bags.
 Tagum filed suit against respondent Sweet Lines and the Davao Veterans Arrastre which
handled the cargoes at the Davao port.
o The basis for such suit are the bills of lading, which serves as the contract
between parties that the goods indicated therein are to be delivered complete
in number and in the condition specified.
o Militating against the petitioners, however, is the prescriptive period included
in the bills of lading. It states that any action arising from shortage or
damages must be brought within sixty (60) days from accrual of right of
action.
o Also, notice of claims for loss or damages is required to be given to the carrier
before the institution of judicial claims.
• The bills of lading were not formally offered as evidence; hence it was not shown that a
contractual prescriptive period was indicated therein.
• The Trial Court ruled in favor of petitioners PHILAMGEN and TAGUM, but the CA reversed
on the basis of prescription. Hence, this petition for review on certiorari.
ISSUES & RATIO.
1. WON the CA correctly ruled on the basis of prescription even without formal
evidence of its existence? – YES.
Existence of the provision in the bill of lading on prescription was properly proven in the
pleadings
contracts sued upon, hence, they are inevitably involved and their provisions cannot be
disregarded in the determination of the relative rights of the parties thereto. Respondent
court correctly passed upon the matter of prescription, since that defense was so considered
and controverted by the parties.
Since petitioners are suing on the basis of contractual obligations indicated in the bills of
lading, such bills can be categorized as actionable documents which under the Rules of Court
must be properly pleaded either as causes of action or defenses, and the genuineness and due
execution of which are deemed admitted unless specifically denied under oath by the adverse
party.

Failure to specifically deny the existence of the instruments in question amounts to an
admission. Judicial admissions, verbal or written, made by the parties in the pleadings or in
the course of the trial or other proceedings in the same case are conclusive, no evidence being
required to prove the same, and cannot be contradicted unless shown to have been made
through palpable mistake or that no such admission was made.
In the case at bar, prescription as an affirmative defense was seasonably raised by respondent
Sweet Lines in its answer, except that the bills of lading embodying the same were not
formally offered in evidence.
Such limitation is not contrary to public policy for it does not in any way defeat the right to
recover, but merely requires the assertion of that right by action at an earlier period than
would be necessary to defeat it through the operation of the ordinary statute of limitations.
The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just
liability, but reasonably to inform it that the shipment has been damaged and that it is
charged with liability therefor.
DECISION.
Petition denied by the SC.

Petitioner specifically replied to such defense in respondent’s answer, but it failed to

controvert the existence of the bills of lading. It is thus in the nature of a negative pregnant.
Consequently, they impliedly admitted the same when they merely assailed the validity of
subject stipulations. Petitioners MUST SPECIFICALLY DENY THE EXISTENCE OR
PRESENTATION OF EVIDENCE. This is petitioners’ reply to respondent’s answer:
“In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer, plaintiffs
state that such agreements are what the Supreme Court considers as contracts of adhesion and,
consequently, the provisions therein which are contrary to law and public policy cannot be availed
of by answering defendant as valid defenses.”

Petitioners failed to touch on the matter of the non-presentation of the bills of lading. Hence
it is too late in the day to now allow the litigation to be overturned on that score, for to do so
would mean an over-indulgence in technicalities. Petitioners' feigned ignorance of the
provisions of the bills of lading does not deserve serious attention.

2. WON he stipulation as to the prescriptive period was valid? – YES.

Contracts of adhesion, while frowned upon, are not absolutely illegal.

Petitioners posit that the alleged shorter prescriptive period which is in the nature of a
limitation on petitioners' right of recovery is unreasonable and that SLI has the burden of
proving otherwise, citing the earlier case of Southern Lines, Inc. vs. Court of Appeals, et al.

BUT the validity of a contractual limitation of time for filing the suit has generally been
upheld as such stipulation merely affects the plaintiff's remedy and does not affect the
liability of the defendant.

In the absence of any statutory limitation and subject only to the requirement on the
reasonableness of the stipulated limitation period, the parties to a contract of carriage may
fix by agreement a shorter time for the bringing of suit on a claim for the loss of or damage to
the shipment than that provided by the statute of limitations.