hundred and thirty-six, be accepted, as it is
hereby accepted to be made applicable to all
COMMONWEALTH ACT No. 65
IN ACT TO DECLARE THAT PUBLIC ACT
NUMBERED FIVE HUNDRED AND
TWENTY-ONE, KNOWN AS "CARRIAGE
OF GOODS BY SEA ACT," ENACTED BY
THE SEVENTY-FOURTH CONGRESS OF
THE UNITED STATES, BE ACCEPTED, AS
IT IS HEREBY ACCEPTED BY THE
NATIONAL ASSEMBLY
WHEREAS, the Seventy-fourth Congress of
the United States enacted Public Act
Numbered Five hundred and twenty-one,
entitled:
"Carriage of Goods by Sea Act";
WHEREAS, the primordial purpose of the said
Acts is to bring about uniformity in ocean bills
of lading and to give effect to the Brussels
Treaty, signed by the United States with other
powers;
WHEREAS, the Government of the United
States has left it to the Philippine Government
to decide whether or not the said Act shall
apply to carriage of goods by sea in foreign
trade to and from Philippine ports;
WHEREAS, the said Act of Congress contains
advanced legislation, which is in consonance
with modern maritime rules and the practices
of the great shipping countries of the world;
WHEREAS, shipping companies, shippers,
and marine insurance companies, and various
chambers of commerce, which are directly
affected by such legislation, have expressed
their desire that said Congressional Act be
made applicable and extended to the
Philippines; therefore,
Be it enacted by the National Assembly of the
Philippines:
Section 1. That the provisions of Public Act
Numbered Five hundred and twenty-one of
the Seventy-fourth Congress of the United
States, approved on April sixteenth, nineteen
contracts for the carriage of goods by sea to
and from Philippine ports in foreign
trade: Provided, That nothing in the Act shall
be construed as repealing any existing
provision of the Code of Commerce which is
now in force, or as limiting its application.
Section 2. This Act shall take effect upon its
approval.
Approved: October 22,1936.
An Act Relating to the Carriage of Goods
by Sea.
Be it enacted by the Senate and House of
Representatives of the United States of
America in Congress assembled, That every
bill of landing or similar document of title
which is evidence of a contract for the
carriage of goods by sea to or from ports of
the United States, in foreign trade, shall have
effect subject to the provisions of the Act.
TITLE I
Section 1. When used in this Act —
(a) The term "carrier" includes the
owner or the charterer who enters into
a contract of carriage with a shipper.
(b) The term "contract of carriage"
applies only to contracts of carriage
covered by a bill of lading or any
similar document of title, insofar as
such document relates to the carriage
of goods by sea, including any bill of
lading or any similar document as
aforesaid issued under or pursuant to
a charter party from the moment at
which such bill of lading or similar
document of title regulates the
relations between a carrier and a
holder of the same.
(c) The term "goods" includes goods,
wares, merchandise, and articles of
every kind whatsoever, except live
animals and cargo which by the
 contract of carriage is stated as being
carried on deck and is so carried.
(d) The term "ship" means any vessel
used for the carriage of goods by sea.
(e) The term "carriage of goods"
covers the period from the time when
the goods are loaded on to the time
when they are discharged from the
ship.
RISKS
Section 2. Subject to the provisions of section
6, under every contract of carriage of goods
by sea, the carrier in relation to the loading
handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject
to the responsibilities and liabilities and
entitled to the rights and immunities
hereinafter set forth.
RESPONSIBILITIES AND LIABILITIES
Section 3. (1) The carrier shall be bound,
before and at the beginning of the voyage, to
exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and
supply the ship;
(c) Make the holds,
refrigerating and cooling
chambers, and all other parts
of the ship in which goods are
carried, fit and safe for their
reception carriage and
preservation.
(2) The carrier shall properly and
carefully load, handle, stow, carry,
keep, care for, and discharge the
goods carried.
(3) After receiving the goods into his
charge the carrier, or the master or
agent of the carrier, shall, on demand
of the shipper, issue to the shipper a
bill of lading showing among other
things —
(a) The leading marks
necessary for identification of
the goods as the same are
furnished in writing by the
shipper before the loading of
such goods starts, provided
such marks are stamped or
otherwise shown clearly upon
the goods if uncovered, or on
the cases or coverings in
which such goods are
contained, in such a manner
as should ordinarily remain
legible until the end of the
voyage.
(b) Either the number of
packages or pieces, or the
quantity or weight, as the case
may be, as furnished in writing
by the shipper.
(c) The apparent order and
condition of the goods:
Provided, That no carrier,
master, or agent of the carrier,
shall be bound to state or
show in the bill of lading any
marks, number, quantity, or
weight which he has
reasonable ground for
suspecting not accurately to
represent the goods actually
received, or which he has had
no reasonable means of
checking.
(4) Such a bill of lading shall be prima
facie evidence of the receipt by the
carrier of the goods as therein
described in accordance with
paragraphs (3) (a), (b), and (c) of this
section: Provided, That nothing in this
Act shall be construed as repealing or
limiting the application of any part of
the Act, as amended, entitled "An Act
relating to bills of lading in interstate
and foreign commerce," approved
August 29, 1916 (U. S. C. title 49,
secs. 81-124), commonly known as
the "Pomerene Bills of Lading Act."
(5) The shipper shall be deemed to
have guaranteed to the carrier the
accuracy at the time of shipment of
the marks, number, quantity, and
weight, as furnished by him; and the
shipper shall indemnify the carrier
against all loss damages, and
expenses arising or resulting from
inaccuracies in such particulars. The
right of the carrier to such indemnity
shall in no way limit his responsibility
and liability under the contract of
carriage or to any person other than
the shipper.
(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
In the case of any actual or
apprehended loss or damage the
carrier and the receiver shall give all
reasonable facilities to each other for
inspecting and tallying the goods.
(7) After the goods are loaded the bill
of lading to be issued by the carrier,
master, or agent of the carrier to the
shipper shall, if the shipper so
demands, be a "shipped" bill of lading
Provided, That if the shipper shall
have previously taken up any
document of title to such goods, he
shall surrender the same as against
the issue of the "shipped" bill of lading,
but at the option of the carrier such
document of title may be noted at the
port of shipment by the carrier,
master, or agent with name or name
the names of the ship or ships upon
which the goods have been shipped
and the date or dates of shipment, and
when so noted the same shall for the
purpose of this section be deemed to
constitute a "shipped" bill of lading.
(8) Any clause, covenant, or
agreement in a contract of carriage
relieving the carrier or the ship from
liability for loss or damage to or in
connection with the goods, arising
from negligence, fault, or failure in the
duties and obligations provided in this
section, or lessening such liability
otherwise than as provided in this Act,
shall be null and void and of no effect.
A benefit of insurance in favor of the
carrier, or similar clause, shall be
deemed to be a clause relieving the
carrier from liability.
RIGHTS AND IMMUNITIES
Section 4. (1) Neither the carrier nor the ship
shall be liable for loss or damage arising or
resulting from unseaworthiness unless caused
by want of due diligence on the part of the
carrier to make the ship seaworthy, and to
secure that the ship is properly manned,
equipped, and supplied, and to make to the
holds, refrigerating and cool chambers, and all
other parts of the ship in which goods are
carried fit and safe for their reception,
carriage, and preservation in accordance with
the provisions of paragraph (1) of section 3.
Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the
exercise of due diligence shall be on the
carrier or other persons claiming exemption
under the section.
(2) Neither the carrier nor the ship
shall be responsible for loss or
damage arising or resulting from —
(a) Act, neglect, or default of
the master, mariner, pilot, or
the servants of the carrier in
the navigation or in the
management of the ship;
(b) Fire, unless caused by the
actual fault or privity of the
carrier;
(c) Perils, dangers, and
accidents of the sea or other
navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of
princes, rulers, or people, or
seizure under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the
shipper or owner of the goods,
his agent or representative;
(j) Strikes or lockouts or
stoppage or restraint of labor
from whatever cause, whether
partial or
general; Provided, That
nothing herein contained shall
be construed to relieve a
carrier from responsibility for
the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to
save life or property at sea;
(m) Wastage in bulk or weight
or any other loss or damage
arising from inherent defect,
quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy
of marks;
(p) Latent defects not
discoverable by due diligence;
and
(q) Any other cause arising
without the actual fault and
privity of the carrier and
without the fault or neglect of
the agents or servants of the
carrier, but the burden of proof
shall be on the person
claiming the benefit of this
exception to show that neither
the actual fault or privity of the
carrier nor the fault or neglect
of the agents or servants of
the carrier contributed to the
loss or damage.
(3) The shipper shall not be
responsible for loss or damage
sustained by the carrier or the ship
arising from any cause without the act,
fault, or neglect of the shipper, his
agents, or servants.
(4) Any deviation in saving or
attempting to save life or property at
sea, or any reasonable deviation shall
not be deemed to be an infringement
or breach of this Act or of the contract
of carriage, and the carrier shall not be
liable for any loss or damage resulting
therefrom: Provided, however, That if
the deviation is for the purpose of
loading cargo or unloading cargo or
passengers it shall, prima facie, be
regarded as unreasonable.
(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 $600
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 not be conclusive
on the carrier.
By agreement between the carrier,
master, or agent of the carrier, and the
shipper another maximum amount
than that mentioned in this paragraph
may be fixed: Provided, That such
maximum shall not be less than the
figure above named. In no event shall
the carrier be liable for more than the
amount of damage actually sustained.
Neither the carrier nor the ship shall
be responsible in any event for loss or
damage to or in connection with the
transportation of the goods if the
nature or value thereof has been
knowingly and fraudulently misstated
by the shipper in the bill of lading.
(6) Goods of an inflammable,
explosive, or dangerous nature to the
shipment whereof the carrier, master
or agent of the carrier, has not
consented with knowledge of their
nature and character, may at any time
before discharge be landed at any
place or destroyed or rendered
innocuous by the carrier without
compensation, and the shipper of
such goods shall be liable for all
damages and expenses directly or
indirectly arising out of or resulting
from such shipment. If any such goods
shipped with such knowledge and
consent shall become a danger to the
ship or cargo, they may in like manner
be landed at any place, or destroyed
or rendered innocuous by the carrier
without liability on the part of the
carrier except to general average, if
any.
SURRENDER OF RIGHTS AND
IMMUNITIES AND INCREASE OF
RESPONSIBILITIES AND LIABILITIES
Section 5. A carrier shall be at liberty to
surrender in whole or in part all or any of his
rights and immunities or to increase any of his
responsibilities and liabilities under this Act,
provided such surrender or increase shall be
embodied in the bill of lading issued to the
shipper.
The provisions of this Act shall not be
applicable to charter parties; but if bills of
lading are issued in the case of a ship under
charter party, they shall comply with the terms
of this Act. Nothing in this Act shall be held to
prevent the insertion in a bill of lading of any
lawful provision regarding general average.
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of
the preceding sections, a carrier, master or
agent of the carrier, and a shipper shall, in
regard to any particular goods be at liberty to
enter into any agreement in any terms as to
the responsibility and liability of the carrier for
such goods, and as to the rights and
immunities of the carrier in respect of such
goods, or his obligation as to seaworthiness
(so far as the stipulation regarding
seaworthiness is not contrary to public policy),
or the care or diligence of his servants or
agents in regard to the loading, handling
stowage, carriage, custody, care, and
discharge of the goods carried by sea:
Provided, That in this case no bill of lading
has been or shall be issued and that the terms
agreed shall be embodied in a receipt which
shall be a non-negotiable document and shall
be marked as such.
Any agreement so entered into shall have full
legal effect: Provided, That this section shall
not apply to ordinary commercial shipments
made in the ordinary course of trade but only
to other shipments where the character or
condition of the property to be carried or the
circumstances, terms, and conditions under
which the carriage is to be performed are such
as reasonably to justify a special agreement.
Section 7. Nothing contained in this Act shall
prevent a carrier or a shipper from entering
into any agreement, stipulation, condition,
reservation, or exemption as to the
responsibility and liability of the carrier or the
ship for the loss or damage to or in connection
with the custody and care and handling of
goods prior to the loading on and subsequent
to the discharge from the ship on which the
goods are carried by sea.
Section 8. The provisions of this Act shall not
affect the rights and obligations of the carrier
under the provisions of the Shipping Act,
1916, or under the provisions of section 4281
to 4289, inclusive, of the Revised Statutes of
the United States, or of any amendments
thereto; or under the provisions of any other
enactment for the time being in force relating
to the limitation of the liability of the owners of
seagoing vessels.
TITLE II
Section 9. Nothing contained in this Act shall
be construed as permitting a common carrier
by water to discriminate between competing
shippers similarly place in time and
circumstances, either (a) with respect to the
right to demand and receive bills of lading
subject to the provisions of this Act; or (b)
when issuing such bills of lading, either in the
surrender of any of the carrier's rights and
immunities or in the increase of any of the
carrier's responsibilities and liabilities pursuant
to section 6, title I, of this Act or (c) in any
other way prohibited by the Shipping Act,
1916, s amended.
Section 10. Section 25 of the Interstate
Commerce Act is hereby amended by adding
the following proviso at the end of paragraph 4
thereof: "Provided, however, That insofar as
any bill of lading authorized hereunder relates
to the carriage of goods by sea, such bill of
lading shall be subject to the provisions of the
Carriage of Goods by Sea Act."
Section 11. Where under the customs of any
trade the weight of any bulk cargo inserted in
the bill of lading is a weight ascertained or
accepted by a third party other than the carrier
or the shipper, and the fact that the weight is
so ascertained or accepted is stated in the bill
of lading, then, notwithstanding any thing in
this Act, the bill of lading shall not be deemed
to be prima facie evidence against the carrier
of the receipt of goods of the weight so
inserted in the bill of lading, and the accuracy
thereof at the time of shipment shall not be
deemed to have been guaranteed by the
shipper.
Section 12. Nothing in this Act shall be
construed as superseding any part of the Act
entitled "An act relating to navigation of
vessels, bills of lading, and to certain
obligations, duties, and rights in connection
with the carriage of property," approved
February 13,1893, or of any other law which
would be applicable in the absence of this Act,
insofar as they relate to the duties,
responsibilities, and liabilities of the ship or
carrier prior to the time when the goods are
loaded on or after the time they are
discharged from the ship.
Section 13. This Act shall apply to all
contracts for carriage of goods by sea to or
from ports of the United States in foreign
trade. As used in this Act the term "United
States" includes its districts, territories, and
possessions: Provided, however, That the
Philippine legislature may by law exclude its
application to transportation to or from ports of
the Philippine Islands. The term "foreign
trade" means the transportation of goods
between the ports of the United States and
ports of foreign countries. Nothing in this Act
shall be held to apply to contracts for carriage
of goods by sea between any port of the
United States or its possessions, and any
other port of the United States or its
possession: Provided, however, That any bill
of lading or similar document of title which is
evidence of a contract for the carriage of
goods by sea between such ports, containing
an express statement that it shall be subject to
the provisions of this Act, shall be subjected
hereto as fully as if subject hereto as fully as if
subject hereto by the express provisions of
this Act: Provided, further, That every bill of
lading or similar document of title which is
evidence of a contract for the carriage of
goods by sea from ports of the United States,
in foreign trade, shall contain a statement that
it shall have effect subject to the provisions of
this Act.
applicable to that part of Title I which may
have thus been suspended.
Section 15. This Act shall take effect ninety
days after the date of its approval; but nothing
in this Act shall apply during a period not to
exceed one year following its approval to any
contract for the carriage of goods by sea,
made before the date on which this Act is
approved, nor to any bill of lading or similar
document of title issued, whether before or
after such date of approval in pursuance of
any such contract as aforesaid.
Section 16. This Act may be cited as the
"Carriage of Goods by Sea Act."

Section 14. Upon the certification of the

Secretary of Commerce that the foreign
commerce of the United States in its
competition with that of foreign nations is
prejudiced the provisions, or any of them, of
Title I of this Act, or by the laws of any foreign
country or countries relating to the carriage of
goods by sea, the President of the United
States, may, from time to time, by
proclamation, suspend any or all provisions of
Title I of this Act for such periods of time or
indefinitely as may be designated in the
proclamation. The President may at any time
rescind such suspension of Title I hereof, and
any provisions thereof which may have been
suspended shall thereby be reinstated and
again apply to contracts thereafter made for
the carriage of goods by sea. Any
proclamation of suspension or rescission of
any such suspension shall take effect on a
date named therein, which date shall be not
less than ten days from the issue of the
proclamation.

Any contract for the carriage of goods by sea,

subject to the provisions of this Act, effective
during any period when title I hereof, or any
part thereof, is suspended, shall be subject to
all provisions of law now or hereafter
Ang V. American Steamship
Preamble: A notify party is when the
notification of a shipment’s arrival is
usually sent to this party whose
address appears on the shipping
document. This party is usually either
the buyer or the importer
Facts: Yue Commercial Bank Ltd. of Hongkong,
referred to hereafter as Yau Yue, agreed to sell
140 packages of galvanized steel durzinc
sheets to one Herminio G. Teves (the date of
said agreement is not shown in the record
here) for the sum of $32,458.26with Herminio
G. Teves as the shipper. When the articles
arrived in Manila on or about May 9, 1961,
Hongkong& Shanghai Bank notified Teves, the
"notify party" under the bill of lading, of the
arrival of the goods and requested payment of
the demand draft representing the purchase
price of the articles. Teves, however, did not
pay the demand draft, prompting the bank to
make the corresponding protest. The bank
likewise returned the bill of lading and demand
draft to Yau Yue which indorsed the said bill of
lading to Domingo Ang.
Meanwhile, despite his non-payment of the
purchase price of the articles, Teves as able to
obtain a bank guaranty in favor of
the American Steamship Agencies, Inc., as
carrier's agent, to the effect that he would
surrender the original and negotiable bill of
lading duly indorsed by Yau Yue. On the
strength of this guaranty, Teves succeeded in
securing a "Permit To Deliver Imported
Articles" from the carrier's agent, which he
presented to the Bureau of Customs which in
turn released to him the articles covered by
the bill of lading.
Subsequently, Domingo Ang claimed for the
articles from American Steamship Agencies,
Inc., by presenting the indorsed bill of lading,
but he was informed by the latter that it had
delivered the articles to Teves.
On October 30, 1963 Domingo Ang filed a
complaint in the Court of First Instance of
Manila against
the American Steamship Agencies, Inc., for
having allegedly wrongfully delivered and/or
converted the goods covered by the bill of
lading belonging to plaintiff Ang, to the
damage and prejudice of the latter.
On December 2, 1963, defendant filed a
motion to dismiss upon the ground that
plaintiff's cause of action has prescribed under
the Carriage of Goods by Sea
Act(Commonwealth Act No. 65), more
particularly Section 3(6), paragraph 4, which
provides:
"In any event, the carrier and the ship shall
discharged from all liability in respect to 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."
Issue: WON plaintiff’s cause of action has
prescribed?
Ruling: No. Plaintiff’s action does not fall under
the cited paragraph.
The provision of law involved in this case
speaks of "loss or damage". That there was no
damage caused to the goods which were
delivered intact to Herminio G. Teves who did
not file any notice of damage, is admitted by
both parties in this case. What is to be resolved
— in order to determine the applicability of
the prescriptive period of one year to the case
at bar — is whether or not there was "loss" of
the goods subject matter of the complaint.
Nowhere is "loss" defined in the Carriage of
Goods by Sea Act. Therefore, recourse must be
had to the Civil Code which provides in Article
18 thereof that, "In matters which are
governed by the Code of Commerce and
special laws, their deficiency shall be supplied
by the provisions of this Code."
Article 1189 of the Civil Code defines the
word "loss" in cases where conditions have
been imposed with the intention of
suspending the efficacy of an obligation to
give. The contract of carriage under
consideration entered into by and
between American Steamship Agencies, Inc.
and the Yau Yue (which later on endorsed the
bill of lading covering the shipment to plaintiff
herein Domingo Ang), is one involving an
obligation to give or to deliver the goods "to
the order of shipper", that is, upon the
presentation and surrender of the bill of
lading. This being so, said article can be applied
to the present controversy, more specifically
paragraph 2 thereof which provides that, ". . .
it is understood that a thing is lost when it
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered."
As defined in the Civil Code and as applied to
Section 3(6), paragraph 4 of the Carriage of
Goods by Sea Act, "loss" contemplates merely
a situation where no delivery at all was made
by the shipper of the goods because the same
had perished, gone out of commerce, or
disappeared in such away that their existence
is unknown or they cannot he recovered. It
does not include a situation where there was
indeed delivery — but delivery to the wrong
person, or a misdelivery, as alleged in the
complaint in this case.
The point that matters here is that the
situation is either delivery or misdelivery, but not
nondelivery. Thus, the goods were either rightly
delivered or misdelivered, but they were not
lost. There being no loss or damage to the goods,
the afore-quoted provision of the Carriage of
Goods by Sea Act stating that "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," does not apply|||
The American Insurance
Company vs Compania Maritima,
G.R. No. L-24515
From NY to Cebu ra unta. Pero gi transship from
Siquijor to Cebu. International Freightage ba
ghpon? Yes.
Facts: Petitioner was an insurance company
who insured the goods of Atlas Mining
Corporation on shipment from New York to the
Philippines with shipping terms CIF Cebu. The
carrier was Macondray & Co. Inc. and the goods
were shipped in the vessel “M/S TOREADOR".
Pursuant to the agreement, when the goods
arrived in Manila on September 18, 1962, they
were then transshipped with “SS Siquijor”, a
vessel owned by respondent Compania Maritima
bound to Cebu. It arrived in Cebu on September
24, 1962.
Upon its arrival in Cebu, the shipper noticed
that two (2) pieces of tractor parts worth
$2,834.88, or P11,063.12at the exchange rate of
P3.9025 were missing. With this, an insurance
claim was filed against petitioner and petitioner
paid the insurance claim.
Since petitioner was then subrogated to the
rights of the shipper, it filed a claim against
respondent on September 24, 1963. Respondent
interposed the defense that there was merely a
transhipment and that the goods were not
delivered to it. On this contention, petitioner
sought to amend its complaint by impleading
Macondray& Co contending that it is necessary
in view of defendant Maritima's assertion and
records tending to show that the lost
merchandise was not delivered to it, contrary to
Macondray's representation, even after the
filing of the original complaint, that the cargo
was delivered to Maritima." The amended
complaint was admitted on November 14, 1964.
Macondray moved to dismiss the amended
complaint against it on the ground that plaintiff's
action had already prescribed under the
provisions of the Carriage of Goods by Sea
Act1 which provides in section 3 (6):
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
shall have been delivered: . . .
Macondray contended that since the amended
complaint in which it was impleaded for the first
time was filed only on November 6, 1964 and
admitted on November 14, 1964, the period of
one year had expired.
Plaintiff counters that the one year prescriptive
period provided for in the Carriage of Goods by
Sea Act does not apply in this case, and instead,
it is the civil code statute of limitations which
should be govern due to the fact that there was
transhipment.
Issue: WON COGSA will apply.
Held: Yes, COGSA applies.
We do not see that the use of the term
"forwarding agent of the shipper" is decisive of
the issue. According to paragraph 4 of the
amended complaint the cargo was loaded on
board the "M/S TOREADOR" in New York,
"freight prepaid to Cebu City . . . pursuant to the
bill of lading No. 13." In other words, the action
is based on the contract of carriage up to the
final port of destination, which was Cebu City,
for which the corresponding freight had been
prepaid.
The transshipment of the cargo from Manila to
Cebu was not a separate transaction from that
originally entered into by Macondray, as general
agent for the "M/S TOREADOR". It was part of
Macondray's obligation under the contract of
carriage and the fact that the transshipment
was made via an inter-island vessel did not
operate to remove the transaction from the
operation of the Carriage of Goods by Sea Act.
Union Carbide Philippines VS
Manila Railroad Co.
Delivery is counted from the moment it is given
to the arrastre operator not the consignee.
Facts:
On December 18, 1961 the vessel Daishin Maru
arrived in Manila with a cargo of 1,000 bags of
synthetic resin consigned to General Base
Metals, Inc. which later sold the cargo to Union
Carbide Philippines, Inc. On the following day,
December 19, that cargo was delivered to the
Manila Port Service in good order and condition
except for twenty- five bags which were in bad
order. On January 20 and February 6 and 8, 1962
eight hundred ninety-eight (898) bags of resin
(out of the 1,000 bags) were delivered by the
customs broker to the consignee. One hundred
two bags were missing. The contents of twenty-
five bags were damaged or pilfered while they
were in the custody of the arrastre operator. 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.
The consignee, through the customs broker, filed
on January 3, 1962 with the Manila Port Service,
as arrastre operator, and the American
Steamship Agencies, Inc., as agent of the carrier,
a provisional claim advising them that the
shipment in question was "shorthanded, short
delivered and/or landed in bad order". As the
claims were not paid, Union Carbide Philippines,
Inc. filed a complaint on December 21, 1962 in
the Court of First Instance of Manila against the
Manila Railroad Company, the Manila Port
Service and the American Steamship Agencies,
Inc. for the recovery of damages amounting to
P7,402.78 as the value of the undelivered 102
bags of resin and the damaged 50 bags plus legal
rate of interest from the filing of the complaint
and P1,000 as attorney's fees.
One was an action in admiralty under the
Carriage of Goods by Sea Act against the carrier's
agent for the recovery of P1,217.56 as the value
of twenty-five bags of resin which were damaged
before they were landed. The other was an
action under the management contract between
the Bureau of Customs and the Manila Port
Service, a subsidiary of the Manila Railroad
Company, for the recovery of P6,185.22 as the
value of the undelivered 102 bags of resin and
twenty-five bags, the contents of which were
damaged or pilfered while in the custody of the
arrastre operator.
The trial court in its decision of January 15, 1964
dismissed the case as to the carrier's agent on
the ground that the action had already
prescribed because it was not "brought within
one year after delivery of the goods", as
contemplated in section 3(6) of the Carriage of
Goods by Sea Act. The one-year period was
counted from December 19, 1961 when the
cargo was delivered to the arrastre operator.
That Appellate Court elevated the case to this
Court because in its opinion the appeal raises
only the legal issue of prescription.
Issue: When should the 1 year prescriptive
period start?
Held:
There is no question that, as shown in the
twenty-five tally sheets, 975 bags of resin were
delivered by the carrier in good order to the
arrastre operator and that only twenty-five (25)
bags were damaged while in the carrier's
custody. The one-year period within which the
consignee should sue the carrier is computed
from "the delivery of the goods or the date
when the goods should have been delivered”
What is the meaning of "delivery" in section 3(6)
of the Carriage of Goods by Sea Act The trial
court construed delivery as referring to the
discharge or landing of the cargo. Union Carbide
contends that "delivery" does not mean the
discharge of goods or the delivery thereof to the
arrastre operator but the actual delivery of the
goods to the consignee by the customs broker.
The carrier contends that delivery means
discharge from the vessel into the custody of the
customs arrastre operator because under
sections 1201 and 1206 of the Tariff and
Customs Code merchandise cannot be directly
delivered by the carrier to the consignee but
should first pass through the customhouse at a
port of entry for the collection of customs duties.
The sensible and practical interpretation is that
delivery within the meaning of section 3(6) of
the Carriage of Goods by Sea Law means delivery
to the arrastre operator. That delivery is
evidenced by tally sheets which show whether
the goods were landed in good order or in bad
order, a fact which the consignee or shipper can
easily ascertain through the customs broker.
To use as basis for computing the one-year
period the delivery to the consignee would be
unrealistic and might generate confusion
between the loss or damage sustained by the
goods while in the carrier's custody and the loss
or damage caused to the goods while in the
arrastre operator's possession.
Under the facts of this case, we held that the
one-year period was correctly reckoned by the
trial court from December 19, 1961, when, as
agreed upon by the parties and as shown in the
tally sheets, the cargo was discharged from the
carrying vessel and delivered to the Manila Port
Service. That one-year period expired on
December 19, 1962. Inasmuch as the action was
filed on December 21, 1962, it was barred by the
statute of limitations. Defendant American
Steamship Agencies, Inc., as agent of the carrier,
has no more liability to the consignee's assignee,
Union Carbide Philippines, Inc., in connection
with the damaged twenty-five bags of resin.
Prescription was duly pleaded by the said
defendant in its answer and motion to dismiss.
That defense was correctly entertained by trial
court.
Under the foregoing contractual provisions, the
action against the arrastre operator to enforce
liability for loss of the cargo or damage thereto
should be filed within one year from the date of
the discharge of the goods or from the date
when the claim for the value of such goods has
been rejected or denied by the arrastre
operator.
However, before such action can be filed a
condition precedent should be complied with
and that is, that a claim (provisional or final) shall
have been previously filed with the arrastre
operator within fifteen days from the date of the
discharge of the last package from the carrying
vessel. In this case, the consignee's customs
broker filed with the Manila Port Service as
provisional claim advising the latter that the
cargo was "short, short delivered and/or landed
in bad order". That claim was filed on January 3,
1962 or on the fifteenth day following December
19, 1961, the date of the discharge of the last
package from the carrying vessel. That claim was
never formally rejected or denied by the Manila
Port Service.
Having complied with the condition precedent
for the filing of a claim within the fifteen- day
period, Union Carbide could file the court action
within one year, either from December 19, 1961
or from December 19, 1962. This second date is
regarded as the expiration of the period within
which the Manila Port Service should have acted
on the claim (Philippine Education Co., Inc. vs.
Manila Port Service, L-24091, 21 SCRA, 174, 178).
In other words, the claimant or consignee has a
two-year prescriptive period, counted from the
date of the discharge of the goods, within which
to file the action in the event that the arrastre
contractor, as in this case, has not rejected nor
admitted liability. Since the action in this case
against the arrastre operator was filed on
December 21, 1962, or within the two-year
period expiring on December 19, 1963, that
action was filed on time. The trial court erred in
dismissing the action against the Manila Port
Service and its principal, the Manila Railroad
Company.
As shown in the statement of facts, the arrastre
operator is responsible for the value of 102 bags
of resin which were not delivered, and twenty-
five bags, which were damaged, or a total of one
hundred twenty-seven bags valued at P6,185.22.
The arrastre operator should pay attorney's fees
to the plaintiff for not having satisfied its plainly
valid, just and demandable claim (Art. 2208, Civil
Code). We fix the attorney's fees and the
litigation expenses in the sum of one thousand
pesos.
Eastern v Great American, G.R.
No. L-37604 (???)
Facts: Petitioner was the owner of the vessel
which shipped one (1) case of impellers for
warman pump from Sydney Australia by Jackson
and Spring (Sydney) Pty. Ltd., the shipper.
The goods were insured with respondent Great
American Insurance Co.
When the ship that was supposed to carry the
shipment arrived in Manila, it was found out that
the shipment was lost.
Respondent then, as insurer paid for the value of
the shipment at P35,921.81. Being subrogated to
the rights of the shipper, respondent filed a claim
against petitioner claiming therein the amount it
paid.
The issue presented at the lower court was
whether petitioners' liability is limited to 100
Sterling or its peso equivalent of P1,544.40 as
stipulated in Clause 17 of the Bill of Lading 1 or
whether petitioners' liability should be $500 or
its peso equivalent in the sum of P3,217.50
pursuant to Sec. 4(5) of the Carriage of Goods by
Sea Act.
Petitioners contend that the first paragraph of
Section 4 (5) of the Carriage of Goods by Sea Act
prescribes a maximum liability of the
vessel/carrier in the amount of $500.00 per
package; that said maximum liability, however, is
not applicable in a shipment wherein the nature
and a higher valuation of the goods are indicated
in the Bill of Lading. Petitioners also contend that
the New Civil Code, particularly Articles 1749 3
and 1750, 4 expressly allow the limitation of the
carrier's liability, provided it is just and
reasonable. Hence, the limitation of petitioners'
liability to 100 Sterling or its peso equivalent as
stipulated in the Bill of Lading is perfectly legal
and binding to the parties.
Private respondent alleges that Article 1749
imposes certain conditions for the validity of a
stipulation limiting the carrier's liability. These
conditions are: (1) it must be in writing, signed
by the shipper or owner; (2) it must be supported
by a valuable consideration other than the
service rendered by the carrier; and (3) it must
be reasonable, just and not contrary to public
policy. Respondent believes that an agreement
limiting the carrier's liability does not per se give
validity thereto but it must be shown, among
others, that the amount agreed upon is just and
reasonable under the circumstances.
Issue: WON Section (5) of COGSA provides
only for a maximum amount and WON a
stipulation limiting the liability is allowed.
Held: There is no inconsistency between Section
4 (5) of the Carriage of Goods by Sea Act and
Clause 17 of the Bill of Lading. The first part of
the provision of Section 4 (5) of the Carriage of
Goods by Sea Act limits the maximum amount
that may be recovered by the shipper in the
absence of an agreement as to the nature and
value of goods shipped. Said provision does not
prescribe the minimum and hence, it could be
any amount which is below $500.00. Clause 17
of the questioned Bill of Lading also provides the
maximum for which the carrier is liable. It
prescribes that the carrier may only be held
liable for an amount not more than 100 Sterling
which is below the maximum limit required in
the Carriage of Goods by Sea Act.
The second paragraph of Section 4 (5) of the
Carriage of Goods by Sea Act prescribing the
maximum amount shall not be less than $500.00
refers to a situation where there is an agreement
other than that set forth in the Bill of Lading
providing for a maximum higher than $500.00
per package. In the case at bar, it is apparent that
there had been no agreement between the
parties, and hence, Clause 17 of the Bill of Lading
shall prevail.
By providing that $500.00 is the maximum
liability, the law does not disallow an agreement
for liability at a lesser amount. L
Significantly, Article 1749 of the New Civil Code
expressly allows the limitation of the carrier's
liability:
"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 rights of the shipper in claiming for the value of
binding." the loss and sought a claim against petitioner.

Among the defences interposed by petitioner

Universal Shipping v IAC, G.R. No. were that respondent has no capacity to sue in
74125 Philippine jurisdiction and that the claim has
The one-year prescription to file suit admits of already prescribed it being filed beyond the one
an exception: if the one-year period is year period.
suspended by express agreement of the parties
(via correspondence).
Issue: WON respondent Alliance Assurance
Facts: On or about March 22, 1974, SEVALCO, has capacity to sue and WON the claim has
Limited, owned and operated by the petitioner, prescribed.
shipped from Rotterdam, Netherlands, to
Bangkok, Thailand, aboard its M/V "TAIWAN",
two (2) cargoes of 50 palletized cartons
Held: On the issue of jurisdiction, we uphold
consisting of 2,000 units of 25-kilogram bags of
the appellate court's ruling that the private
Statex R Brand carton black, with a declared
respondent may sue in Philippine courts upon
gross weight of 53,000 kilos each. They were
the marine insurance policies issued by it abroad
respectively consigned to S. Lersen Company,
to cover international-bound cargoes shipped by
Ltd. and Muang Ngarm Retreads, Ltd., per Bills of
a Philippine carrier, even if it has no license to do
Lading Nos. RB-15 (Exh. A) and RB-16 (Exh. B).
business in this country, for it is not the lack of
Both shipments were insured with the private
the prescribed license (to do business in the
respondent, Alliance Assurance Company, Ltd., a
Philippines) but doing business without such
foreign insurance company domiciled in London,
license, which bars a foreign corporation from
England, which had withdrawn from the
access to our courts.
Philippine market on June 30, 1951 yet.

Anent the issue of prescription of the action

Despite the arrival of the vessel on June 28, 1974
under Section 3(6), Title I, of the Carriage of
at Bangkok, the cargo covered by Bill of Lading
Goods by Sea Act (Commonwealth Act No. 65)
No. RB-15 was not unloaded nor delivered to the
which provides that: cdrep
consignee, S. Lersen Company, Ltd. The
shipment under Bill of Lading No. RB-16 was ". . . the carrier and the ship shall be
delivered to Muang Ngarm Retreads, Ltd. with a discharged from all liability in respect of
total weight shortage of 11,070 kilos because the loss or damage unless suit is brought
cargoes had been either totally or partially within one year after delivery of the
dissolved in saltwater which flooded Hatch No. 2 goods or the date when the goods
of the vessel where they had been stored. should have been delivered. . . ."

Respondent Alliance Assurance Company, the

insurer of the shipment was subrogated to the
This provision of the law admits of an exception:
if the one-year period is suspended by express
agreement of the parties.
The exchange of correspondence between the
parties and or their associates/representatives
(Exhs. R, S, S-1, T, T-1 and T 2) shows that the
parties had mutually agreed to extend the time
within which the plaintiff or its predecessors-in-
interest may file suit until December 27, 1976.
When the complaint was filed on June 25, 1976,
that deadline had not yet expired.
Meyer Steel VS CA
If the suit is filed by the shipper against the
insurance company, can the latter apply
COGSA? No. (Meyer vs. CA)
If the suit is filed by the insurance company
(subrogee) against the carrier, can the latter
apply COGSA? Yes. (Filipino Merchants Case)
Facts:
In 1983, petitioner Hongkong Government
Supplies Department (Hongkong) contracted
petitioner Mayer Steel Pipe Corporation (Mayer)
to manufacture and supply various steel pipes
and fittings. Mayer shipped the pipes and fittings
to Hongkong. Prior to the shipping, petitioner
Mayer insured the pipes and fittings against all
risks with private respondents South Sea Surety
and Insurance Co., Inc. (South Sea) and Charter
Insurance Corp. (Charter). The pipes and fittings
covered by Invoice Nos. MSPC-1014, 1015 and
1025 with a total amount of US$212,772.09
were insured with respondent South Sea, while
those covered by Invoice Nos. 1020, 1017 and
1022 with a total amount of US$149,470.00
were insured with respondent Charter.
Industrial Inspection certified all the pipes and
fittings to be in good order condition before they
were loaded in the vessel. Nonetheless, when
the goods reached Hongkong, it was discovered
that a substantial portion thereof was damaged.
Petitioners filed a claim against private
respondents for indemnity under the insurance
contract. Respondent Charter paid petitioner
Hongkong the amount of HK$64,904.75.
Petitioners demanded payment of the balance of
HK$299,345.30 representing the cost of repair of
the damaged pipes. Private respondents refused
to pay because the insurance surveyor's report
allegedly showed that the damage is a factory
defect.
On April 17, 1986, petitioners filed an action
against private respondents to recover the sum
of HK$299,345.30.
RTC Ruled in favor of petitioner. CA reversed due
to prescription.
Issue: WON the action has already prescribed?
Held: - NO
Respondent court erred in applying Section 3(6)
of the Carriage of Goods by Sea Act.
Section 3(6) of the Carriage of Goods by Sea Act
states that the carrier and the ship shall be
discharged from all liability for loss or damage to
the goods if no suit is filed within one year after
delivery of the goods or the date when they
should have been delivered.
Under this provision, only the carrier's liability is
extinguished if no suit is brought within one year.
But the liability of the insurer is not extinguished
because the insurer's liability is based not on the
contract of carriage but on the contract of
insurance. A close reading of the law reveals that
the Carriage of Goods by Sea Act governs the
relationship between the carrier on the one
hand and the shipper, the consignee and/or the
insurer on the other hand. It defines the
obligations of the carrier under the contract of
carriage. It does not, however, affect the
relationship between the shipper and the
insurer. The latter case is governed by the
Insurance Code.
The Filipino Merchants case is different from the
case at bar. In Filipino Merchants, it was the
insurer which filed a claim against the carrier for
reimbursement of the amount it paid to the
shipper. In the case at bar, it was the shipper
which filed a claim against the insurer. The basis
of the shipper's claim is the "all risks" insurance
policies issued by private respondents to
petitioner Mayer.
The ruling in Filipino Merchants should apply
only to suits against the carrier filed either by the
shipper, the consignee or the insurer. When the
court said in Filipino Merchants that Section 3(6)
of the Carriage of Goods by Sea Act applies to the
insurer, it meant that the insurer, like the
shipper, may no longer file a claim against the
carrier beyond the one-year period provided in
the law. But it does not mean that the shipper
may no longer file a claim against the insurer
because the basis of the insurer's liability is the
insurance contract. An insurance contract is a
contract whereby one party, for a consideration
known as the premium, agrees to indemnify
another for loss or damage which he may suffer
from a specified peril. An "all risks" insurance
policy covers all kinds of loss other than those
due to willful and fraudulent act of the insured.
Thus, when private respondents issued the "all
risks" policies to petitioner Mayer, they bound
themselves to indemnify the latter in case of loss
or damage to the goods insured. Such obligation
prescribes in ten years, in accordance with
Article 1144 of the New Civil Code.
Mitsui VS CA (???)
Facts:
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign
corporation represented in the Philippines by its
agent, Magsaysay Agencies. It entered into a
contract of carriage through Meister Transport,
Inc., an international freight forwarder, with
private respondent Lavine Loungewear
Manufacturing Corporation to transport goods
of the latter from Manila to France. Petitioner
undertook to deliver the goods to France 28 days
from initial loading. However, in Kaoshiung,
Taiwan the goods were not transshipped
immediately, with the result that the shipment
arrived in Le Havre only on November 14, 1991.
Dom: basta late ang arrival.
The consignee allegedly paid only half the value
of the said goods on the ground that they did not
arrive in France until the off season in that
country. The remaining half was allegedly
charged to the account of private respondent
(carrier) which in turn demanded payment from
petitioner through its agent.
As petitioner denied private respondents claim,
the latter filed a case in the Regional Trial Court
on April 14, 1992.
Petitioner filed a motion to dismiss alleging that
the claim against it had prescribed under the
Carriage of Goods by Sea Act.
The Regional Trial Court, as aforesaid, denied
petitioners motion as well as its subsequent
motion for reconsideration. On petition for
certiorari, the Court of Appeals sustained the
trial courts orders
Issue: WON the action has already prescribed?
Held: -NO
In Ang v. American Steamship Agencies, Inc., the
question was whether an action for the value of
goods which had been delivered to a party other
than the consignee is for loss or damage within
the meaning of 3(6) of the COGSA. It was held
that there was no loss because the goods had
simply been misdelivered. Loss refers to the
deterioration or disappearance of goods.
As defined in the Civil Code and as applied to
Section 3(6), paragraph 4 of the Carriage of
Goods by Sea Act, loss contemplates merely a
situation where no delivery at all was made by
the shipper of the goods because the same had
perished, gone out of commerce, or disappeared
in such a way that their existence is unknown or
they cannot be recovered.
The rationale behind limiting the said definitions
to such parameters is not hard to find or fathom.
As this Court held in Ang:
but petitioners potential liability for the
damages it has caused in the general sense and,
as such, the matter is governed by the Civil Code,
the Code of Commerce and COGSA, for the
breach of its contract of carriage with private
respondent.
We conclude by holding that as the suit below is
not for loss or damage to goods contemplated in
3(6), the question of prescription of action is
governed not by the COGSA but by Art. 1144 of
the Civil Code which provides for a prescriptive
period of ten years.

Said one-year period of limitation is designed to

meet the exigencies of maritime hazards. In a
case where the goods shipped were neither lost
nor damaged in transit but were, on the
contrary, delivered in port to someone who
claimed to be entitled thereto, the situation is
different, and the special need for the short
period of limitation in cases of loss or damage
caused by maritime perils does not obtain.

In the case at bar, there is neither deterioration

nor disappearance nor destruction of goods
caused by the carrier’s breach of contract.
Whatever reduction there may have been in the
value of the goods is not due to their
deterioration or disappearance because they
had been damaged in transit.

Indeed, what is in issue in this petition is not the

liability of petitioner for its handling of goods as
provided by 3(6) of the COGSA, but its liability
under its contract of carriage with private
respondent as covered by laws of more general
application.

DOM: WHY?

Precisely, the question before the trial court is

not the particular sense of damages as it refers
to the physical loss or damage of a shippers
goods as specifically covered by 3(6) of COGSA
Liao vs. American President brought suit on May 25, 1948, more than a year
from the receipt of the goods.
Facts: Plaintiff entered into a contract with the
Kent Sales Co., Inc., of New York City, for the Dom: in short, 1 year from December 26,
importation of 2,000 cases of fresh hen eggs to 1946 unta siya ni file. May 25, 1948 naman
be shipped on the S.S. “Marine Leopard”, sailing siya ni file. Prescribed na.
from New York to Manila.

Upon arrival in San Francisco, California, the

Defendant unloaded the 2,000 cases of eggs Issue:
from the S.S. “Marine Leopard”, which resumed WON the action of plaintiff has already
its voyage, arriving in Singapore. The eggs were prescribed
later shipped on another of Defendant’s ships,
the S.S. “General Meigs”, to Manila which WON the action or suit referred to in the
arrived late. provision in question refers only to loss or
damage to the goods in relation to their
Dom: August 7, 1946 dapat maabot sa "loading, handling, storage, carriage, custody,
Manila ang cargoes pero December 26, 1946 care, and discharge", and does not cover or
na niabot. Nia ang sabot sad nila kay walay include loss or damage due to the wrongful and
transshipment. unreasonable delay in their transportation.
Plaintiff’s Argument Defendant’s WON COGSA does not repeal the provisions of
Argument the Code of Civil Procedure on prescription of
That the eggs were That when the eggs actions
improperly discharged were discharged in
in San Francisco, San Francisco, they WON plaintiff’s cause of action accrued, not
exposing the eggs to were immediately upon his receipt of the goods, but upon denial
heat without refrigerated. of his claim for damages by the defendant on
refrigeration, which February 16, 1948.
caused their decay.

The delay could’ve That the delay in the

Ruling:
been prevented transshipment of the
because the eggs cargo was due to the 1) Yes, the action has already prescribed.
could have been strike of the union of Section 3 paragraph 6 of COGSA provides:
transshipped on the longshoremen in the
S.S. “Clovis Victory”, western coast of the "In any event the carrier and the ship shall
also one of United States. be discharged from all liability in respect of
Defendant’s ships, loss or damage unless suit is brought within
that arrived in Manila one year after delivery of the goods or the
on time. date when the goods should have been
As a special defense, defendant claimed that delivered: Provided, That, if a notice of loss
plaintiff's action had prescribed under Section or damage, either apparent or concealed, is
3, Paragraph 6, of the Carriage of Goods by Sea not given as provided for in this section, that
Act since while plaintiff received the goods in fact shall not affect or prejudice the right of
question on December 26, 1946, he filed a claim the shipper to bring suit within one year
with defendant for damages only on July 25, after the delivery of the goods or the date
1947 (denied on February 16, 1948), and
 when the goods should have been
delivered."
Plaintiff-appellant argues that the suit or action
referred to therein is one for "loss or damage,
either apparent or concealed" to the goods, and
not one for a breach of the contract of carriage
on the part of the carrier where it is guilty of
delay in the shipment of the goods, causing
losses and damages to the consignee. Any and
all injury or damages suffered by the goods,
while in transit and in the custody of the carrier,
amounts to a breach of the contract of carriage,
unless due to fortuitous event; for the carrier is
bound to transport the goods safely and so
breaches its contract if it neglects such duty.
Appellant also makes a distinction between
damage to the goods and damages to the
shipper or consignee, and claims that while the
former falls within the prescriptive period in
question, the latter is governed by the
provisions of the New Civil Code on limitation of
actions. We see no difference between the two.
Whatever damage or injury is suffered by the
goods while in transit would result in loss or
damage to either the shipper or the consignee.
As long as it is claimed, therefore, as it is done
here, that the losses or damages suffered by
the shipper or consignee were due to the arrival
of the goods in damaged or deteriorated
condition, the action is still basically one for
damage to the goods, and must be filed within
the period of one year from delivery or receipt,
under the above-quoted provision of the
Carriage of Goods by Sea Act.
2) The argument is untenable.
The obligation of the carrier to carry the goods
naturally includes the duty not to delay their
transportation, so unjustified delay, the carrier
is held liable therefor. Besides, the damages or
losses claimed to have been suffered by
appellant, on account of the unreasonable
delay in the shipment of his cargo, still arose
from the arrival of the goods in decayed and
damaged state, resulting in appellant's inability
to sell them at the price he would have
obtained had they arrived in good condition.
Such alleged negligence of the defendant
company in the custody and handling of
appellant's cargo falls squarely within the
provisions of the Carriage of Goods by Sea Act.
There would be some merit in appellant's
insistence that the damages suffered by him as
a result of the delay in the shipment of his cargo
are not covered by the prescriptive provision of
the Carriage of Goods by Sea Act above referred
to, if such damages were due, not to the
deterioration and decay of the goods while in
transit, but to other causes independent of the
condition of the cargo upon arrival, like a drop
in their market value. But the ultimate
objective of appellant's action being to recover
damages suffered by reason of the decay and
deterioration of his goods while in transit, the
same is still governed by the prescriptive
period of one year under the Carriage of Goods
by Sea Act.
3) In Go Chan & Co. vs. Aboitiz & Co., the SC
ruled that the prescriptive period of one year
established in the Carriage of Goods by Sea Act
modified pro tanto the provisions of Act No.
190 as to goods transported to and from
Philippine ports in foreign trade, the former
being a special act while the latter is a law of
general application.
4) The claim is clearly without merit, for the law
in question explicitly requires that suit must be
brought "within one year after delivery of the
goods or the date when the goods should have
been delivered". Neither could the pendency of
the extra-judicial claim for damages filed with
the defendant company toll or suspend the
running of the period of limitation; for neither
the proposal for arbitration for the fact that
negotiations have been made for the
adjustment of a controversy suspends the
running of the period for prescription, unless
there is an express agreement to the contrary.
PHILIPPINE CHARTER v NEPTUNE
FACTS:
On September 30, 1993, L.T. Garments
Manufacturing Corp. Ltd. 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 (Fukuyama) of No. 7 Jasmin Street,
AUV Subdivision, Metro Manila.
The said cargoes were loaded in
Container No. IEAU-4592750 in good condition
under Bill of Lading No. HKG-0396180.
Fukuyama insured the shipment against all risks
with petitioner Philippine Charter Insurance
Corporation (PCIC) under Marine Cargo Policy
No. RN55581 in the amount of P228,085.
During the course of the voyage, the
container with the cargoes fell overboard and
was lost.
Thus, Fukuyama wrote a letter to
respondent Overseas Agency Services, Inc.
(Overseas Agency), the agent of Neptune Orient
Lines in Manila, and claimed for the value of the
lost cargoes. However, Overseas Agency
ignored the claim. Hence, Fukuyama sought
payment from its insurer, PCIC, for the insured
value of the cargoes in the amount of P228,085,
which claim was fully satisfied by PCIC.
On February 17, 1994, Fukuyama issued
a Subrogation Receipt to petitioner PCIC for the
latter to be subrogated in its right to recover its
losses from respondents.
PCIC demanded from respondents
reimbursement of the entire amount it paid to
Fukuyama, but respondents refused payment.
On March 21, 1994, PCIC filed a
complaint for damages against respondents
with the Regional Trial Court (RTC) of Manila,
Branch 35.
Respondents filed an Answer with
Compulsory Counterclaim denying liability. They
alleged that during the voyage, the vessel
encountered strong winds and heavy seas
making the vessel pitch and roll, which caused
the subject container with the cargoes to fall
overboard. Respondents contended that the
occurrence was 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 held that respondents, as common
carrier, failed to prove that they observed the
required extraordinary diligence to prevent loss
of the subject cargoes in accordance with the
pertinent provisions of the Civil Code.
CA affirmed the RTC Decision with
modification, thus: Neptune and Overseas are
hereby ordered to pay jointly and severally
appellee PCIC P228,085.00, representing the
amount it paid Fukuyama.
Neptune moved for reconsideration of
the Decision of the CA arguing, among others,
that their liability was only US$1,500 or US$500
per package under the limited liability provision
of the Carriage of Goods by Sea Act (COGSA).
CA found the said argument of
respondents to be meritorious. The motion is
partly granted in the sense that appellants shall
be liable to pay appellee PCIC 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 or not the COURT OF APPEALS ERRED
IN AWARDING RESPONDENTS DAMAGES
SUBJECT TO THE US$500 PER PACKAGE
LIMITATION?
RULING:
During the course of voyage, high
winds and heavy seas were encountered
causing the ship to roll and pitch heavily. The
course and speed was altered to ease motion
of the vessel, causing delay and loss of time on
the voyage.
SURVEYORS REMARKS:
In view of the foregoing incident, we
are of the opinion that the shipment of 3 cases
of Various Warp Yarn on Returnable Beams
which were containerized onto 40 feet LCL (no.
IEAU-4592750) and fell overboard the subject
vessel during heavy weather is an "Actual Total
Loss"
As regards the issue on the limited
liability of respondents, the Court upholds the
decision of the CA.
Since the subject cargoes were lost
while being transported by respondent
common carrier from Hong Kong to the
Philippines, Philippine law applies pursuant to
the Civil Code which provides:
Art. 1753. The law of the country to
which the goods are to be transported shall
govern the liability of the common carrier for
their loss, destruction or deterioration.
The rights and obligations of
respondent common carrier are thus governed
by the provisions of the Civil Code, and the
COGSA, which is a special law, applies
suppletorily.
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.
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.
Such limited-liability clause has also
been consistently upheld by this court in a
number of cases. Thus, in Sea-Land Service, Inc.
vs. Intermediate Appellate Court, we ruled:
'It seems clear that even if said section
4 (5) of the Carriage of Goods by Sea Act did not
exist, the validity and binding effect of the
liability limitation clause in the bill of lading
here are nevertheless fully sustainable on the
basis alone of the cited Civil Code Provisions.
The stipulation is just and reasonable is
arguable from the fact that it echoes Art. 1750
itself in providing a limit to liability only if a
greater value is not declared for the shipment in
the bill of lading. To hold otherwise would
amount to questioning the justness and fairness
of the law itself. But over and above that
consideration, the just and reasonable
character of such stipulation is implicit in it
giving the shipper or owner the option of
avoiding accrual of liability limitation by the
simple and surely far from onerous expedient
of declaring the nature and value of the
shipment in the bill of lading.'
 The CA, therefore, did not err in
holding respondents liable for damages to
petitioner subject to the US$500 per package
limited- liability provision in the bill of lading.
Philippines First v. Wallem
FACTS: October 2, 1995, Anhui Chemicals Import
& Export Corp. loaded on board M/S Offshore
Master a shipment consisting of 10,000 bags of
sodium sulphate anhydrous, complete and in
good order for transportation to and delivery to
the port of Manila for consignee, L.G. Atkimson
Import-Export, covered by a Clean Bill of Lading.
The BOL reflects the gross weight of the total
cargo at 500,200 kilograms. The owner and/or
charterer of M/V Offshore Master is unknown
while the shipper of the shipment is Shanghai
Fareast Ship Business Company. Both are foreign
firms doing business in the Philippines, thru its
local ship agent, respondent Wallem Philippines.
October 16, 1995, the shipment arrived at the
port of Manila and was subsequently discharged.
It was disclosed during the discharge that 2,426
bags were in bad order and condition, having
sustained various degrees of spillages and losses.
This is evidenced by the Turn Over Survey of Bad
Order Cargoes of the arrastre operator, Asian
Terminals. The bad state of the bags is also
evinced by the arrastre operator’s request for
bad order survey.
Asia Star Freight Services undertook the delivery
of the shipment from pier to consignee’s
warehouse in Quezon City, while the final
inspection was conducted jointly by the cargo
surveyor and the consignee’s representative.
During unloading, it was found and noted that
the bags had been discharged in damaged and
bad order condition. It was discovered that
63,065 kgs of the shipment had sustained
unrecovered spillages, while 58,235 kgs had
been exposed and contaminated, resulting in
losses due to depreciation and downgrading.
April 26, 1996, the consignee filed a formal claim
with Wallem for the value of the damaged
shipment, to no avail. Since the shipment was
insured with petitioner Philippines First
Insurance against all risks in the amount of
P2,470,213.50, the consignee filed a formal
claim with petitioner for the damage and losses
sustained by the shipment. After evaluating the
invoices, the turn-over survey, the bad order
certificate and other documents, petitioner
found the claim to be in order and compensable
under the marine insurance policy.
Consequently, petitioner paid the consignee the
sum of P397,879.69 and the latter signed a
subrogation receipt.
Petitioner, in the exercise of its right of
subrogation, sent a demand letter to Wallem for
recovery of the amount paid. However, despite
receipt of the letter, Wallem did not respond to
the claim, thus petitioner instituted an action for
damages before the RTC.
RTC ruled in favor of petitioners, ordering
respondents to pay. The CA reversed and set
aside the RTC’s decision. (RTC ruled that it was
arrastre operator’s fault, and that arrastre
operator should be solidarily liable with shipping
company. CA held that there is no solidary
liability because it was established that the
damages were caused by the arrastre operator)
ISSUE: 1. WON CA erred in not holding that as a
common carrier, the carrier’s duties extend to
the obligation to safely discharge the cargo - YES
2. WON the carrier should be held liable for the
cost of the damaged shipment - YES
3. WON Wallem’s failure to answer the extra
judicial demand by petitioner for the cost of the
lost/damaged shipment is an implied admission
of the former’s liability for said goods - NO
HELD: Common carriers, from the nature of
their business and for reasons of public policy,
are bound to observe extraordinary diligence
in the vigilance over the goods transported by
them. Subject to certain exceptions
enumerated under Article 1734 of the NCC,
common carriers are responsible for the loss,
destruction, or deterioration of the goods. The
extraordinary responsibility of the common
carriers last from the time the goods are
unconditionally placed in the possession of,
and received by the carrier for transportation
until the same are delivered, actually or
constructively, by the carrier to the consignee,
or to the person who has a right to receive
them.
For Marine vessels, Article 619 of the Code of
Commerce provides that the ship captain is
liable for the cargo from the time it is turned
over to him at the dock or afloat alongside the
vessel at the port of loading, until he delivers it
on the shore or on the discharging wharf at the
port of unloading, unless agree otherwise.
Lastly, Section 2 of the COGSA provides that
under every contract of carriage of goods by
sea, the carrier in relation to the loading,
handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the
rights and immunities set forth in the Act.
Section 3(2) thereof then states that among the
carriers’ responsibilities are to properly and
carefully load, handle, stow, carry, keep, care
for, and discharge the goods carried.
On the other hand, the functions of an arrastre
operator involve the handling of cargo
deposited on the wharf or between the
establishment of the consignee or shipper and
the ship’s tackle. Being the custodian of the
goods discharged from a vessel, an arrastre
operator’s duty is to take good care of the
goods and to turn them over to the party
entitled to their possession. Handling cargo is
mainly the arrastre operator’s principal work so
its drivers/operators or employees should
observe the standards and measures necessary
to prevent losses and damage to shipments
under its custody.
It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain
under the custody of the carrier. In the instant
case, the damage or losses were incurred
during the discharge of the shipment while
under the supervision of the carrier.
Consequently, the carrier is liable for the
damage or losses caused to the shipment.
As for the 3rd issue, Wallem’s failure to respond
to its demand letter does not constitute an
implied admission of liability. Accoridng to
Justice Oliver Wendell Holmes: “A failure to
answer such adverse assertions in the absence
of further circumstances making an answer
requisite or natural has no effect as an
admission.”
UCPB GENERAL INSURANCE v
ABOITIZ SHIPPING CORP.
Under Code of Commerce, notice must be given
within the period. It is mandatory. Under
COGSA, it is not.
The presence of Eagle Express, the agent of the
freight consolidator and not the carrier, in the
joint inspection does not mean that they are
exempt from the notice requirement since
COGSA requires that it must be the carrier who
inspects (or at least carrier’s agent)
FACTS: 3 units of waste water treatment
plant with accessories were purchased
by SMC from Super Max Engineering
Enterprises, Co., Ltd. of Taipei, Taiwan.
The goods came from USA and arrived at
the port of Manila on board MV
"SCANDUTCH STAR". The same were
then transported to Cebu on board MV
"ABOITIZ SUPERCON II". After its arrival
at the port of Cebu and clearance from
the Bureau of Customs, the goods were
delivered to and received by SMC at its
plant site. It was then discovered that
one electrical motor of DBS Drive Unit
was damaged.
Plaintiff-appellee filed a Complaint as
subrogee of SMC seeking to recover from
defendants the amount it had paid SMC.
Plaintiff-appellee moved to admit its
Amended Complaint whereby it impleaded
East Asiatic Co. Ltd. as among the defendants
for being the "general agent" of DAMCO.
Accordingly, the court a quo noted the
dismissal of the complaint against defendant
EAST on the ground of prescription (24hr
notice req). Thus, trial ensued with respect to
the remaining defendants.
Lower court declared DAMCO
Intermodal Systems, Inc., Eagle Express
Lines, Inc. and defendant Aboitiz
Shipping solidarily liable to plaintiff-
subrogee for the damaged shipment.
The appellate court reversed the decision
and ruled that UCPB's right of action against
respondents did not accrue because UCPB
failed to file a formal notice of claim within 24
hours from (SMC's) receipt of the damaged
merchandise as required under Art. 366 of the
Code of Commerce.
ISSUE: Whether the formal notice of claim
within 24hrs is a condition precedent for the
accrual of a right of action against the carrier.
RULING: YES
UCPB claims that under the 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.
Interestingly enough, UCPB itself has
revealed that when the shipment was
discharged from MV SCANDUTCH in Manila
in the presence of an Eagle Express
representative, the cargo had already been
found damaged. In fact, a request for bad
order survey was then made and a turnover
survey of bad order cargoes was issued,
pursuant to the procedure in the discharge
of bad order cargo.
In charging Aboitiz with liability for
the damaged cargo, the trial court condoned
UCPB's wrongful suit against Aboitiz to
whom the damage could not have been
attributable since there was no evidence
presented that the cargo was further
damaged during its transshipment to Cebu.
Even by the exercise of extraordinary
diligence, Aboitiz could not have undone
the damage to the cargo that had already
been there when the same was shipped on
board its vessel.
That said, it is nonetheless necessary
to ascertain whether any of the remaining
parties may still be held liable by UCPB.
ART 366 of the Code of Commerce
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 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, and to give it an opportunity to
examine the nature and extent of the injury.
This protects the carrier by affording it an
opportunity to make an investigation of a
claim while the matter is still fresh and easily
investigated so as to safeguard itself from
false and fraudulent claims.
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.
The shipment in this case 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 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.
But what of the damage already
discovered in the presence of Eagle Express's
representative at the time the shipment was
discharged in Manila?
UCPB seizes upon the last paragraph
of Sec 3(6) of COGSA which dispenses with
the written notice if the state of the goods
has been the subject of a joint survey which,
in this case, was the opening of the shipment
in the presence of an Eagle Express
representative. 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.
Wallem Philippines Shipping v SR
Farms
FACTS: Continental Enterprises loaded on board
the vessel at Bedi Bunder, India, a shipment of
Indian Soya Bean Meal, for transportation and
delivery to Manila, with plaintiff (herein
respondent) as consignee/notify party. The said
shipment is said to weigh 1,100 metric tons and
covered by a bill of lading. The vessel is owned
and operated by defendant Conti-Feed, with
defendant (herein petitioner) Wallem as its ship
agent.
Thereafter, the shipment was discharged and
transferred into the custody of the receiving
barges. A cargo check of the subject shipment
was made where it was discovered that there
was an estimated shortage of 80.467 metric
tons.
Respondent then filed a Complaint for damages
against Conti-Feed. Thereafter, it filed an
Amended Complaint which impleaded Wallem
Philippines, petitioner herein. The RTC dismissed
the complaint but was reversed by the CA hence
the case at bar.
Petitioner’s Arguments: Petitioner claims that
pursuant to Section 3 (6) of the COGSA,
respondent should have filed its Notice of Loss
within 3 days from delivery. It asserts that
respondent failed to file any written notice of
claim. Petitioner also avers that, pursuant to the
same provision of the COGSA, respondents claim
had already prescribed because the complaint
for damages was filed more than one year after
the shipment was discharged.
ISSUE: WON the claim was timely filed – NO. It
was not timely filed
RULING: With respect to the prescriptive period
involving claims arising from shortage, loss of or
damage to cargoes sustained during transit, the
law that governs the instant case is the Carriage
of Goods by Sea Act (COGSA), Section 3 (6) of
which provides:
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 described in the
bill of lading. If the loss or damage is not
apparent, the notice must be given
within 3 days of delivery. Xxx
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 1 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 1 year after the delivery of the
goods or the date when the goods should
have been delivered.
Under Section 3 (6) of the COGSA, notice of loss
or damages must be filed within three days of
delivery. Admittedly, respondent did not comply
with this provision.
Under the same provision, however, a failure to
file a notice of claim within 3 days will not bar
recovery if a suit is nonetheless filed within one
year from delivery of the goods or from the date
when the goods should have been delivered.
There is no dispute that the vessel carrying the
shipment arrived at the Port of Manila on April
11, 1992 and that the cargo was completely
discharged therefrom on April 15, 1992.
However, respondent erred in arguing that the
complaint for damages, insofar as the petitioner
is concerned, was filed on March 11, 1993.
As the records would show, petitioner was not
impleaded as a defendant in the original
complaint filed on March 11, 1993. It was only
on June 7, 1993 that the Amended Complaint,
impleading petitioner as defendant, was filed.
The settled rule is that the filing of an amended
pleading does not retroact to the date of the
filing of the original; hence, the statute of
limitation runs until the submission of the
amendment.
It is true that, as an exception, this Court has held
that an amendment which merely supplements
and amplifies facts originally alleged in the
complaint relates back to the date of the
commencement of the action and is not barred
by the statute of limitations which
expired after the service of the original
complaint. The exception, however, would not
apply to the party impleaded for the first time
in the amended complaint.
In the instant case, petitioner was only
impleaded in the amended Complaint of June 7,
1993, or 1 year, 1 month and 23 days from April
15, 1992, the date when the subject cargo was
fully unloaded from the vessel. Hence, reckoned
from April 15, 1992, the one-year prescriptive
period had already lapsed.
UNSWORTH TRANSPORT
INTERNATIONAL v. CA
One Liner: Liability of common carriers for any
loss/damage to or in connection with
transportation of goods shall not exceed $500
per package unless shipper declares a higher
amount. [COGSA, Section 4(5)]
FACTS:
Sylvex Purchasing Corp. delivered to UTI
a shipment of 27 drums of various raw materials
for pharmaceutical manufacturing on Aug. 31,
1992. UTI issued a Bill of Lading covering the said
shipment. The shipment was insured with
private respondent Pioneer Insurance and
Surety Corp. in favor of Unilab against all risk of
P1,779,664.77.
The shipment arrived at the port of
Manila on Sept. 30, 1992 and on Oct. 6, 1992,
petitioner received the shipment in its
warehouse. On Oct. 9, 1992, Oceanica Cargo
Marine Surveyors Corp. (OCMSC) conducted a
stripping survey of the shipment located in the
petitioner’s warehouse. The results shows that
everything is in good order condition and
properly sealed except on the 1-steel drum STC
Vitamin B Complex Extract which has a cut/hole
on side, with approximate spilling of 1%.
On Oct. 15, 1992, arrastre Jardine Davies
issued a gate pass which stated the “22 drums”
raw materials were noted to be complete and in
good order. The shipment arrived at the Unilab’s
warehouse and was immediately surveyed by an
independent surveyor, J.G Bernas Adjusters &
Surveyors. The result shows that; (1) 1-p/bag
torn on side contents partly spilled, (2) 1-s/drum
#7 punctured and retaped on bottom side
lacking and (3) 5-drims shortship/short delivery.
The same independent surveyor conducted final
inspection surveys which yielded the same
results.
Unilab filed a formal claim for the
damage against the private respondent and UTI.
UTI denied liability on the basis of the gate pass
issued by Jardine that the goods were complete
and in good condition. Private Repondent paid
the claim and by virtue of the Loss and
Subrogation Receipt, filed a complaint for
damages against APL, UTI and petitioner with the
RTC.
RTC rendered a decision in favor of
private respondent. On appeal, the CA affirned
the decision of the RTC.
Issue:
1. Whether or not petitioner UTI is a
common carrier? YES, Freight
forwarders become common carriers
where it contracts to deliver goods to
their destination instead of merely
arranging for their transportation.
2. Whether or not private respondent
sufficiently established the alleged damage
to its cargo? NO, it failed to declare a higher
valuation of its goods.
1. Held: UTI is a common carrier.
Admittedly, petitioner is a freight forwarder. The
term freight forwarder" refers to a firm holding
itself out to the general public (other than as a
pipeline, rail, motor, or water carrier) to provide
transportation of property for compensation
and, in the ordinary course of its business, (1) to
assemble and consolidate, or to provide for
assembling and consolidating, shipments, and to
perform or provide for break-bulk and
distribution operations of the shipments; (2) to
assume responsibility for the transportation of
goods from the place of receipt to the place of
destination; and (3) to use for any part of the
transportation a carrier subject to the federal
law pertaining to common carriers.
A freight forwarders liability is limited to
damages arising from its own negligence,
including negligence in choosing the carrier;
however, where the forwarder contracts to
deliver goods to their destination instead of
merely arranging for their transportation, it
becomes liable as a common carrier for loss or
damage to goods. A freight forwarder assumes
the responsibility of a carrier, which actually
executes the transport, even though the
forwarder does not carry the merchandise itself.
It is undisputed that UTI issued a bill of lading in
favor of Unilab. Pursuant thereto, petitioner
undertook to transport, ship, and deliver the 27
drums of raw materials for pharmaceutical
manufacturing to the consignee.
A bill of lading is a written acknowledgement of
the receipt of goods and an agreement to
transport and to deliver them at a specified place
to a person named or on his or her order. It
operates both as a receipt and as a contract. It is
a receipt for the goods shipped and a contract to
transport and deliver the same as therein
stipulated.
Undoubtedly, UTI is liable as a common carrier.
Common carriers, as a general rule, are
presumed to have been at fault or negligent if
the goods they transported deteriorated or got
lost or destroyed. That is, unless they prove that
they exercised extraordinary diligence in
transporting the goods. In order to avoid
responsibility for any loss or damage, therefore,
they have the burden of proving that they
observed such diligence.[27] Mere proof of
delivery of the goods in good order to a common
carrier and of their arrival in bad order at their
destination constitutes a prima facie case of fault
or negligence against the carrier. If no adequate
explanation is given as to how the deterioration,
loss, or destruction of the goods happened, the
transporter shall be held responsible.
2. Held: No
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.
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.
SC rejected CA’s contention that COGSA
limitation of $500 per package should not apply
considering that a higher value was declared
pursuant to the letter of credit and the pro forma
invoice. Insertion of the words "L/C No. LC No.
1-187-008394/ NY 69867 covering shipment of
raw materials for pharmaceutical Mfg. x x x"
cannot be the basis of petitioner's liability and
invoice number does not in itself sufficiently and
convincingly show that petitioner had
knowledge of the value of the cargo.
In the present case, the shipper did not declare
a higher valuation of the goods to be shipped
(meaning, letters of credit and letters of
invoice are not enough to establish the value
of the goods; it should be stated in the bill of
lading). Petitioners liability should be limited to
$500 per steel drum. In this case, as there was
only one drum lost, private respondent is
entitled to receive only $500 as damages for the
loss.
New World vs Seaboard (insurer
of new world)
FACTS: Petitioner New World International
Development Inc. (New World) bought from
DMT Corporation through its agent, Advatech
Industries, Inc. three emergency generator
sets worth US$721,500.00.
DMT shipped the generator sets from
Wisconsin, United States, and at Oakland,
California, it was loaded on S/S California
Luna V59, owned and operated by NYK Fil-
Japan Shipping Corporation (NYK) for delivery
to petitioner New World in Manila. NYK issued
a bill of lading, declaring that it received the
goods in good condition.
NYK unloaded the shipment in Hong
Kong and transshipped it to S/S ACX Ruby V/72
that it also owned and operated. On its journey
to Manila, however, ACX Ruby encountered
typhoon Kadiang whose captain filed a sea
protest on arrival at the Manila South Harbor
on October 5, 1993 respecting the loss and
damage that the goods on board his vessel
suffered.
Marina Port Services, Inc. (Marina),
the Manila South Harbor arrastre or cargo-
handling operator, received the shipment on
October 7, 1993. Upon inspection of the three
container vans separately carrying the
generator sets, two vans bore signs of external
damage while the third van appeared
unscathed. Eventually, on October 20, 1993
customs authorities allowed petitioner's
customs broker, Serbros Carrier Corporation
(Serbros), to withdraw the shipment.
An examination of the three generator
sets in the presence of petitioner New World's
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 longer be
repaired. New World then demanded
recompense for its loss from respondents NYK,
DMT, Advatech, LEP Profit, LEP International
Philippines, Inc, Marina, and Serbros. While
LEP and NYK acknowledged receipt of the
demand, both denied liability for the loss.
Since Seaboard covered the goods
with a marine insurance policy,
petitioner New World sent it a formal claim
dated November 16, 1993. Replying on
February 14, 1994, Seaboard required
petitioner New World to submit to it an
itemized list of the damaged units, parts, and
accessories, with corresponding values, for the
processing of the claim. But
petitioner New World did not submit what
was required of it, insisting that the insurance
policy did not include the submission of such a
list in connection with an insurance claim.
Reacting to this, Seaboard refused to process
the claim.
On October 11, 1994
petitioner New World filed an action for
specific performance and damages against all
the respondents.
ISSUE: WoN the filing of the claim has already
prescribed under the Carriage of Goods by Sea
Act (COGSA)? –NO, the delay was the insurer’s
fault.
RULING: Regarding prescription of claims,
Section 3 (6) of the COGSA provides that the
carrier and the ship shall be discharged from
all liability in case of loss or damage unless the
suit is brought within one year after delivery of
the goods or the date when the goods should
have been delivered.
 The last day for filing such a suit fell on
October 7, 1994. The record shows that
petitioner New World filed its formal claim for
its loss with Seaboard, its insurer, a remedy it
had the right to take, as early as November 16,
1993 or about 11 months before the suit
against NYK would have fallen due.
In the ordinary course,
if Seaboard had processed that claim and paid
the same, Seaboard would have been
subrogated to petitioner New World's right to
recover from NYK. And it could have then filed
the suit as a subrogee. But, as discussed
above, Seaboard made an unreasonable
demand on February 14, 1994 for an itemized
list of the damaged units, parts, and
accessories, with corresponding values when it
appeared settled that New World's loss was
total and when the insurance policy did not
require the production of such a list in the
event of a claim.
Besides, when
petitioner New World declined to comply with
the demand for the list, Seaboard against
whom a formal claim was pending should not
have remained obstinate in refusing to process
that claim. It should have examined the same,
found it unsubstantiated by documents if that
were the case, and formally rejected it. That
would have at least given
petitioner New World a clear signal that it
needed to promptly file its suit directly against
NYK and the others. Ultimately, the fault for
the delayed court suit could be brought
to Seaboard's (insurer) doorstep.
Section 241 of the Insurance
Code provides that no insurance company
doing business in the Philippines shall refuse
without just cause to pay or settle claims
arising under coverages provided by its
policies. And, under Section 243, the insurer
has 30 days after proof of loss is received and
ascertainment of the loss or damage within
which to pay the claim. If such ascertainment
is not had within 60 days from receipt of
evidence of loss, the insurer has 90 days to pay
or settle the claim. And, in case the insurer
refuses or fails to pay within the prescribed
time, the insured shall be entitled to interest
on the proceeds of the policy for the duration
of delay at the rate of twice the ceiling
prescribed by the Monetary Board.
Seaboard already incurred delay when
it failed to settle petitioner New World's claim
as Section 243 required. Under Section 244,
a prima facie evidence of unreasonable delay
in payment of the claim is created by the
failure of the insurer to pay the claim within
the time fixed in Section 243.
PAKAPIN NA ISSUE/S: 1) The issue regarding
which of the parties to a dispute incurred
negligence is factual and is not a proper
subject of a petition for review
on certiorari. And petitioner New World has
been unable to make out an exception to
this rule. Consequently, the Court will not
disturb the finding of the RTC and CA, that
NYK is liable.
2) New World complied with the
documentary requirements evidencing
damage to its generator sets. The marine
open policy that Seaboard issued
to New World was an all-risk policy and
Seaboard was unable to show that
petitioner New World's loss or damage fell
within some or one of the enumerated
exceptions. Further, it appears from the
exchanges of communications
between Seaboard and Advatech that
submission of the requested itemized listing
was incumbent on the latter as the seller
DMT's local agent.
Petitioner New World should not be made
to suffer for Advatech's shortcomings.
INSURANCE COMPANY OF
NORTH AMERICA VS. ASIAN
TERMINALS INC
Doctrine: The term “carriage of goods” in the
Carriage of Goods by Sea Act (COGSA) covers the
period from the time the goods are loaded to the
vessel to the time they are discharged therefrom.
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.
Facts:
On November 2002, Macro-Lite Corporation
shipped to San Miguel Corporation (SMC),
through M/V DIMI P vessel, 185 packages (or
231,000 sheets) of electrolytic tin free steel,
complete and in good order condition and
covered by Bill of Lading. The shipment had a
declared value of US $169,850.35 and was
insured with petitioner against all risks under its
marine policy.
The carrying vessel arrived at the port of Manila
and when the shipment was discharged
therefrom, it was noted than 7 packages were
damaged and in bad order. The shipment was
then turned over to the custody of respondent
(as arrastre operator) for storage and
safekeeping pending its withdrawal by the
consignee’s authorized customs broker, which
was later withdrawn by the customs broker from
custody of the respondent.
An examination report was written and showed
that an additional 5 packages were found to be
damaged and in bad order.
Consignee, SMC, filed separate claims against
respondent and petitioner for the damage of
11,200 sheets of electrolytic tin free steel.
Petitioner, as insurer of the cargo, paid the
consignee the amount of Php 431,592.14 for the
damage caused to the shipment. Thereafter,
petitioner formally demanded reparation
against respondent and as respondent failed to
satisfy its demand, petitioner filed an action for
damages with the RTC.
The trial court dismissed the complaint because
it was already barred by the statute of
limitations. It held that COGSA, embodied in CA
65, applies to this case since the goods were
shipped from a foreign port to the Philippines.
Under the said law, particularly paragraph 4,
Section 3(6), 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.
Note:
The shipment was delivered to
the consignee on 22, 23 and 29
of November 2002. The plaintiff
took almost a year to approve
and pay the claim of its assured,
San Miguel, despite the fact that
it had initially received the
latter's claim as well as the
inspection report and survey
report of McLarens as early as
January 2003. The
assured/consignee had only
until November of 2003 within
which to file a suit against the
defendant.
However, the case was filed only
on September 7, 2005 or almost
three (3) years from the date the
subject shipment was delivered
to the consignee. The plaintiff,
as insurer of the shipment which
has paid the claim of the
insured, is subrogated to all the
rights of the said insured in
relation to the reimbursement
of such claim. As such, the
plaintiff cannot acquire better
rights than that of the insured.
 Thus, the plaintiff has no one
but itself to blame for having
acted lackadaisically on San
Miguel's claim.
Petitioner’s MR was denied by the trial court. It
submits that the trial court’s dismissal of the
complaint on the ground of prescription under
the COGSA is legally erroneous. It 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.
Moreover, petitioner contends that the term
carriage of goods in the COGSA covers the period
from the time the goods are loaded to the vessel
to the time they are discharged therefrom. It
points out that it sued respondent only for the
additional five (5) packages of the subject
shipment that were found damaged while in
respondents custody, long after the shipment
was discharged from the vessel.
Issues:
(1) WON the one-year prescriptive period for
filing a suit under the COGSA applies to this
action for damages against respondent
arrastre operator;
(2) WON petitioner is entitled to recover actual
damages in the amount of P431,592.14
from respondent.
Ruling:
(1) NO. The COGSA was accepted to be
made applicable to all contracts for the
carriage of goods by sea to and from the
Philippine ports in foreign trade by
virtue of CA 65. The term “carriage of
goods” covers the period from the time
when the goods are loaded to the time
when they are discharged from the ship;
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 operator is
not covered by the COGSA.
The prescriptive period for filing an action for the
loss or damage of the goods under the COGSA is
found in paragraph 6, Section 3. It states that:
“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.”
However, the COGSA does not mention that an
arrastre operator may invoke the prescriptive
period of 1 year; hence, it does not cover the
arrastre operator.
In fact, respondent arrastre operator’s
responsibility and liability for losses and
damages are set forth in Section 7.01 of the
Contract for Cargo Handling Services executed
between the Philippine Ports Authority and
Marina Ports Services, Inc. (now Asian Terminals,
Inc.), which explicitly provides that the
consignee has a period of thirty (30) days from
the date of delivery of the package to the
consignee within which to request a certificate
of loss from the arrastre operator. From the date
of the request for a certificate of loss, the
arrastre operator has a period of fifteen (15)
days within which to issue a certificate of non-
delivery/loss either actually or constructively.
Moreover, from the date of issuance of a
certificate of non-delivery/loss, the consignee
has fifteen (15) days within which to file a formal
claim covering the loss, injury, damage or non-
delivery of such goods with all accompanying
documentation against the arrastre operator.
Here, the verification and ascertainment of
liability by respondent ATI had been
accomplished within thirty (30) days from the
date of delivery of the package to the consignee
and within fifteen (15) days from the date of
issuance by the Contractor (respondent ATI) of
the examination report on the request for bad
order survey. Although the formal claim was
filed beyond the 15-day period from the issuance
of the examination report on the request for bad
order survey, the purpose of the time limitations
for the filing of claims had already been fully
satisfied by the request of the consignees broker
for a bad order survey and by the examination
report of the arrastre operator on the result
thereof, as the arrastre operator had become
aware of and had verified the facts giving rise to
its liability. Hence, the arrastre operator suffered
no prejudice by the lack of strict compliance with
the 15-day limitation to file the formal
complaint.
(2) YES. Petitioner is entitled to actual
damages in the amount of P164,428.76
for the four (4) skids damaged while in
the custody of respondent.
It should be noted that the petitioner, who filed
this action for damages for the five (5) skids that
were damaged while in the custody of
respondent, was not forthright in its claim, as it
knew that the damages it sought in the amount
of P431,592.14, which was based on the
Evaluation Report of its adjuster/surveyor
covered nine (9) skids. Based on the same
Evaluation Report, only four of the nine skids
were damaged in the custody of respondent.
Petitioner should have been straightforward
about its exact claim, which is borne out by the
evidence on record, as petitioner can be granted
only the amount of damages that is due to it.
WHEREFORE, the petition is GRANTED.
BENJAMIN CUA (CUA UlAN TEK),
VS WALLEM PHILIPPINES
SHIPPING, INC. and ADVANCE
SHIPPING CORPORATION, G.R.
No. 171337
On November 12, 1990, Cua filed a civil action for
damages against Wallem (local agent) and
Advance Shipping (a foreign corporation, the
owner and manager of M/V Argo Trader that
carried the cargo) before the RTC of Manila. Cua
sought the payment of P2,030,303.52 for
damage to 218 tons and for a shortage of 50 tons
of shipment of Brazilian Soyabean consigned to
him, as evidenced by Bill of Lading No. 10. He
claimed that the loss was due to the
respondents’ failure to observe extraordinary
diligence in carrying the cargo.
Advance Shipping filed a motion to dismiss the
complaint, assailing the RTC’s jurisdiction over
Cua’s claim; it argued that Cua’s claim should
have first been brought to arbitration. Cua
opposed Advance Shipping’s argument; he
contended that he, as a consignee, was not
bound by the Charter Party Agreement, which
was a contract between the ship owner
(Advance Shipping) and the charterers. The RTC
initially deferred resolving the question of
jurisdiction until after trial on the merits,8 but
upon motion by Advance Shipping,9 the RTC
ruled that Cua was not bound by the arbitration
clause in the Charter Party Agreement.
In the meantime, 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 – more than one
year than the period allotted under the COGSA.
Since the action was filed beyond the one year
prescriptive period, Wallem argued that Cua’s
action has been barred.
Cua filed an opposition to Wallem’s motion to
dismiss, denying the latter’s claim of
prescription. Cua referred to the August 10,
1990 telex message sent by Mr. A.R. Filder of
Thomas Miller, manager of the UKP&I Club,
which stated that Advance Shipping agreed to
extend the commencement of suit for 90 days,
from August 14, 1990 to November 12, 1990; the
extension was made with the concurrence of the
insurer of the vessel, the UK P&I Club.
On February 11, 1992, Wallem filed an omnibus
motion, withdrawing its motion to dismiss and
adopting instead the arguments in Advance
Shipping’s motion to dismiss. It made an express
reservation, however, that it was not waiving
“the defense of prescription and will allege as
one of its defenses, such defense of prescription
and/or laches in its Answer should this be
required by the circumstances.
An order dated June 5, 1992, the RTC resolved
that “the Court need not act on the Motion to
Dismiss filed by the defendant Wallem
Philippines Shipping, Inc.[,]” and required the
defendants therein to file their Answer.
The respondents filed an appeal with the CA,
insisting that Cua’s claim is arbitrable and has
been barred by prescription and/or laches. The
CA found the respondents’ claim of prescription
meritorious after finding that the August 10,
1990 telex message, extending the period to file
an action, was neither attached to Cua’s
opposition to Wallem’s motion to dismiss, nor
presented during trial. The CA ruled that there
was no basis for the RTC to conclude that the
prescriptive period was extended by the parties’
agreement. Hence, it set aside the RTC decision
and dismissed Cua’s complaint. Cua filed a
motion for reconsideration of the CA decision,
which was denied by the CA in a resolution dated
January 31, 2006. Cua thus filed the present
petition to assail the CA rulings.
ISSUES:
Whether or not Cua’s claim for payment of
damages against the respondents has
prescribed.
RULING:
The Court finds that Cua timely filed his claim
before the trial court.
The Court, therefore, need not resolve the
question of whether Wallem actually waived the
defense of prescription; an inquiry into this
question is useless, as courts are empowered to
dismiss actions on the basis of prescription even
if it is not raised by the defendant so long as the
facts supporting this ground are evident from
the records. In the present case, what is decisive
is whether the pleadings and the evidence
support a finding that Cua’s claim has prescribed,
and it is on this point that we disagree with the
CA’s findings. The Court find that the CA failed to
appreciate the admissions made by the
respondents in their pleadings that negate a
finding of prescription of Cua’s claim.
Respondents admitted the agreement
extending the period to file the claim
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. The vessel MV
Argo Trader arrived in Manila on July 8, 1989;
Cua’s complaint for damages was filed before
the RTC of Manila on November 12, 1990.
Although the complaint was clearly filed beyond
the one-year period, Cua additionally alleged in
his complaint (under paragraph 11) that “[t]he
defendants x x x agreed to extend the time for
filing of the action up to November 12, 1990.”
The allegation of an agreement extending the
period to file an action in Cua’s complaint is a
material averment that, under Section 11, Rule 8
of the Rules of Court, must be specifically denied
by the respondents; otherwise, the allegation is
deemed admitted.
A review of the pleadings submitted by the
respondents discloses that they failed to
specifically deny Cua’s allegation of an
agreement extending the period to file an
action to November 12, 1990. Wallem’s motion
to dismiss simply referred to the fact that Cua’s
complaint was filed more than one year from the
arrival of the vessel, but it did not contain a
denial of the extension.
Since the COGSA is the applicable law, the
respondents’ discussion to support their claim of
prescription under Article 366 of the Code of
Commerce would, therefore, not constitute a
refutation of Cua’s allegation
of extension. Given the respondents’ failure to
specifically deny the agreement on the extension
of the period to file an action, the Court
considers the extension of the period as an
admitted fact.
ASIAN TERMINALS, INC. vs.
PHILAM INSURANCE CO., INC.
Facts: (3 consolidated cases ni. Parties are
Philam - insurer [subrogated to the rights of the
consignee Universal Motors], Westwind -
carrier, ATI - arrastre/stevedore)
Nichimen Corp. shipped to Universal Motors
219 packages containing 120 units of brand new
Nissan Pickup Truck Double Cab 4x2 model on
board S/S Calayan Iris from Japan to Manila.
The shipment was insured by Philam.
When the vessel arrived at the port of Manila
and the shipment was unloaded by the staff of
ATI, it was found that a package was in bad
order. The Turn Over Survey of Bad Order
Cargoes identified two packages as being
dented and broken. Thereafter, the cargoes
were stored for temporary safekeeping inside
CFS Warehouse in Pier No. 5.
On May 11, 1995, the shipment was withdrawn
by R.F. Revilla Customs Brokerage, Inc., the
authorized broker of Universal Motors, and
delivered to the latter’s warehouse in
Mandaluyong City. Upon the request of
Universal Motors, a bad order survey was
conducted on the cargoes and it was found that
one Frame Axle Sub without LWR was deeply
dented on the buffle plate while six Frame
Assembly with Bush were deformed and
misaligned. Owing to the extent of the damage
to said cargoes, Universal Motors declared
them a total loss.
Universal Motors filed a formal claim for
damages in the amount of ₱643,963.84 against
Westwind, ATI and R.F. Revilla Customs
Brokerage, Inc. When Universal Motors’
demands remained unheeded, it sought
reparation from and was compensated in the
sum of ₱633,957.15 by Philam. Accordingly,
Universal Motors issued a Subrogation Receipt
in favor of Philam. Philam, as subrogee of
Universal Motors, filed a Complaint for
damages against Westwind, ATI and R.F. Revilla
Customs Brokerage, Inc.
RTC: In favor of Philam. Westwind and ATI
solidarily liable. RTC observed that while the
staff of ATI undertook the physical unloading of
the cargoes from the carrying vessel,
Westwind’s duty officer exercised full
supervision and control throughout the process.
It held Westwind vicariously liable for failing to
prove that it exercised extraordinary diligence
in the supervision of the ATI stevedores who
unloaded the cargoes from the vessel.
However, the court absolved R.F. Revilla
Customs Brokerage, Inc. from liability in light of
its finding that the cargoes had been damaged
before delivery to the consignee.
CA: Modified the amount.
Westwind argues, aside that ATI’s stevedores
were the ones who caused the damage, that
Philam’s cause of action has prescribed since
the latter filed a formal claim with it only four
months after the cargoes arrived on April 20,
1995. Westwind stresses that according to the
provisions of clause 20, paragraph 2 of the Bill
of Lading as well as Article 366 of the Code of
Commerce, the consignee had until April 20,
1995 within which to make a claim considering
the readily apparent nature of the damage, or
until April 27, 1995 at the latest, if it is assumed
that the damage is not readily apparent.
Issue: 1) W/N Philam’s cause of action had
already prescribed.
2) W/N ATI and Westwind are jointly and
solidarily liable. (the carrier ad arrastre)
Ruling: 1) No. COGSA is applicable in this case.
The prescriptive period for filing an action for
the loss or damage of the goods under the
COGSA is found in paragraph (6), Section 3,
thus:
(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 may be
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.
The SC, in a prior case, held that a request for,
and the result of a bad order examination, done
within the reglementary period for furnishing
notice of loss or damage to the carrier or its
agent, serves the purpose of a claim. In the
present case, Universal Motors filed a request
for bad order survey before all the packages
could be unloaded to its warehouse.
Moreover, paragraph (6), Section 3 of the
COGSA clearly states that 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.
Petitioner Philam, as subrogee of Universal
Motors, filed the Complaint for damages on
January 18, 1996, just eight months after all the
packages were delivered to its possession on
May 17, 1995. Evidently, petitioner Philam’s
action against petitioners Westwind and ATI
was seasonably filed.

2) Yes. ATI and Westwind are jointly and
solidarily liable. (carrier and arrastre)
Section 2 of the COGSA provides that under
every contract of carriage of goods by the sea,
the carrier in relation to the loading, handling,
stowage, carriage, custody, care and discharge
of such goods, shall be subject to the
responsibilities and liabilities and entitled to the
rights and immunities set forth in the Act.
Section 3 (2) thereof then states that among the
carrier’s responsibilities are to properly load,
handle, stow, carry, keep, care for and
discharge the goods carried.
It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain
under the custody of the carrier. The Damage
Survey Report reveals that the package was
damaged by ATI stevedores due to
overtightening of a cable sling hold during
discharge from the vessel’s hatch to the pier.
Since the damage to the cargo was incurred
during the discharge of the shipment and while
under the supervision of the carrier, the latter is
liable for the damage caused to the cargo.
However, ATI is also at fault.
Handling cargo is mainly the arrastre operator’s
principal work so its drivers/operators or
employees should observe the standards and
measures necessary to prevent losses and
damage to shipments under its custody.
While it is true that an arrastre operator and a
carrier may not be held solidarily liable at all
times, the facts of these cases show that apart
from ATI’s stevedores being directly in charge of
the physical unloading of the cargo, its foreman
picked the cable sling that was used to hoist the
packages for transfer to the dock.
CA affirmed. Only the one pc. frame axle sub
was allowed to be reimbursed because of the
inconsistencies on the complaint of Universal
Motors kung asa gud na package nagbelong ang
6 pcs. of frame assembly with bush.
Pioneer Insurance vs APL Co. Pte.
Ltd.
Facts:
Chili Export House turned over to APL Co. 250
bags of chili pepper for transport from India to
Manila. It was loaded on board MV Wan Hai. The
consignee BSFIL insured it with Pioneer
Insurance. When the shipment arrived in Manila,
it was discovered that 76 bags were wet and
infested with molds, and was declared unfit for
human consumption, a total loss. BSFIL made a
formal claim against APL. Pionner paid BSFIL and
subrogated the claims against APL. Upon refusal
of APL to pay, Pioneer lodged a complaint before
the MTC. MTC granted the complaint and
ordered APL to pay the full amount. This was
affirmed by the RTC. The CA however reversed
the ruling on the basis that the present action
was barred by prescription. A provision in the Bill
of Lading states that the carrier shall be absolved
from any liability unless a case is filed within 9
months after delivery of goods. Hence this
petition.
Pioneer argues that the nine-month provision
was inapplicable because the BoL is is merely
subordinate to COGSA and that while parties are
free to stipulate, it must not be contrary to law,
morals, good customs public order and public
policy.
APL argues that the BoL provision applies in the
absence of an applicable law. Mere “absence”
differs from “contrary”.
which provides for a different prescriptive
period. Hence, strictly applying the terms of the
Bill of Lading, the one-year prescriptive period
under the COOSA should govern because the
present case involves loss of goods or cargo.

Issue:

Whether the CA erred in ruling that the one-

year prescriptive period of the COGSA is not
applicable?

Held:

Yes. DT
In the Bill of Lading, it was categorically stated
that the carrier shall in any event be discharged
EAHI
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. The same, however, is qualified in that
when the said nine-month period is contrary to
any law compulsory applicable, the period
prescribed by the said law shall apply.

The present case involves lost or damaged cargo.

It has long been settled that in case of loss or
damage of cargoes, the one-year prescriptive
period under the COOSA applies. It is at this
juncture where the parties are at odds, with
Pioneer Insurance claiming that the one-year
prescriptive period under the COOSA governs;
whereas APL insists that the nine-month
prescriptive period under the Bill of Lading
applies.

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.
Thus, it is readily apparent that the exception
under the Bill of Lading became operative
because there was a compulsory law applicable