Philippine American General Insurance Co.
v Sweet Lines ISSUE/S & RATIO:
Pleadings; Alleging Defenses | August 5, 1992 | Regalado, J.
Nature of Case: Petition for certiorari
Digest maker: Hernandez
SUMMARY: This case is about a controversy over several shipments of chemicals aboard
the vessel owned by Sweet Lines which were delivered damaged and lacking in number to
plaintiff PHILAMGEN. Sweet Lines argued that the action has prescribed since the claim
for damages were not presented within the period stipulated in the bills of
lading. PHILAMGEN contended that the bills of lading were not presented in evidence,
therefore, since the tenor and existence of the stipulations were not established, it was
inconceivable how they can comply therewith. Trial court held in favor of PHILAMGEN
but CA reversed.
Supreme Court held that the action has already prescribed. Besides, plaintiff’s failure to
specifically deny the existence, genuineness and due execution of the instruments
amounted too an admission.
DOCTRINE: Bills of lading can be categorized as actionable documents which under
the Rules must be properly pleaded either as causes of action or defenses, and the
genuineness and due execution of which are deemed admitted unless specifically denied
under oath by the adverse party
Negative pregnant is a denial pregnant with the admission of the substantial facts in
the pleading responded to which are not squarely denied
FACTS:
 PHILAMGEN and Tagum Plastics were the insurers and importers, respectively, of
an order of polyethylene
 The polyethylenes are to be shipped from F.E. Zuellig in the United States through an
Indian ship, SS Vishva Yash, and are to be received at Manila. After which, the
subject matter is to be shipped to Davao, Tagum’s place of business
 When the Indian vessel arrived at Manila, it sought the services of respondent Sweet
Lines, Inc. for the inter-island shipment to Davao.
 However, when the M/V Sweet Love, owned by Sweet Lines, arrived at Davao,
petitioners found that some of the polyethylenes undelivered or damaged.
 For this reason, petitioners filed a suit against Sweet Lines and the Davao Veterans
Arrastre which handled the cargoes at the Davao port.
o The basis for such suit are the bills of lading, which serves as the contract
between parties that the goods indicated therein are to be delivered
complete in number and in the condition specified.
o Militating against the petitioners, however, is the prescriptive period
included in the bills of lading. It states that any action arising from shortage
or damages must be brought within sixty days from accrual of right of
action.
o Also, notice of claims for loss or damages is required to be given to the
carrier before the institution of judicial claims.
 The bills of lading were not formally offered as evidence; hence it was not shown that
a contractual prescriptive period was indicated therein.
 The trial court ruled in favor of petitioners but CA reversed on the basis of
prescription.
1. WON the CA correctly ruled on the basis of prescription even without formal
evidence of its existence- YES
a. Because such was sufficiently raised in the pleadings .
b. The litigation obviously revolves on such bills of lading which are
practically the documents or contracts sued upon, hence, they are inevitably
involved and their provisions cant be disregarded in the determination of
the relative rights of the parties thereto.
c. Respondent court correctly passed upon the matter of prescription, since
that defense was so considered and controverted by the parties
d. Since petitioners are suing on the basis of contractual obligations
indicated in the bills of lading, such bills can be categorized as actionable
documents which under the RoC must be properly pleaded either as
causes of action or defenses, and the genuineness and due execution of
which are deemed admitted unless specifically denied under oath by the
adverse party
e. Failure to specifically deny the existence of the instruments in question
amounts to an admission.
f. Judicial admission, verbal or written, made by the parties in the
pleadings or in the course of the trial or other proceedings in the same
cases are conclusive , no evidence being required to prove the same, and
can’t be contradicted unless shown to have been made through palpable
mistake or that no such admission was made.
g. In the case at bar, prescription as an affirmative defense was seasonably
raised by respondent in its answer, except that the bills of lading
embodying the same were not formally offered in evidence.
h. Petitioner specifically replied to such defense in respondent’s answer,
but it failed to controvert the existence of the bills of lading. It is thus in
the nature of a negative pregnant. Consequently, they impliedly admitted
the same when they merely assailed the validity of subject stipulations.
Petitioners, must specifically deny the existence or presentation of
evidence. This is petitioner’s reply to respondent’s answer;
i. “In connection with Pars. 14 and 15 of defendant Sweet Lines,
Inc.’s Answer, plaintiffs state that such agreements are what the
Supreme Court considers as contracts of adhesion and,
consequently, the provisions therein which are contrary to law
and public policy cannot be availed of by answering defendant as
valid defenses.”
ii. Petitioners failed to touch on the matter of the non-presentation of
the bill of lading. Hence it is too late in the day to now allow the
litigation to be overturned on that score, for to do so would mean
an over –indulgence in technicalities. Petitioners feigned
ignorance of the povisions of the bills of lading does not deserve
serious attention
2. Assuming arguendo that a prescriptive period exists in the contract, is null and void
for being contrary to public policy as contracts of adhesion?- NO
a. Because contracts of adhesion are not illegal
b. Petitioners posit that the alleged shorter prescriptive period which is in the
nature of a limitation on petitioner’s right of recovery is unreasonable and
that SLI has the burden of proving otherwise.
c. In the absence of any statutory limitation and subject only to the
requirement on the reasonableness of the stipulated limitation period,
the parties to a contract of carriage may fix by agreement a shorter period
 for the bringing of the suit on a claim for the loss of or damage to the
shipment than that provided by the statute of limitations.

3. WON petitioners complied with regard to the prescriptive period?-NO

a. Before and action can properly be commenced all the essential elements
of the cause of action must be in existence. All valid conditions precedent
to the institution of the particular action, whether prescribed by statute ,
fixed by agreement of the parties or implied by law must be performed or
complied with before commencing the action , unless the conduct of the
adverse party has been such as to prevent or waive performance or excuse
non-performance of the condition
b. Stipulations on the bill of lading requiring notice of claim for loss or
damage is a condition precedent. The carrier is not liable if notice is not
given in accordance with the stipulation .
c. The bills of lading, are reasonable conditions precedent, they are not
limitations of action. Being conditions precedent, their performance must
precede a suit for enforcement and the vesting of the right to file suit
does not take place until the happening of these conditions.

Ruling: Petition denied. Dismissal of the complaint affirmed.