CASES

Doctrine: Written extrajudicial demand by the creditor does not

toll the running of the prescriptive period under the Act.
DOLE Philippines, Inc. v. Maritime Company of the Philippines
No. L-61352,February 27, 1987
Facts: The cargo subject of the instant case was discharged in
Dadiangas unto the custody of the onsignee on December 18, 1971.
The corresponding claim or the damages sustained by the
cargo was filed by the plaintiff with the defendant vessel on May
4, 1972.
On June 11, 1973, the plaintiff filed a complaint in the
Court of First Instance of Manila, docketed therein as Civil Case
No. 91043, embodying three (3) causes of action involving three
(3) separate and differrent shipments. The third cause of action
involved the cargo now subject of this present litigation.
On December 11, 1974, Judge Serafin Cuevas issued an Order
in Civil Case No. 91043 dismissing the first two causes of action
in the aforesaid case with prejudice and without pronouncement as
to costs becasue the parties had settled or compromised the
claims involved therein. The third cause of action which covered
the cargo subject of this case now was likewise dismissed but
without prejudice as it was not covered by the settlement. The
dismissal of that complaint containing the tree causes of ation
was upon a joint motion to dismiss filed by the parties.
Becasue of the dismissal of the complaint in Civil Case No.
91043 with respect to the third cause of action without
prejudice,plaintiff instituted this present complaint on January
6, 1975.
To the complaint in the subsequent action, Maritime filed an
answer
plaeding
inter
alia
the
affirmative
defense
of
prescription under the provisions of the Carriage of Goods by Sea
Act, and following pre-trial moved for a preliminary hearing on
said defense. The Trial Court granted the motion, scheduling the
preliminary hearing on April 27, 1977. The record before the
Court does not show whether or not that hearing was held, but

under date of May 6, 1977, Maritime filed a formal motion

todismiss invoking once more the ground of prescription. The
motion
was
opposed
by
DOLE
and
TrialCourt,
after
due
consideration , resolved the matter in favor of Maritime and
dismissed the complaint. Dole sought a reconsideration, which was
denied, and thereafter took the present appeal from the order of
dismissal.
ISSUE:
Whether Article 1155 of the Civil Code providing that the
prescription of actions is interrupted by the making of an
extrajudicial written demand by the creditor is applicable to
actions brought under the Carriage of Goods by Sea Act which, in
its Section 3, paragraph 6, provides that:
*** the carriage and the ship shall be discharged from all
liability in espect 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.
HELD:
Dole concedes that its action is subject to the one-year
period of limitaion precribedin the above-cited provision. The
substance of its argument is that since the provisions of the
Civil Code are, by express mandate of said Code, suppletory of
deficiencies in the Code of Commerce and special laws in matter
governed by the latter, and there being a patent deficiency with
respect to the tolling of the prescriptive period provided for in
the Carriage of Goods by Sea Act, prescription under said act is
subject to the provisions of Article 1155 of the Civil Code on
tolling and because Doles claim for loss or damage made on May
4, 1972 amounted to a written extarjudicial demand which would
toll or interrupt prescription under Article 1155, it operated to
toll prescription also in actions under the Carriage of Goods by
Sea Act. To much the same effect is the further argument based on
article 1176 of the Civil Code which provides that the rights and

obligations of common carriers shall be governed by the Code of

Commerce and by special laws in all matters not regulated by the
Civil Code.
These
arguments
might
merit
weightier
consideration
wereitnot for the fact that the question has already received a
definite answer,adverse to the position taken by Dole, in The
Yek Tong Lin Fire & Marine Insurance Co., Ltd. v. American
President Lines, Inc. There, in a parallel factual situation,
where suit to recover for damage to cargo shipped by vessel from
Tokyo to Manila was filed more that two years after the
consignees receipt of the cargo, this Court rejected the
contention that an extrajudicial demand tolled the prescriptive
period provided for in the Carriage of Goods by Sea Act.
Moreover, no different result would obtain even if the court
were to accept the proposition that a written extrajudicial
demand does toll prescription under the Carriage of Goods by Sea
Act. The demand in this instance would be the claim for damage
filed by Dole with maritime on May 4, 1972. The effect of that
demand would have been to renew the one-year prescriptive period
from the date of its making. Stated otherwise, under Doles
theory, when its claim was received by Maritime, the one-year
prescriptive was interrupted tolled would be the more precise
term and began to run anew from May 4, 1972, affording Dole
another period of one (1) year counted from that date within
which to institute action on its claim for damage. Unforunately,
Dole let the new period lapse without filing action. In
instituting Civil Case No. 91043 only on June 11, 1973, more that
one month after that period has expired and its right of acion
has prescribed.
Doles contention that the prescriptive period remained
tolled as of May 4, 1972 (and that) in legal contemplation (the)
case (Civil Case No. 96353) was filed on January 7, 1975 well
within the one-year prescriptive period in Sec. 3(6) of the
Carriage of Goods by Sea Act, eqautes tolling with indefinite
suspension. It is clearly fallacious and merits no consideration.

Doctrine: Section 3 (6), Title I of the Carriage of goods by Sea

Act admits of an exception: if one-year period is suspended by
express agreement of the parties.
Universal Shipping Lines, Inc. v. Intermediate Appellate Court
and Alliance Assurance Co., Ltd.
G.R. No. 74125, July 31, 1990
Facts:
On or about March 22, 1974, SEVALCO,Limited, owned and
operated by the petitioner, shipped from Rotterdam, Netherlands,
to Bangkok, Thailand, aboard its M/VV TAIWAN, two (2) cargoes
of 50 palletized cartons consisting of 2, 000 units of 25
kilograms bags of Statex R Brand carton black, with a declared
gross weight of 53, 000 kilos each. They were respectively
consigned to S. LERSEN Company, Ltd. and Muang Ngarm Retreads,
Ltd., per Bills of Lading Nos. RB- 15 both shipments were insured
with the private respondent, Alliance Assurance Company, Ltd., a
foreign insurance company domiciled in London, England, which had
withdrawn from the Philippine market on June 30, 1951 yet.
Despite the arrival of the vessel on June 28, 1974 at
Bangkok the cargo covered by Bill of Lading No. RB- 15 was not
unloaded nor delivered to the consignee, S. Lersen Company, Ltd.
The shipment under Bill of Lading No. RB- 16 was delivered to
Muang Ngarm Retreads, Ltd. with a total weight shortage of 11,
070 kilos because the cargoes had been either totally or
partially dissolved in saltwater which flooded Hatch No. 2 of the
vessel where they had neen stored.
The consignees, S. Lersen Co., Ltd. and
Retreads, Inc., filed their respective formal claims
damage to their cargoes on August 7, 1974 and on
1974 the insurer paid both claims in the amounts of
$2, 547. 18 for the loss and damge to their cargoes.

Muang Ngarm
for loss and
November 12,
$12, 180 and

On June 25, 1976, private respondent,as insurer- subrogee,

filed an action in the Court of First Instance of Manila to
recover from the petitioner and its Manila agent, Carlos Go Thong
& Company, what it paid the consignees of the cargo.
After the trial, the court a quo rendered judgment for the
private respondent.

In this appeal by certiorari, petitioner alleges that

respondent court erred in finding that private respondents cause
of action has not yet prescribed.
ISSUE:Whether the action under Section 3 (6) of the Carriage of
Goods by Sea Act has prescribed.
Held: Anent the issue of prescription of the action under Section
3 (6), Title I, of the Carriage of Goods by Sea Act (Commonwealth
Act No. 65) which provides that:
x x x 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.
This provision of the law admits of an exception: if the
one- year period is suspended by express agreement of the
parties. For in such case, their agreement becomes the law for
them.
The exchange of correspondece between the parties and/or
their associates/ representatives shows that the parties had
mutually agrred to extend the time within the plaintiff or its
predecessors- in- interest may file suit until December 27, 1976.
When the compalint was filed on June 25, 1976, that deadline had
not yet expired.
PETITION DENIED.
NOTES: The one- year prescriptive period under Section 3 (6) of
paragraph 4 of the Carriage of Goods by Sea Act is not applicable
in cases of misdelivery or conversion. (Ang v. American Steamship
Agencies, Inc., 19 SCRA 123).
The prescriptive period for suits predicated not uopon lost
or damage but on alleged misdelivery or conversion of goods is
that found in the New Civil Code, i.e., either ten years for
breach of a written contract or four years for quasi- delict.

Doctrine: Coverage of the one- year prescriptive period under the

Carriage of Goods by Sea Act includes the insurer of the goods.
Filipino Merchants Insurance Co., Inc. v. Hon. Jose Alejandro and
Frota Oceanica Brasiliera
G.R. No. L- 54140, October 14, 1986
Filipino Merchants Insurance Co., Inc. v. Hon. Alfredo Benipayo
and Australia- West Pacific Line
G.R. No. L- 62001, October 14, 1986

Facts:On August 3, 1977, plaintiff Choa Tiek Seng filed a

complaint, docketed as Civil Case No. 10991, againt the
petitioner before the then Court of First Instance of Manila for
recovery of a sum of money under the marine insurance policy on
cargo. Mr. Choa alleged that the goods he insured with the
petitioner sustained loss and damage in the amount of P 35, 987.
26. The vessel SS Frotario which was owned and operated by
private respondent Frota Oceanica Brasiliera (Frota), discharged
the goods at the port of Manila on December 13, 1976. The said
goods were delivered to the arrastre operator E. Razon, Inc., on
December 17, 1976 and on the same date were received
by the
consignee- plaintiff.
On December 19, 1977, the petitioner filed its amended
answer disclaiming the liability, imputing against the plaintiff
the commission of fraud and counterclaiming for damages.
On January 9, 1978, the
compalint against the carrier,
arrastre contarctor, E. Razon,
or reimbursement in the event
plaintiff.

petitioner filed a third- party

private respondent Frota and the
Inc. for indemnity, subrogation,
that it is held liable to the

Meanwhile, on August 10, 1977, Joseph Benzon Chua filed a

similar compalint against the petitioner which was docketed as
Civil Case No. 110061, for recovery under the marine insurance
policy for cargo alleging that the goods insured with the
petitioner sustained loss and damage in the sum of P55,996. 49.

The goods were delivered to the plaintiff- consignee on or

about January 25-28, 1977.
On May 31, 1978, the petitioner filed its answer. On
September 28, 1978, it filed an amended third- party complaint
against respondent carrier, the Australia- West Pacific Line
(Australia- West).
In both cases, the private respondents filed their
respective
answers
and
subsequently
filed
a
motion
for
preliminary hearing on their affirmative defense of prescription.
The private respondents alleged in their separate answers that
the petitioner is already
barred from filing a claim because
under the Carriage of Goods by Sea Act, the suit against the
carrier must be filed within one year after delivery of the
goods or the date when the goods should have been delivered.x x
x
The petitioner contended that the provision relied upon by
the respondents applies only to the shipper and not to the
insurer of the goods.
On April 30, 1980, the respondents judge in Civil Case No.
109911, upheld respondent Frota and dismissed the petitioners
third party complaint. Likewise, on August 31, 1982, the reponent
judge in Civil Cse No. 110061 dismissed the petitioners
complaint against respondent Australia- West on the ground that
the same was filed beyond the prescriptive period provided in
Section 3 (6) of the Carriage of Goods by Sea Act of 1936.
Issue: Whether the prescriptive period of one year under the said
Act also applies to an insurer such as herein petitioner.
Held: The lower courts did not err.
Section 3 (6) of the Carriage of Goods by Sea Act provides:
(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 goods
or 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 the 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.
Clearly, the coverage of the Act includes the insurer of the
goods. Otherwise, what the Act intends to prohibit after the
lapse of the one- year prescriptive period can be done indirectly
by the shipper or owner of the goods by simply filing a claim
against the insurer even after the lapse of one year. This would
be the result if we follow petitioners argument that the insurer
can, at any time, proceed against the carrier and the ship since
it is not bound by the time- bar provision. In this situation,
the one- year limitation will be practically useless. This could
not have been the intention of the law which has also for its
purpose the protection of the carrier and the ship from
fraudulent claims by having matters affecting transportation of
goods by sea be decided in as short a time as possible and by
avoiding incidents which would unnecessarily extend the period
and permit delays in the settlement of questions affecting the
transportation.

In the case at bar, the petitioners action has prescribed

under the provisions of the Carriage of Goods by Sea Act. Hence,
whether it files a third-party complaint or chooses to maintain
an independent action against herein respondents is of no moment.
Had the plaintiffs in the civil cases below filed an action
against the petitioner after the one- year prescriptive period,
then the latter could have successfully denied liability on the
ground that by their own doinvg, the plaintiffs had prevented the
petitioner from being subrogated to their respective rights
against the herein respondents by filing a suit after the oneyear prescriptive period. The situation, however, does not obtain
in the present case. The plaintiffs in the civil cases below gave
extra- judicial notice to their respective carriers and filed
suit against the petitioner well within the one year from their
receipt o the goods. The petitioner had plenty of time within
which to act. In Civil Case No. 109911, the petitioner had more
than four months to file a third- party complaint while in Civil
Case No. 110061, it had more than five months to do so. In both
instances, however, the petitioner failed to file the appropriate
action.
PETITION DISMISSED.

Doctrine: Under Section 3(6) of the Carriage of Goods by Sea Act,

only the carriers liability is extinguished if no suit is
brought within oone year.

Mayer Steel Pipe Corporation and Hongkong Government Supplies

Department v. Court of Appeals, South Sea Surety and Insurance
co., Inc. and Charter Insurance Corporation
274 SCRA 432 (1997)
FACTS:
In 1983, petitioner Honkong Government Supplies Department
(Honkong) contracted petitioner Mayer SteelPipe Corporation
(Mayer) to manufacture and supply variuos steel pipes and
fittings. From August to October 1983, Mayer shipped the pipes
and fittings to Honkong as evidenced by Invoice Nos. MSPC-1014,
MSPC-1015, MSPC-1020, MSPC-1017 and MSPC-1022.
Prior to the shipping, petitioner Mayer insured the pipes
and fittings againts all risks with private respondents South Sea
Surety and Insurance Co., Inc. (South Sea) and Charter Insurance
Corp. (Chapter).
Petitioners Mayer and Honkong jointly appointed Industral
Inspection (International), Inc. as third-party inspector to
examine whether the pipes and fittings ara manufactured in
accordance with the specifications in the contract. 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 againts private respondents for
indemnity under the insurance contract. Respondent Charter paid
petitioner Honkong the amount of HK$299,345.30 representing the
cost of repair of the damaged pipes. Private respondents refused
to pay because the insurance surveyors allegedly showed that the
damage is a factory defect.
On april 17, 1986, petitioners filed an action against
privatte respondents to recover the sum of HK$299,345.30. for
their defense, private respondents averred that they hae no
obligation to pay the amount claimed by petitioners because the
damage to the goods is due to factory defects which are not
covered by the insurance policies.

The trial court ruled in favor of petitioners. It found that

the damage to the goods is not due to manufacturing defects. It
also noted nthat the insurancecontracts executed by petitioner
Mayer and private respondents are all risks policies which
insure against all caues of conceivable loss od=r damage. The
only exceptions are those excluded in the policy, or those
sustained due to fraud or intentional misconduct onthe part of
the insured.
Respondent court affirmed the finding of the trial court
that the damage isnot due to factory defect and that it was
covered by the all risk insurance policies issued by private
respondents to petitioner Mayer. However, lit set aside the
decision of the trial court and dismissed the complaint on the
ground of prescription. It held that the action is barred under
Section 3(6) of the Carriage of Goods by Sea act since it was
filed only on April 17, 1986, more than two years from the time
the goods were unloaded from the vessel. Section 3(6) of the
Carriage of Goods by Sea Act provides that the carrier and the
ship shall be discharged from all liability in respect of loss or
damage unless suit is brought ithin one year after delivery of
the goods or the date when the goods should have ben delivered.
Respondent court ruled that this provision applies not only to
the carrier but also to the insurer, citing Filipino Merchants
Insurance Co., Inc. v. Alejandro.
ISSUE:
Whether or not petitioners cause of action had already
prescribed under section 3(6) of the Carriage of Goods by Sea Act
in the light of the doctrine of Filipino Merchants Insurance
Co., Inc. v. Alejandro (145 SCRA 42).
HELD:
No. The petition is impressed with merit. Respondents 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 carriers

liability is based not on the contract of carriage buton 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 obligaton 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.
PETITION GRANTED.

Mayer Steel Pipe Corporation Case compared to Filipino Merchants

case
The ruling in Filipino Merchants Insurance Co., Inc. v.
Alejandro and the other cases cited therein does not support
respondent courts view that the insurers liability prescribes
after one year if no action for indemnity is filed against the
carrier or the insurer. In that case, the shipper filed a
complaint against the insurer for recovery of a sum of money as
indemnity for the loss and damage sustained by the insured goods.
The insurer, in turn, filed a third-party complaint against the
carrier for reimbursement of the amount it paid to the shipper.
The insurer filed the third-party complaint on January 9, 1978,
more than one year after the delivery of the goods on December
17, 1977. The court held that the insurer was already barred from
filing a claim against the carrier because under the Carriage of
Goods By Sea Act, the suit against the carrier must be filed
within one year after the delivery of the goods or the date when
the goods should have been delivered. The court said that the
coverage of the Act includes the insurer of the goods.
The Filipino Merchants case is different from the case at
bar. In Filipino Merchants, it was the insurer which filed a
claim agains the carrier for the 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 shippers

claim is the all risks insurance policies issue by the private

respondents to petitioner Mayer.
The ruling in Filipino Mercchants 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 the 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 insurers 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.