17. Philippine American General Insurance Company v. Sweet Lines, abandoned the vessel. The CA affirmed the RTC.
ffirmed the RTC. The S.C. however, found that PKS
Inc.
G.R. No. 149038
April 9, 2003
OSORIO
Topic: Requisites of a Fortuitous Event
Ponente:
Doctrine:
“In case of loss, destruction or deterioration of goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden of
proving otherwise rests on them. The provisions of Article 1733, notwithstanding,
common carriers are exempt from liability for loss, destruction, or deterioration
of the goods due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers; and
(5) Order or act of competent public authority.”
PARTIES:
Shipper: Davao Union Marketing Corporation (DUMC)
Common Carrier: PKS shipping company (PKS) - Limar 1 is a Dumb barge
Insurance: Philippine American General Insurance Company (Philamgen)
Nature of Action: Reimbursement of Insurance Paid
Goods Carried: 75,000 Bags of Cement insured for P3,375,000.00
CAUSE / ACCIDENT: barge sank due to strong winds and rough waves – Typhoon
Apiang
RECIT READY DIGEST:
75,000 bags of cement insured for P3,375,000.00 by Philamgen and consigned to
DUMC was loaded on the barge Limar 1, operated and owned by PKS Shipping.
However, due to strong winds and rough waters because of a brewing storm, the
barge sank along with all the bags of cement. Philamgen paid the amount insured
to DUMC. When Philamgen asked DUMC to pay them back, PKS refused. The RTC
held that PKS is liable under the code of commerce since the cpatain and crew
is not liable for the loss due to a fortuitious event.
FACTS:
· DUMC contracted the services of PKS Shipping for the
shipment to Tacloban City of 75,000 bags of cement worth
P3,375,000.00.
· DUMC insured the full amount of the goods with the
insurance company Philamgen.
· The goods were loaded aboard the dumb barge Limar I
belonging to PKS Shipping.
· Unfortunately, the barge sank due to strong winds and
rough waves, bringing down the entire cargo of 75,000 bags of
cement.
· DUMC led a formal claim for the entire amount of
insurance, to which Philamgen promptly paid.
· Philamgen sought reimbursement from PKS Shipping of
the sum paid to DUMC but the shipping company refused to
pay.
· Philamgen then filed a suit against PKS Shipping with
the Makati RTC.
PROCEDURE:
RTC Makati: dismissed - there is a fortuitous event
· ship owner was not liable, or through the negligence of
the captain and crew of the vessel and that, under Article 587
of the Code of Commerce adopting the "Limited Liability
Rule," the ship owner could free itself of liability by
abandoning, as it apparently so did, the vessel with all her
equipment and earned freightage.

CA: affirmed in toto the decision of the trial court.
· However, it held that PKS, because it was only holding
out shipping as a causal occupation, was not a common
carrier and therefore did not require stringent extraordinary
diligence.
Philamgen Contention: PKS shipping is a common carrier
· typhoon "APIANG" has not entered the Philippine area
of responsibility and that, even if it did, PKS would not be
exempt from liability because its employees, particularly the
tugmaster, have failed to exercise due diligence to prevent or
minimize the loss.
ISSUE/S:
1. WON PKS is exempt from liability due to a fortuitious
event – YES (Main Issue)
2. WON PKS Shipping is a Common Carrier – YES
3. WON PKS Shipping has exercised the proper diligence
demanded of common carriers, Article 1733 of the Civil Code
requires common carriers to observe extraordinary diligence
in the vigilance over the goods they carry - YES
HELD:
1ST ISSUE: (MAIN ISSUE)
PKS is exempt from liability due to the fortuitious event of the effects of the
brewing typhoon of Apiang.
The provisions of Article 1733, notwithstanding, common carriers are exempt
from liability for loss, destruction, or deterioration of the goods due to any of
the following causes:
In case of loss, destruction or deterioration of goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden
of proving otherwise rests on them
1. Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
2. Act of the public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the
containers; and
5. Order or act of competent public authority
IN THIS CASE:
· CA gathered from the testimonies and sworn marine protests
of the respective vessel masters of Limar I and MT Iron Eagle, that
there was no way by which the barge's or the tugboat's crew could
have prevented the sinking of Limar I.
· The vessel was suddenly tossed by waves of extraordinary
height of six (6) to eight (8) feet and buffeted by strong winds of 1.5
knots resulting in the entry of water into the barge's hatches.
· The official Certicate of Inspection of the barge issued by the
Philippine Coastguard and the Coastwise Load Line Certi cate
would attest to the seaworthiness of Limar I and should strengthen
the factual findings of the appellate court.
2ND ISSUE:
Yes, the S.C. considered PKS as a common carrier.
 · ordinary, if a private carrier
· extraordinary, if a common carrie
RULE: The Civil Code defines “common carriers” in the following terms:
“Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air for compensation, offering their
services to the public.”
narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions
· Contrary to the conclusion made by CA, its factual findings indicate
that PKS Shipping has engaged itself in the business of carrying goods for
others, although for a limited clientele, undertaking to carry such goods for a
fee.
· The regularity of its activities in this area indicates more than just a
casual activity on its part.

The concept of `common carrier’ under Article 1732 may be seen to coincide · Such restrictive interpretation would make it easy for a common
neatly with the notion of `public service,’ under the Public Service Act carrier to escape liability by the simple expedient of entering into those
distinct agreements with clients.
Complementary to the codal definition is Section 13, paragraph (b), of the
Public Service Act; it defines “public service” to be – THEREFORE: PKS is not liable to pay back the insurance because it
ensured the seaworthiness of the vessel and that it’s sinking was due to
“x x x every person that now or hereafter may own, operate, manage, or fortuitious events.
control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general DISPOSITIVE:
business purposes, any common carrier, railroad, street railway, subway
motor vehicle, either for freight or passenger, or both, with or without fixed All given then, the appellate court did not err in its judgment absolving PKS
route and whatever may be its classification, freight or carrier service of any Shipping from liability for the loss of the DUMC cargo. WHEREFORE, the
class, express service, steamboat, or steamship, or steamship line, petition is DENIED. No costs. SO ORDERED.
pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock,
ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light,
heat and power, water supply and power petroleum, sewerage system, wire
or wireless communication systems, wire or wireless broadcasting stations
and other similar public services

Section 13(b) of the Public Service Act, this Court has held:

“The above article makes no distinction between one whose principal

business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity (in local idiom, as `a
sideline’). Article 1732 also carefully avoids making any distinction between
a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the `general public,’ i.e., the general community or
population, and one who offers services or solicits business only from a
18. UCPB GENERAL INSURANCE CO., INC. v. ABOITIZ SHIPPING CORP.
G.R. No. 168433; February 10, 2009
Tinga, J.
By: Ericka Agustin
________________________________________________________________________
Topic: Claim in Overland Transportation and Coastwise Shipping
Petitioner: UCPB General Insurance Co., Inc.
Respondent: Aboitiz Shipping Corp. Eagle Express Lines, Damco Intermodal
Services, Inc., and Pimentel Custom Brokerage Co.
Doctrine: 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.
________________________________________________________________________
FACTS:
● July 18, 1991 – 3 units of waste water treatment plant with
accessories were purchased by San Miguel Corporation (SMC)
from Super Max Engineering Enterprises, Co., Ltd. of Taipei,
Taiwan.
o The goods came from Charleston, USA and arrived at
the port of Manila on board MV “SCANDUTCH STAR.”
o The same were transported to Cebu on board MV
“ABOITIZ SUPERCON II.”
● After its arrival in Cebu and clearance from Bureau of Customs, the
goods were delivered to and received by SMC at its plant site on
August 2, 1991. It was then discovered that 1 electrical motor of
DBS Drive Unit Model DE-30-7 was damaged.
● Pursuant to an insurance agreement, UCPB paid SMC the amount
of P1,703,381.40 representing the value of the damaged unit. In
turn, SMC executed a Subrogation Form in favor of UCPB.
● Consequently, UCPB filed a complaint seeking to recover from
defendants the amount it paid to SMC.
● UCPB then moved to admit its Amended Complaint whereby it
impleaded East Asiatic Co. Ltd. (EAST) as among the defendants
for being the general agent of DAMCO.
● EAST filed a Motion for Preliminary Hearing on its affirmative
defenses seeking the dismissal of the complaint against it on the
ground of prescription.
● TRIAL COURT: moved to dismissed the complaint of EAST. It
rendered a decision declaring DAMCO Intermodal System, Inc.,
Eagle Express Lines, and Aboitiz Shipping solidarily liable to UCPB
for the damaged shipment and orders them to pay jointly and
severally the sum of P1,703,381.40.
● COURT OF APPEALS: reversed the decision of the trial court and
ruled that UCPB’s right of action against the 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. The filing of a
claim within the time limitation in Art. 366 is a condition precedent
to the accrual of a right of action against the carrier for the
damages caused to the merchandise.
● UCPB’S ARGUMENT: the claim requirement under Art. 366 of the
Code of Commerce does not apply to this case because the
damage to the merchandise had already been known to the carrier.
o UCPB makes this revelation: "x x x damage to the cargo was
found upon discharge from the foreign carrier onto the
International Container Terminal Services, Inc. (ICTSI) in the
presence of the carrier's representative who signed the
Request for Bad Order Survey and the Turn Over of Bad
Order Cargoes. On transshipment, the cargo was already
damaged when loaded on board the inter-island carrier."
This knowledge, UCPB argues, dispenses with the need to
give the carrier a formal notice of claim. Incidentally, the
carrier's representative mentioned by UCPB as present at
the time the merchandise was unloaded was in fact a
representative of respondent Eagle Express Lines (Eagle
Express).
o UCPB claims that under the Carriage of Goods by Sea Act
(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.
 o UCPB further claims that the issue of the applicability of Art.
366 of the Code of Commerce was never raised before the
trial court and should, therefore, not have been considered
by the Court of Appeals.
● EAGLE EXPRESS: it cannot be held liable for the damage as it acted
merely as a freight forwarder’s agent in the transaction.
o It allegedly facilitated the transshipment of the cargo from
Manila to Cebu but represented the interest of the cargo
owner, and not the carrier's. The only reason why the name
of the Eagle Express representative appeared on the Permit
to Deliver Imported Goods was that the form did not have a
space for the freight forwarder's agent, but only for the
agent of the shipping line. Moreover, UCPB had previously
judicially admitted that upon verification from the Bureau of
Customs, it was East Asiatic Co., Ltd. (East Asiatic),
regarding whom the original complaint was dismissed on
the ground of prescription, which was the real agent of
DAMCO Intermodal Services, Inc. (DAMCO), the ship owner.
o The applicability of Art. 366 of the Code of Commerce was
properly raised as an issue before the trial court as it
mentioned this issue as a defense in its Answer to UCPB's
Amended Complaint. Hence, UCPB's contention that the
question was raised for the first time on appeal is incorrect.
● ABOITIZ SHIPPING: it cannot be held liable for the damage to the
cargo which, by UCPB’s admission, was incurred not during
transshipment to Cebu on board one Aboitiz’s vessels, but was
already existent at the time of unloading in Manila. Aboitiz also
argues that Art. 366 of the Code of Commerce is applicable and
serves as a condition precedent to the accrual of UCPB's cause of
action against it.
● PIMENTEL CUSTOMS: reiterate the applicability of Art. 366 of the
Code of Commerce.
ISSUE: W/N a claim should have been made by SMC, or UCPB as SMC’s
subrogee, within the 24-hour period prescribed by Art. 366 of the Code of
Commerce.
Art. 366 of the Code of Commerce states:
Art. 366. Within twenty-four hours following the receipt of the merchandise,
the claim against the carrier for damage or average which may be found
therein upon opening the packages, may be made, provided that the
indications of the damage or average which gives rise to the claim cannot be
ascertained from the outside part of such packages, in which case the claim
shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges
have been paid, no claim shall be admitted against the carrier with regard to
the condition in which the goods transported were delivered.
HELD:
● The law 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.
● The Court 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 three (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? The Request for Bad Order Survey and Turn ● As regards respondent Pimentel Customs, it is sufficient to
Over Survey of Bad Order Cargoes, respectively dated June 17, acknowledge that it had no participation in the physical handling,
1999 and June 28, 1991, evince the fact that the damage to the loading and delivery of the damaged cargo and should, therefore,
cargo was already made known to Eagle Express and, possibly, be absolved of liability.
SMC, as of those dates. ● Finally, UCPB's misrepresentation that the applicability of the Code
● Sec. 3(6) of the COGSA provides a similar claim mechanism as the of Commerce was not raised as an issue before the trial court
Code of Commerce but prescribes a period of three (3) days within warrants the assessment of double costs of suit against it.
which notice of claim must be given if the loss or damage is not
apparent. It states: WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
Sec. 3(6). Unless notice of loss or damage and the general nature in CA-G.R. CV No. 68168, dated October 29, 2004 and its Resolution dated
of such loss or damage be given in writing to the carrier or his June 14, 2005 are AFFIRMED. Double costs against petitioner.
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 descibed 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 of

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.

● UCPB seizes upon the last paragraph 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.
● At any rate, the notion that the request for bad order survey and
turn over survey of bad cargoes signed by Eagle Express's
representative is construable as compliant with the notice
requirement under Art. 366 of the Code of Commerce was
foreclosed by the dismissal of the complaint against DAMCO's
representative, East Asiatic.
 Cordoba vs. Warner, Barner & Co., (1 Phil. Rep., 9) that article 366 of the Code
of Commerce applies to maritime shipments

FACTS:
● I According to the complaint, the plaintiff, on June 3, 1909, placed aboard the
defendant's steamer Venus 500 barrels of cement consigned to the district
engineer of the Province of Albay, to be shipped to Tabaco, Albay.
● The cement, when placed aboard the steamer in Manila Bay, was in good
order and condition.
● On arrival of the steamer at the port of Tabaco, the defendant, through its
agents, unloaded the 500 barrels of cement and received a receipt therefor
from the consignee stating that the property had been received in good
condition.
● Subsequently thereto (the exact time not alleged in the complaint) the
consignee discovered that 42 barrels had been broken open and about half of
the cement in each barrel lost, and it is alleged that this loss was due to the
careless handling on the part of the defendant's agents.
● There is no allegation in the complaint showing that either the plaintiff or the
consignee or anyone else representing them made any complaint or demand
on the defendant company at any time prior to the presentation of this
19 Govt of PH v Inchausti & Co. complaint, which was filed on February 18, 1911, to be reimbursed for the loss
GR 6957 of the cement.
February 14,1913
BELTRAN ISSUE:
Topic: Claim in Overland Transportation & Coastwise Shipping W/N it can claim loss for damages?
Petitioner: Government of PH
Respondent: Inchausti & Co
Ponente: Trent RULING:
NOTE: MEDJO MALABO YUNG CASE DIN TALAGA ● Before the passage of Act No. 1792, evidence of the "opening" of a package or
"tampering" with the goods delivered to him for transportation made the
DOCTRINES: carrier liable for the loss, provided the required notice was given in time.
● LIABILITY FOR DAMAGES IN TRANSITU. — Notation of damages to the ● And when the fact that the packages in which goods have been received
shipment entered upon the bill of lading or receipt throws the burden of proof showed evidence of having been opened or tampered with the time of
upon the carrier, in claims for shortages or damages to the shipment, to show delivery, and
that such shortages or damages occurred after the shipment left the carrier's o This fact was noted upon the bill of lading, the burden rested upon
possession. (Sec. 67, Act No. 1792.) the carrier to show that, although the package may have been
● ARTICLE 366, CODE OF COMMERCE. — Under article 366 of the Code of broken at the time of delivery, the contents were intact.
Commerce, claims for damages must be made at the time delivery is taken, ● This being so, the mere repetition in the Act or section of a part of the existing
unless the indications of the damage cannot be ascertained from the exterior law on the subject of the liability of common carriers cannot be construed so
of the packages, in which case such claims must be made within twenty-four as to have the effect of repealing by implication the unrepealed parts of that
hours after delivery. law in the absence of a clear intention on the part of the Legislature to effect
● ARTICLE 366, CODE OF COMMERCE. — This court has already decided in such repeal.
 ▪ In other words, the statement that an annotation of the
receipt of goods in bad condition on the bill of lading
throws the burden of proof on the carrier to show that
they were in fact intact and in good condition at the time
of delivery does involve as a necessary corollary the
proposition that when the goods are received and
receipted for as being in good condition
▪ That the shipper can bring an action against the carrier at
any time within the ten years allowed by section 43 of Act
No. 190, within which to sue on an obligation arising from
a contract in writing and recover upon proof that the
goods, although receipted for as being in good condition,
were really received to the Code of Commerce is to
● Give the carrier an opportunity to ascertain
whether the claim is a well-founded one before
the goods leave his hands with respect to
damages which are observable upon the
exterior of the goods or of the packages in
which they are contained,
● Before the goods have been consumed or their
identity destroyed in cases in which it is alleged
that the damage has been discovered after the
goods were received by the consignee.
● To impose upon the carrier the liability which plaintiff seeks to impose by this
action would be to make the business of a common carrier a most hazardous
one — so hazardous, indeed, that carriers would be obliged to charge much
higher rates for carrying goods belonging to the Government than for
carrying goods belonging to other persons not entitled to any such
exemption from the general provisions of law relating to rights and liabilities
of shippers and carriers as is here claimed on behalf of this plaintiff.
● With reference to the question insisted upon by the plaintiff that article 366 of
the Code of Commerce is not applicable to maritime transportation, it is
sufficient to say that this court has decided this point in the case of Cordoba
vs. Warner, Barnes & Co. (1 Phil. Rep., 7) adversely to the contention of the
plaintiff.
● We now see no reason for changing the doctrine announced in that case
20. G.R. No. 136888 June 29, 2005 PHILIPPINE CHARTER INSURANCE gaskets of the manhole covers of the ballast tanks re-acted to the
CORPORATION, petitioner, vs. CHEMOIL LIGHTERAGE chemical causing shrinkage thus, loosening the covers and cargo
CORPORATION, respondent. -DE LEON, Luis ingress to the rusty ballast tanks
● on 03 April 1991, PGP paid the respondent the amount of
₱301,909.50 as full payment for the latter’s services, as evidenced
Topic: Notice of Claim > Claim in Overland transportation and Coastwise by Official Receipt No. 1274
shipping ● an action for damages was instituted by the petitioner-insurer
Petitioner: Philippine Charter Insurance Corporation (insurer of goods of against respondent-carrier before the RTC, Branch 16, City of
consignee Plastic Group Phils [PGP]) Manila
Respondent: Chemoil Lighterage Corporation (Common carrier) ● trial court rendered a Decision
○ judgment is hereby rendered in favor of plaintiff ordering
Doctrine: defendant to pay plaintiff’s claim
● The filing of a claim with the carrier within the time limitation ● respondent sought relief with the Court of Appeals where it alleged
therefore actually constitutes a condition precedent to the accrual of in the main that PGP failed to file any notice, claim or protest within
a right of action against a carrier for loss of, or damage to, the the period required by Article 366 of the Code of Commerce, which
goods. is a condition precedent to the accrual of a right of action against
● The second paragraph of Article 366 of the Code of Commerce is the carrier
also edifying. It is not only when the period to make a claim has ○ A telephone call which was supposedly made by a certain
elapsed that no claim whatsoever shall be admitted, as no claim Alfred Chan, an employee of PGP, to one of the Vice
may similarly be admitted after the transportation charges have Presidents of the respondent, informing the latter of the
been paid discoloration, is not the notice required by Article 366 of
the Code of Commerce
● Court of Appeals promulgated its Decision reversing the trial court
Facts:
Issue:
● Samkyung Chemical Company, Ltd., based in Ulsan, South Korea,
● WON the notice of claim was filed within the prescribed period for
shipped 62.06 metric tons of the liquid chemical DIOCTYL
the right of action to accrue
PHTHALATE (DOP) and another 436.70 metric tons of DOP to the
○ Was the phone call tantamount to a notice of claim
Philippines. The consignee was Plastic Group Phils., Inc. (PGP) in
No.
Manila
● PGP insured the cargo with herein petitioner Philippine Charter
Ruling:
Insurance Corporation against all risks.
● Article 366 of the Code of Commerce has profound application in
● The ocean tanker MT "TACHIBANA" unloaded the cargo to Tanker
the case at bar
Barge LB-1011 of respondent Chemoil Lighterage Corporation,
● As to the first issue, the petitioner contends that the notice of
which shall transport the same to Del Pan Bridge in Pasig River.
contamination was given by Alfredo Chan, an employee of PGP, to
Tanker Barge LB-1011 would unload the cargo to tanker trucks,
Ms. Encarnacion Abastillas, Vice President for Administration and
also owned by the respondent, and haul it by land to PGP’s storage
Operations of the respondent, at the time of the delivery of the
tanks in Calamba, Laguna.
cargo, and therefore, within the required period.25 This was done by
● Upon inspection by PGP, the samples taken from the shipment
telephone
showed discoloration from yellowish to amber, demonstrating that it
● The respondent, however, claims that the supposed notice given by
was damaged, as DOP is colorless and water clear
PGP over the telephone was denied by Ms. Abastillas
● As unloading progressed, it was observed on February 14, 1991
● Both (lower) courts held that, indeed, a telephone call was made by
that DOP samples taken were discolored from yellowish to amber.
Alfredo Chan to Encarnacion Abastillas, informing the latter of the
Inspection of cargo tanks showed manhole covers of ballast tanks’
contamination. However, nothing in the trial court’s decision stated
ceilings loosely secured. Furthermore, it was noted that the rubber
that the notice of claim was relayed or filed with the respondent-
 carrier immediately or within a period of twenty-four hours from the
time the goods were received
○ The phone call was deemed not a notice of claim
● we cannot find a shred of evidence that will precisely and ultimately
point to the conclusion that the notice of claim was timely relayed or
filed

● The second paragraph of Article 366 of the Code of Commerce is

also edifying. It is not only when the period to make a claim has
elapsed that no claim whatsoever shall be admitted, as no claim
may similarly be admitted after the transportation charges have
been paid.
● In this case, there is no question that the transportation charges
have been paid, as admitted by the petitioner, and the
corresponding official receipt32 duly issued.
○ Hence, it the right of action was deemed waived

Ratio:

WHEREFORE, in view of all the foregoing, the Decision of the Court of

Appeals dated 18 December 1998, which reversed and set aside the
decision of the trial court, is hereby AFFIRMED in toto. No pronouncement
as to costs.
 21
Lorenzo Shipping Corp. v. Chubb and Sons, Inc
[G.R. NO. 147724 : June 8, 2004]
PUNO, J.
By: Lacbayo
_____________________________________________________________
Petitioner: LORENZO SHIPPING CORP.
Respondents: CHUBB and SONS, Inc., GEARBULK, Ltd. and PHILIPPINE
TRANSMARINE CARRIERS, INC.
Topic: Notice of Claim in Overland Transportation and Coastwise Shipping
Doctrines: (please see those in bold under Held)
_____________________________________________________________
Facts:
● Mayer Steel Pipe Corporation loaded 581 bundles of ERW black
steel pipes on board M/V Lorcon IV (owned by Lorenzo Shipping)
for shipment to Davao City.
● Lorenzo Shipping issued a clean bill of lading for the account of the
Sumitomo Corporation (consignee) of San Francisco, California,
USA, which in turn, insured the goods with Chubb and Sons, Inc.
● The M/V Lorcon IV arrived at the Sasa Wharf in Davao City
● Transmarine Carriers received the subject shipment which was
discharged. It discovered seawater in the hatch of M/V Lorcon IV,
and found the steel pipes submerged in it.
● Sumitomo hired the services of R.J. Del Pan Surveyors to inspect
the shipment prior to and subsequent to discharge. Del Pans
Survey Report showed that the subject shipment was no longer in
good condition, as in fact, the pipes were found with rust formation
on top and/or at the sides. Moreover, the surveyor noted that the
cargo hold of the M/V Lorcon IV was flooded with seawater, and the
tank top was rusty, thinning, and with several holes at different
places.The rusty condition of the cargo was noted on the mates
receipts and the checker of M/V Lorcon IV signed his conforme
thereon.
● Gearbulk loaded the shipment on board its vessel M/V San Mateo
Victory, for carriage to the United States. It issued Bills of Lading
covering 364 bundles of steel pipes to be discharged at Oakland,
U.S.A and another one covering 217 bundles of steel pipes to be
discharged at Vancouver, Washington, U.S.A. All bills of lading
were marked ALL UNITS HEAVILY RUSTED.
● While the cargo was in transit from Davao City to the U.S.A.,
Sumitomo sent a letter of intent to petitioner Lorenzo Shipping
informing the latter that it will be filing a claim based on the
damaged cargo once such damage had been ascertained.
● M/V San Mateo Victory arrived at Oakland, California, U.S.A.,
where it unloaded 364 bundles of the subject steel pipes. It then
sailed to Vancouver, Washington where it unloaded the remaining
217 bundles. Toplis and Harding, Inc. of San Franciso, California,
surveyed the steel pipes, and also discovered the latter heavily
rusted. When the steel pipes were tested with a silver nitrate
solution, Toplis and Harding found that they had come in contact
with salt water.
● Due to its heavily rusted condition, the consignee Sumitomo
rejected the damaged steel pipes and declared them unfit for the
purpose they were intended. It then filed a marine insurance claim
with respondent Chubb and Sons, Inc. which the latter settled.
● Chubb and Sons, Inc. filed a complaint for collection of a sum of
money against Lorenzo Shipping, Gearbulk, and Transmarine.
● Chubb and Sons, Inc. alleged that it is not doing business in the
Philippines, and that it is suing under an isolated transaction.
● Gearbulk and Transmarine filed their answer with counterclaim and
cross-claim against petitioner Lorenzo Shipping denying liability on
the following grounds:(a) respondent Chubb and Sons, Inc. has no
capacity to sue before Philippine courts; (b) the action should be
dismissed on the ground of forum non conveniens; (c) damage to
the steel pipes was due to the inherent nature of the goods or to the
insufficiency of packing thereof; (d) damage to the steel pipes was
not due to their fault or negligence; and, (e) the law of the country
of destination, U.S.A., governs the contract of carriage.
● Lorenzo Shipping filed its answer with counterclaim denying liability
alleging, among others: (a) that rust easily forms on steel by mere
exposure to air, moisture and other marine elements; (b) that it
made a disclaimer in the bill of lading; (c) that the goods were
improperly packed; and, (d) prescription, laches, and
extinguishment of obligations and actions had set in.
● RTC: Ruled in favor of the respondent Chubb and Sons, Inc.,
finding that: (1) respondent Chubb and Sons, Inc. has the right to
institute this action; and, (2) petitioner Lorenzo Shipping was
negligent in the performance of its obligations as a carrier.
● Petitioner Lorenzo Shipping appealed to the Court of Appeals
insisting that:(a) respondent Chubb and Sons does not have
capacity to sue before Philippine courts; and, (b) petitioner Lorenzo
Shipping was not negligent in the performance of its obligations as
carrier of the goods.
● CA: Denied the petition and affirmed the decision of the trial court.
Issues:
 substituted (the insurer) will succeed to all the rights of the
1. WON Chubb and Sons has the capacity to sue before the creditor (the insured), having reference to the debt due the
Philippine courts. latter.
2. WON Lorenzo Shipping is negligent in carrying the subject cargo.
3. WON the claims for damages by Chubb and Sons has already
prescribed. The rights inherited by Chubb and Sons, pertain only to the
4. WON the American law governs the contract of carriage because payment it made to the insured Sumitomo as stipulated in the
the U.S.A. is the country of destination. insurance contract between them, and which amount it now seeks
to recover from petitioner Lorenzo Shipping which caused the loss
Held: sustained by the insured Sumitomo. The capacity to sue of
respondent Chubb and Sons could not perchance belong to the
group of rights, remedies or securities pertaining to the payment
1. Yes. Petitioner failed to raise the defense that Sumitomo is a
respondent insurer made for the loss which was sustained by the
foreign corporation doing business in the Philippines without a
insured Sumitomo and covered by the contract of insurance.
license. It is therefore estopped from litigating the issue on appeal
Capacity to sue is a right personal to its holder. It is conferred
especially because it involves a question of fact which this Court
by law and not by the parties. Lack of legal capacity to sue
cannot resolve. Secondly, assuming arguendo that Sumitomo
means that the plaintiff is not in the exercise of his civil rights,
cannot sue in the Philippines, it does not follow that respondent, as
or does not have the necessary qualification to appear in the
subrogee, has also no capacity to sue in our jurisdiction.
case, or does not have the character or representation he
claims. It refers to a plaintiffs general disability to sue, such as on
Subrogation is the substitution of one person in the place of
account of minority, insanity, incompetence, lack of juridical
another with reference to a lawful claim or right, so that he
personality, or any other disqualifications of a party. Respondent
who is substituted succeeds to the rights of the other in
Chubb and Sons who was plaintiff in the trial court does not
relation to a debt or claim, including its remedies or securities.
possess any of these disabilities. On the contrary, respondent
The principle covers the situation under which an insurer that
Chubb and Sons has satisfactorily proven its capacity to sue, after
has paid a loss under an insurance policy is entitled to all the
having shown that it is not doing business in the Philippines, but is
rights and remedies belonging to the insured against a third
suing only under an isolated transaction, i.e., under the one (1)
party with respect to any loss covered by the policy. It
marine insurance policy issued in favor of the consignee Sumitomo
contemplates full substitution such that it places the party
covering the damaged steel pipes.
subrogated in the shoes of the creditor, and he may use all
means which the creditor could employ to enforce payment.
The law on corporations does not prohibit foreign
The rights to which the subrogee succeeds are the same as,
corporations from performing single acts of business. A
but not greater than, those of the person for whom he is
foreign corporation needs no license to sue before Philippine courts
substituted he cannot acquire any claim, security, or remedy
on an isolated transaction. In this case, Chubb and Sons is suing
the subrogor did not have.25 In other words, a subrogee
under an isolated transaction because the two (2) bills of lading
cannot succeed to a right not possessed by the subrogor. A
spawned from the single marine insurance policy that respondent
subrogee in effect steps into the shoes of the insured and can
Chubb and Sons issued in favor of the consignee Sumitomo,
recover only if insured likewise could have recovered.
covering the damaged steel pipes. The execution of the policy is a
However, when the insurer succeeds to the rights of the
single act, an isolated transaction. The term isolated transaction to
insured, he does so only in relation to the debt. The person
literally mean one or a mere single act.
 Furthermore, respondent insurer Chubb and Sons, by virtue of the
right of subrogation provided for in the policy of insurance, is the
real party in interest in the action for damages before the court a
quo against the carrier Lorenzo Shipping to recover for the loss
sustained by its insured. Rule 3, Section 2 of the 1997 Rules of
Civil Procedure defines a real party in interest as one who is
entitled to the avails of any judgment rendered in a suit, or who
stands to be benefited or injured by it. Where an insurance
company as subrogee pays the insured of the entire loss it
suffered, the insurer-subrogee is the only real party in interest and
must sue in its own name to enforce its right of subrogation against
the third party which caused the loss. This is because the insurer in
such case having fully compensated its insured, which payment
covers the loss in full, is subrogated to the insureds claims arising
from such loss. The subrogated insurer becomes the owner of the
claim and, thus entitled to the entire fruits of the action.36 It then,
thus possesses the right to enforce the claim and the significant
interest in the litigation. In the case at bar, it is clear that respondent
insurer was suing on its own behalf in order to enforce its right of
subrogation.
2. YES. The steel pipes were in good condition when they were
loaded at the port of origin (Manila) on M/V Lorcon IV en route to
Davao City. Lorenzo Shipping issued clean bills of lading covering
the subject shipment. A bill of lading, aside from being a
contract and a receipt, is also a symbol of the goods covered
by it. A bill of lading which has no notation of any defect or
damage in the goods is called a clean bill of lading. A clean bill
of lading constitutes prima facie evidence of the receipt by the
carrier of the goods as therein described. Mere proof of
delivery of goods in good order to a carrier and the
subsequent arrival in damaged condition at the place of
destination raises a prima facie case against the carrier.
M/V Lorcon IV of petitioner Lorenzo Shipping received the steel
pipes in good order and condition, evidenced by the clean bills of
lading it issued. When the cargo was unloaded from Lorenzo
Shippings vessel at the Sasa Wharf in Davao City, the steel pipes
were rusted all over. M/V San Mateo Victory of respondent
Gearbulk, Ltd, which received the cargo, issued Bills of Lading
covering the entire shipment, all of which were marked ALL UNITS
HEAVILY RUSTED.R.J. Del Pan Surveyors found that the cargo
hold of the M/V Lorcon IV was flooded with seawater, and the tank
top was rusty, thinning and perforated, thereby exposing the cargo
to sea water.
Given this, it may be concluded that the cargo was damaged while
on board the vessel of petitioner Lorenzo Shipping, and that the
damage was due to the latters negligence. Not only did the legal
presumption of negligence attach to Lorenzo Shipping upon the
occurrence of damage to the cargo. More so, the negligence of
petitioner was sufficiently established. Lorenzo Shipping failed to
keep its vessel in seaworthy condition. R.J. Del Pan Surveyors
found the tank top of M/V Lorcon IV to be rusty, thinning, and with
several holes at different places.Witness Captain Pablo Fernan,
Operations Manager of respondent Transmarine Carriers, likewise
observed the presence of holes at the deck of M/V Lorcon IV. The
unpatched holes allowed seawater, reaching up to three (3) inches
deep, to enter the flooring of the hatch of the vessel where the steel
pipes were stowed, submerging the latter in sea water. The contact
with sea water caused the steel pipes to rust. The silver nitrate test,
which Toplis and Harding employed, further verified this conclusion.
Significantly, petitioner Lorenzo Shipping did not even attempt to
present any contrary evidence. Neither did it offer any proof to
establish any of the causes that would exempt it from liability for
such damage. It merely alleged that the:(1) packaging of the goods
was defective; and (2) claim for damages has prescribed.
To be sure, there is evidence that the goods were packed in a
superior condition.John M. Graff, marine surveyor of Toplis and
Harding, examined the condition of the cargo on board the vessel
San Mateo Victory. He testified that the shipment had superior
packing because the ends were covered with plastic, woven plastic.
Whereas typically they would not go to that bother. Typically, they
come in with no plastic on the ends. They might just be banded, no
plastic on the ends.
 3. NO. Art. 366 of the Code of Commerce states and a provision in
the Bill of Lading stated that no claim for damage or loss shall be
honored 24 hours after delivery. Said 24 hours after delivery does
not begin to run until the consignee has received such possession
of the merchandise that he may exercise over it the ordinary control
pertinent to ownership. In other words, there must be delivery of the
cargo by the carrier to the consignee at the place of destination. In
the case at bar, consignee Sumitomo has not received possession
of the cargo, and has not physically inspected the same at the time
the shipment was discharged from M/V Lorcon IV in Davao City.
Lorenzo Shipping failed to establish that an authorized agent of the
consignee Sumitomo received the cargo at Sasa Wharf in Davao
City. Transmarine Carriers as agent of respondent Gearbulk, Ltd.,
which carried the goods from Davao City to the United States, and
the principal, respondent Gearbulk, Ltd. itself, are not the
authorized agents as contemplated by law. What is clear from the
evidence is that the consignee received and took possession of the
entire shipment only when the latter reached the United States
shore.Only then was delivery made and completed. And only then
did the 24-hour prescriptive period start to run.
4. NO. Philippine law applies. Lorenzo Shipping, through its M/V
Lorcon IV, carried the goods from Manila to Davao City.Thus, as
against petitioner Lorenzo Shipping, the place of destination is
Davao City and therefore, Philippine law applies.

Dispositive:

IN VIEW THEREOF, the petition is DENIED.The Decision of the Court of

Appeals in CA-G.R. CV No. 61334 dated August 14, 2000 and its Resolution
dated March 28, 2001 are hereby AFFIRMED.Costs against petitioner.
 22. ROLDAN v. LIM PONZO & Co.
G.R. No. L-11325. December 7, 1917
Carson, J.
By: Yana Mendoza
________________________________________________________________________
Topic: Claim in Overland Transportation and Coastwise Shipping
Petitioner: Monica J. Roldan
Respondent: Lim Ponzo & Co.
Doctrine:
Article 366 of the Commercial Code is limited to cases of claims for
damages to goods actually received by the consignee; it has no application
in cases wherein the goods entrusted to the carrier are not delivered to the
consignee by the carrier in pursuance of the terms of the carriage contract.
_____________________________________________________________
FACTS:
● Plaintiff in this action seeks to recover damages in the sum of
P3,780.12 for the alleged failure of the defendant company to live
up to its contract for the transportation of 2,244 packages of sugar
from the plaintiff's hacienda to Iloilo.
● Defendants admitted the execution of the contract, receipt of 2,244
packages of sugar for transportation, and the loss of a part of this
sugar. However, it insisted that it should not be held responsible for
its failure to carry out the contract, because the sugar was lost in a
wreck in the river of Jalaud, without fault on the part of the owner,
the patron, or the crew of the vessel.
● (What happened was the defendant company's lorcha was
wrecked in the river Jalaud, and that of the 2,244 packages of
plaintiff's sugar aboard the vessel, only 1,022 packages were
saved in a more or less damaged condition)
● During the trial, introduced evidence tending to disclose that the
lorcha had been wrecked and the sugar lost through the negligence
and lack of skill of the master of the lorcha in the management of
his vessel.
● But before the defendant presents its witness, the lower court
dismissed the complaint on the ground that it was neither alleged or
proved that the plaintiff had complied with the provisions of Sec 366
of the Commercial Code, which states:
“Within the 24 hours following the receipt of the
merchandise a claim may be brought against the carrier
on account of damage or average found therein on
opening the packages, provided that the indication of the
damage of average giving rise to the claim cannot be case
said claim would only be admitted on the receipt of the
packages.
● After the periods mentioned have elapsed, or after the
transportation charges have been paid, no claim whatsoever shall
be admitted against the carrier with regards to the condition in
which the goods transported were delivered.”
ISSUE: W/N the lower court erred in dismissing the claim on the ground of
non-compliance w Sec. 366 of the Commercial Code
HELD: YES
● The said provision is limited to cases of claims for damage
goods actually turned over by the carrier and received by the
consignee, whether those damages be apparent from the
examination of the packages in which the goods are delivered, or of
such a character that the nature and extent of the damage is not
apparent until the packages are opened and the contents
examined. Clearly it has no application in such cases wherein
the goods entrusted to the carrier are not delivered by the
carrier to the consignee. In such cases there can be no question
of a claim for damages suffered by the goods while in transport,
since the claim for damages arises exclusively out of the failure to
make delivery.
● The object sought to be attained by the requirement of the
submission of claims in pursuance of this article is to compel the
consignee of goods entrusted to a carrier to make prompt demand
for settlement of alleged damages suffered by the goods while in
transport, so that the carrier will be enabled to verify all such claims
at the time of delivery or within 24 hours thereafter, and if
necessary fix responsibility and secure evidence as to the nature
and extent of the alleged damages to the goods while the matter is
still fresh in the minds of the parties.
● It is very clear, then, that in so far as this action seeks to recover
damages for defendant's failure to deliver 1,222 packages or
bayones of sugar, the failure to make claim for such damages
under the provisions of article 366 of the Commercial Code in no
wise affects the respective rights of the parties.
CLAIM-RELATED PART:
● In so far as this action is founded on a claim for damages resulting
from the wetting of the 1,022 packages of sugar which were saved
from the wreck, it seems clear that if these 1,022 packages of sugar
were delivered by the carrier and received by the consignee under
and in pursuance of the terms of the contract, this claim for
damages would be defeated by the plaintiff's failure to make claim
therefor in accordance with the terms of article 366 of the Code.

● The court is of opinion that the necessity for making the claim in
accordance with that article did not arise if these 1,022 packages of
sugar were recovered from the wreck by the plaintiff, himself, in an
effort, by his own activities, to save his property from total loss. The
measures to be taken under the terms of article 367 of the Code
when the parties are unable to arrive at an amicable settlement of
claims for damages set up in accordance with article 366, quite
clearly indicate that the necessity for the presentation of claims
under this article arises only in those cases wherein the carrier
makes delivery and the consignee receives the goods in pursuance
of the terms of the contract.

● Until the defendant has had an opportunity to submit his evidence it

is impossible to determine under what conditions these 1,022
packages of sugar came into the possession of the plaintiff, or to
determine whether his claim for damages by the wetting of this
sugar, if well founded in every other respect, is or should be
defeated by his failure to make claim for such damages in the
manner and form indicated in article 366 of the Commercial Code.

We conclude that the judgment entered in the court below should be

reversed and the record remanded to the court below for a new trial upon all
the issues raised by the pleadings, it being expressly understood, however,
that the evidence already in the record may be considered as submitted at
the new trial, without prejudice to the right of either party to offer such
additional evidence as he may deem proper in support of the allegations set
forth in the pleadings. No costs will be taxed in this instance. So ordered.

Arellano, C.J., Torres, Johnson, Araullo, Street, and Malcolm, JJ., concur.

23. ASIAN TERMINALS, INC. v. SIMON ENTERPRISES, INC.
G.R. No. 17716
February 27, 2013
OSORIO
Topic: Nature of goods and improper packing;
Ponente:
Doctrine:
The weight of the shipment as indicated in the bill of lading is not
conclusive as to the actual weight of the goods. Consequently, what
must be proven is the actual weight of the subject shipment at the time
it was loaded at the port of origin so that a conclusion may be made as
to whether there was indeed a shortage for which one must be liable.
PARTIES:
COMMON CARRIER: UNKNOWN
VESSELS: M/V Tern/M/V Sea Dream (vessels)
LOCAL AGENT: Inter-Asia Marine Transport Inc.
SHIPPER: Simon Enterprise Inc.
CONSIGNEE: Contiquincybunge Export Company
ARRASTRE OPERATOR: Asian Terminals Inc.
GOODS: Soybean Meal
DESTINATION: Port of Darrow, Louisiana, USA – Port of Manila
CAUSE: Short by 18.5 metric tons
RECIT READY DIGEST:
Simon entered into a contract with Contquincybubnge as its consignee of
Soybean Meal. 2 shipments were made. Both had shortages. Thus, Simon
filed an action for damages against the unknown owner of the vessels. The
unknown owner of the vessels allege that the damage or loss was due to the
inherent vice or defect of the goods or the insufficiency of the packing
thereof plus the bill of lading did not even specify the quantiy or quality of the
goods. ATi on the other hand claims that it exercised extraordinary diligence
in handling the subject shipment. RTC ruled that defendants should be
solidarily liable for the damages. The CA affirmed. SC held that the
decisions of the lower courts should be reversed in so far as ATI is
concerned.
FACTS:
· Simon Enterprise Inc. (Simon) has entered into contract with
Contiquincybunge Export Company (Contiquincybunge) as its consignee of
the shipped Soybean Meal.
· On October 25, 1995 and on November 25, 1995 Contiquincybunge
has made a shipment through M/V Sea Dream and M/V Tern respectively at
the Port of Darrow, Louisiana, U.S.A.
· For the first shipment, Contiquincybunge made a shipment of
6,825.144 metric tons of U.S. Soybean Meal which when the M/V Sea
Dream arrived at the Port of Manila the bulk of soybean meal was received
by the Asian Terminals, Inc. (ATI), for shipment to Simon.
· However, when it reached its receiver Simon, it was already short by
18.556 metric tons.
· For the second shipment, Contiquincybunge made shipment,
through M/V Tern, of 3,300.000 metric tons of U.S. Soybean Meal in Bulk
for delivery to Simon at the Port of Manila.
· The shipment was received by ATI again for delivery to Simon.
However, the shipped cargos were found lacking 199.863 metric tons.
· Simon has filed an action for damages against the unknown owner
of the vessels M/V Sea Dream and M/V Tern, its local agent Inter-Asia
Marine Transport, Inc., and petitioner ATI alleging that it suffered the
losses through the fault or negligence of the said defendants.
· The case of the unknown owner of the vessel M/V Sea Dream has
been settled in release and quitclaim and therefore has been stricken out of
the case, leaving M/V Tern, its local agent Inter-Asia Marine Transport, Inc.,
and petitioner ATI’s case remaining.
UNKNOWN OWNER OF THE VESSELS’ Arguments:
· Prayed for the dismissal of the complaint alleging lack of cause of
action and prescription
· Complaint does not state a cause of action
· Plaintiffs and/or defendants are not the real parties-in-interest
· Cause of action had already prescribed
· That the claim should have been filed within 3 days from the receipt of
cargo pursuant to the Code of Commerce
· That they cannot anymore check the veracity of the plaintiff’s claim
considering that it was filed 8 months after the cargo was dischared
· That plaintiff ATI hired its own barges to receive the cargo hence
accountable for such
· That there was no way of knowing the actual weight, quantity and
quality of the bulk cargo when loaded at the port of origin anf the shipper had
to rely on the bill of lading (which did not state the quantity/quality/weight of
the goods)
· That the damage or loss was due to the inherent vice or defect of
the goods or to the insufficiency of packing thereof or perils or
dangers or accidents of the sea, pre-shipment damage or improper
handling of goods by ATI after discharge from the vessel for which
defendants cannot be made liable
· That the loss is less than 0.75% of the entire cargo and was well-
within the accepted parameters when loading this type of bulk cargo
· By way of counterclaim, asked for payment of attorney’s fees and by
way of cross-claim asked for reimbursement from ATI
ATI’S Arguments:
· Alleged that it exercised the required diligence in handling the subject
shipment
PROCEDURE:
RTC: Ruled that the ATI be solidarily liable for the damages incurred by
Simon
· Respondent has established that the losses/shortages were incurred
prior to its receipt of the goods and as such the burden shifted to the carrier
to prove that it exercised extraordinary diligence as required by law to
prevent the loss
· TC also gave credence to the testimony of Eduardo Ragudo, a super
cargo of defendant Inter-Asia Marine Transport who admitted that there were
spillages or overflow
CA: Affirmed the RTC
· Agreed to the RTC that the unknown owner of the vessels failed to
establish that they exercised extraordinary diligence in transporting the
goods or exercised due diligence to forestall or lessen the loss as provided
in Art. 1742
· Also ruled that ATI, the arrastre operator should be held jointly and
severally liable with the carrier considering that ATI’s stevedores were under
the direct supervision of the unknown owner of the vessels and that the
spillahes occurred when the cargoes were being unloaded by the stevedores
ISSUE/S:
1. Whether the appellate court erred in affirming the decision of the trial
court holding petitioner ATI solidarily liable with its co-defendants for the
shortage incurred in the shipment of the goods to respondent - NO
HELD:
The petition for certiorari was granted to ATI.
RULE:
The weight of the shipment as indicated in the bill of lading is not conclusive
as to the actual weight of the goods. Consequently, what must be proven is
the actual weight of the subject shipment at the time it was loaded at the port
of origin so that a conclusion may be made as to whether there was indeed
a shortage for which one must be liable.
IN THIS CASE:
· The petition for review on certiorari was granted to ATI.
· The SC agreed to ATI’s claim that the CA erred in affirming the
decision of the trial court holding petitioner ATI solidarily liable with its co-
defendants for the shortage incurred in the shipment of the goods to
respondent. The CA misapprehended the following facts:
 o First, petitioner ATI is correct in arguing that the
respondent failed to prove that the subject shipment
suffered actual shortage, as there was no competent
evidence to prove that it actually weighed 3,300 metric
tons at the port of origin.
o Second, as correctly asserted by petitioner ATI, the
shortage, if any, may have been due to the inherent
nature of the subject shipment or its packaging since
the subject cargo was shipped in bulk and had a
moisture content of 12.5%.
o Third, SC agreed with the petitioner ATI that
respondent has not proven any negligence on the part
of the former.
Indeed, as the bill of lading indicated that the contract of carriage was under
a “said to weigh” clause, the shipper is solely responsible for the loading
while the carrier is oblivious of the contents of the shipment. (Emphasis
supplied)
International Container Terminal Services, Inc. v. Prudential Guarantee
& Assurance Co., Inc.,[ explains the meaning of clauses analogous to
“Shipper’s weight, quantity and quality unknown” in this manner:
This means that the shipper was solely responsible for the loading of
the container, while the carrier was oblivious to the contents of the
shipment x x x. The arrastre operator was, like any ordinary depositary,
duty-bound to take good care of the goods received from the vessel and to
turn the same over to the party entitled to their possession, subject to such
qualifications as may have validly been imposed in the contract
between the parties. The arrastre operator was not required to verify
the contents of the container received and to compare them with those
declared by the shipper because, as earlier stated, the cargo was at the
shipper’s load and count x x x.
THEREFORE:
Considering that respondent was not able to establish conclusively that the
subject shipment weighed 3,300 metric tons at the port of loading, and that it
cannot therefore be concluded that there was a shortage for which petitioner
should be responsible; bearing in mind that the subject shipment most likely
lost weight in transit due to the inherent nature of Soya Bean Meal;
assuming that the shipment lost weight in transit due to desorption, the
shortage of 199.863 metric tons that respondent alleges is a minimal 6.05%
of the weight of the entire shipment, which is within the allowable 10%
allowance for loss; and noting that the respondent was not able to show
negligence on the part of the petitioner and that the weighing methods which
respondent relied upon to establish the shortage it alleges is inaccurate,
respondent cannot fairly claim damages against petitioner for the subject
shipment’s alleged shortage.
DISPOSITIVE:
WHEREFORE, the petition for review on certiorari is GRANTED. The
Decision dated November 27, 2006 and Resolution dated March 23, 2007 of
the Court of Appeals in CA- G.R. CV No. 71210 are REVERSED AND SET
ASIDE insofar as petitioner Asian Terminals, Inc. is concerned. Needless to
add, the complaint against petitioner docketed as RTC Manila Civil Case No.
96-81101 is ordered DISMISSED.

The presumption that the bill of lading, which petitioner relies upon to
support its claim for restitution, constitutes prima facie evidence of the
goods therein described was correctly deemed by the appellate court to
have been rebutted in light of abundant evidence casting doubts on its
veracity

The bill of lading carried an added clause – the shipment’s weight,

measure, quantity, quality, condition, contents and value unknown.
Evidently, the weight of the cargo could not be gauged from the bill of
lading.

24 INSURANCE COMPANY OF NORTH AMERICA v. ASIAN TERMINALS,
INC.
G.R. No. 180784; February 15, 2012
● The Consignee, San Miguel Corporation (SMC) filed separate claims
Peralta, J.
By: Ericka Agustin
________________________________________________________________________
Topic: Prescription in Overland Transportation and Coastwise Shipping,
Prescription in International Carriage of Goods
Petitioner: Insurance Company of North America
Respondent: 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 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.
________________________________________________________________________
FACTS:
● On November 9, 2002 – Macro-Lite Korea Corporation shipped to San
Miguel Corporation through M/V “DIM P” vessel, 185 packages
(231,000 sheets) of electrolytic tin free steel, complete and in good
condition and covered by Bill of Lading. The shipment had a declared
value of US$169,850.35 and was insured with Insurance Company of
North America against all risks under Marine Policy.
● The carrying vessel arrived at the port of Manila on November 19,
2002, and when the shipment was discharged therefrom, it was noted
that 7 packages thereof were damaged and in bad order. The shipment
was then turned over to the custody of Asian Terminals, Inc. (ATI) on
November 21, 2002 for storage and safekeeping pending its
withdrawal by the consignee’s authorized customs broker, R.V. Marzan
Brokerage Corp. (Marzan).
● On November 22, 23 and 29, 2002, the shipment was withdrawn by
Marzan from the custody of Asian Terminals. On November 29, 2002,
prior to the last withdrawal of the shipment, a joint inspection of the
said cargo was conducted per the Request for Bad Order Survey and
the examination report, which was written on the same request,
showed that an additional five (5) packages were found to be damaged
and in bad order.
against ATI and Insurance Company of North America (ICNA) for the
damage of 11,200 sheets of electrolytic tin free steel.
○ ICNA engaged the services of an independent
adjuster/surveyor, BA McLarens Phils., Inc. to conduct an
investigation and evaluation on the claim and prepare the
necessary report. BA McLarens, Phils., Inc. submitted to ICNA
an Survey Report regarding the damage shipment. It noted
that out of the reported 12 damaged skids, 9 of them were
rejected and 3 skids were accepted by the consignee’s
representative as good order. BA McLares Phils., Inc.
evaluated the total cost of damage to be P431,592.14.
● ICNA paid the consignee the amount of ₱431,592.14 for the damage
caused to the shipment, as evidenced by the Subrogation Receipt
dated January 8, 2004. Thereafter, petitioner, formally demanded
reparation against ATI. As ATI failed to satisfy its demand, ICNA filed
an action for damages with RTC of Makati City.
● TRIAL COURT: shipment suffered additional damages. The Request
for Bad Order Survey shows that prior to the turnover of the shipment
from the custody of ATI to the consignee, aside from the 7 packages
which were already damaged upon arrival at the port of Manila, 5
more packages were found with “dent, cut and crumple” while in the
custody of ATI. This document was issued by ATI and was jointly
executed by the representatives of ATI, consignee and customs, and
the Shed Supervisor. Thus, ATI is now estopped from claiming that
there was no additional damage suffered by the shipment. It is,
therefore, only logical to conclude that the damage was caused solely
by the negligence of ATI. This evidence of ICNA was refuted by ATI by
merely alleging that "the damage to the 5 Tin Plates is only in its
external packaging." However, the fact remains that the consignee
has rejected the same as total loss for not being suitable for their
intended purpose. In addition, the photographs presented by the
plaintiff show that the shipment also suffered severe dents and some
packages were even critically crumpled.
○ As to the extent of liability, ATI invoked the Contract for Cargo
Handling Services executed between the Philippine Ports
Authority and Marina Ports Services, Inc. (now Asian
Terminals, Inc.). Under the said contract, ATI's liability for
damage to cargoes in its custody is limited to ₱5,000.00 for
each package, unless the value of the cargo shipment is
otherwise specified or manifested or communicated in
writing, together with the declared Bill of Lading value and
supported by a certified packing list to the contractor by the
interested party or parties before the discharge or lading unto
vessel of the goods.
○ The trial court found that there was compliance by the shipper
and consignee with the above requirement. The Bill of Lading,
together with the corresponding invoice and packing list, was
shown to ATI prior to the discharge of the goods from the
vessel. Since the shipment was released from the custody of
ATI, the trial court found that the same was declared for tax
purposes as well as for the assessment of arrastre charges
and other fees. For the purpose, the presentation of the
invoice, packing list and other shipping documents to ATI for
the proper assessment of the arrastre charges and other fees
satisfied the condition of declaration of the actual invoices of
the value of the goods to overcome the limitation of liability of
the arrastre operator.
○ However, the trial court dismissed the complaint on the
ground that ICNA’s claim was already barred by the statute of
limitations. It held that COGSA, embodied in Commonwealth
Act (CA) No. 65, applies to this case, since the goods were
shipped from a foreign port to the Philippines. The trial court
stated that under the said law, particularly paragraph 4,
Section 3 (6)15 thereof, the shipper has the right to bring a
suit within one year after the delivery of the goods or the date
when the goods should have been delivered, in respect of loss
or damage thereto.
○ In this case, the records show that 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 instant 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.
● ICNA’S CLAIM: while it is in full accord with the trial court in finding ATI
liable for the damaged shipment, 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 ATI, 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. ICNA asserts
that since the complaint was filed against ATI, arrastre operator only,
without impleading the carrier, the prescriptive period under the
COGSA is not applicable to this case.
○ Moreover, ICNA 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 respondent’s custody, long after the
shipment was discharged from the vessel. The said damage
was confirmed by the trial court and proved by the Request
for Bad Order Survey No. 56422.
ISSUE/S AND RULING:
1. W/N the one-year prescriptive period for filing a suit under the COGSA
applies to this action for damages against ATI (arrastre operator).

No. The COGSA was accepted to be made applicable to all contracts from
the carriage of goods by sea to and from the Philippine ports in foreign trade
by virtue of CA 65. It is noted that 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, 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 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.
From the provision above, the carrier and the ship may put up the defense of
prescription if the action for damages is not brought within one year after
the delivery of the goods or the date when the goods should have been
delivered. It has been held that not only the shipper, but also the consignee
or legal holder of the bill may invoke the prescriptive period.
However, the COGSA does not mention that an arrastre operator may
invoke the prescriptive period of one year; hence, it does not cover the
arrastre operator.
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.), thus:
Section 7.01 Responsibility and Liability for Losses and Damages;
Exceptions - The CONTRACTOR shall, at its own expense, handle all
merchandise in all work undertaken by it hereunder, diligently and in a
skillful, workman-like and efficient manner. The CONTRACTOR shall be
solely responsible as an independent contractor, and hereby agrees to
accept liability and to pay to the shipping company, consignees, consignors
or other interested party or parties for the loss, damage or non-delivery of
cargoes in its custody and control to the extent of the actual invoice value of
each package which in no case shall be more than FIVE THOUSAND PESOS
(₱5,000.00) each, unless the value of the cargo shipment is otherwise
specified or manifested or communicated in writing together with the
declared Bill of Lading value and supported by a certified packing list to the
CONTRACTOR by the interested party or parties before the discharge or
loading unto vessel of the goods. This amount of Five Thousand Pesos
(₱5,000.00) per package may be reviewed and adjusted by the AUTHORITY
from time to time. The CONTRACTOR shall not be responsible for the
condition or the contents of any package received, nor for the weight nor for
any loss, injury or damage to the said cargo before or while the goods are
being received or remains in the piers, sheds, warehouses or facility, if the
loss, injury or damage is caused by force majeure or other causes beyond
the CONTRACTOR's control or capacity to prevent or remedy; PROVIDED,
that a formal claim together with the necessary copies of Bill of Lading,
Invoice, Certified Packing List and Computation arrived at covering the loss,
injury or damage or non-delivery of such goods shall have been filed with the
CONTRACTOR within fifteen (15) days from day of issuance by the
CONTRACTOR of a certificate of non-delivery; PROVIDED, however, that if
said CONTRACTOR fails to issue such certification within fifteen (15) days
from receipt of a written request by the shipper/consignee or his duly
authorized representative or any interested party, said certification shall be
deemed to have been issued, and thereafter, the fifteen (15) day period
within which to file the claim commences; PROVIDED, finally, that the
request for certification of loss shall be made within thirty (30) days from the
date of delivery of the package to the consignee.
Based on the Contract above, 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.
In this case, the records show that the goods were deposited with the
arrastre operator on November 21, 2002. The goods were withdrawn from
the arrastre operator on November 22, 23 and 29, 2002. Prior to the
withdrawal on November 29, 2002, the broker of the importer, Marzan,
requested for a bad order survey in the presence of a Customs
representative and other parties concerned. The joint inspection of cargo
was conducted and it was found that an additional five (5) packages were
found in bad order as evidenced by the document entitled Request for Bad
Order Survey dated November 29, 2002, which document also contained the
examination report, signed by the Custom’s representative,
Supervisor/Superintendent, consignee’s representative, and the ATI
Inspector.
Thus, as early as November 29, 2002, the date of the last withdrawal of the
goods from the arrastre operator, respondent ATI was able to verify that five
(5) packages of the shipment were in bad order while in its custody. The
certificate of non-delivery referred to in the Contract is similar to or identical
with the examination report on the request for bad order survey. 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 consignee’s
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. W/N ICNA is entitled to recover actual damages in the amount of
₱431,592.14 from ATI.
Yes. ICNA is entitled to actual damages in the amount of P164,428.76 for
the 4 skids damaged while in the custody of ATI.
It should be noted that ICNA, who filed this action for damages for the 5
skids that were damage while in the custody of ATI, 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 9
skids. Based on the same evaluation report, only 4 of the 9 skids were
damaged in the custody of ATI. ICNA should have been straightforward
about its exact claim, which is borne out by the evidence on record, as ICNA
can be granted only the amount of damages that is due to it.
WHEREFORE, the petition is GRANTED. The Decision of the Regional Trial
Court of Makati City, Branch 138, dated October 17, 2006, in Civil Case No.
05-809, and its Order dated December 4, 2007, are hereby REVERSED and
SET ASIDE. Respondent Asian Terminals, Inc. is ORDERED to pay petitioner
Insurance Company of North America actual damages in the amount of One
Hundred Sixty-Four Thousand Four Hundred Twenty-Eight Pesos and
Seventy-Six Centavos (₱164,428.76). Twelve percent (12%) interest per
annum shall be imposed on the amount of actual damages from the date
the award becomes final and executory until its full satisfaction.
 PRESCRIPTION
● Four-year period of prescription for Quasi-Delicts
● Ten-year period for violation of written contract

FACTS:
● It should be noted that that legal point is already res judicata.
● In 1967 it was decided in favor of plaintiff-appellant Domingo Ang in Ang vs.
American
o It was held that Ang has a cause of action against the carrier which
has not prescribed.
● In the instant case, Ang on September 26, 1963, as the assignee of a bill of
lading held by Yau Yue Commercial Bank, Ltd. of Hongkong, sued Compañia
Maritima, Maritime Company of the Philippines and C.L. Diokno.
● He prayed that the defendants be ordered to pay him solidarily the sum of
US$130,539.68 with interest from February 9, 1963 plus attorney's fees and
damages.
● Ang alleged that Yau Yue Commercial Bank agreed to sell to Herminio G. Teves
under certain conditions 559 packages of galvanized steel, Durzinc sheets.
● The merchandise was loaded on May 25, 1961 at Yawata, Japan in the M/S
Luzon, a vessel owned and operated by the defendants,
o To be transported to Manila and consigned "to order" of the
shipper, Tokyo Boeki, Ltd., which indorsed the bill of lading issued by
Compañia Maritima to the order of Yau Yue Commercial Bank.
● Ang further alleged that the defendants, by means of a permit to deliver
imported articles, authorized the delivery of the cargo to Teves who obtained
delivery from the Bureau of Customs without the surrender of the bill of
lading and in violation of the terms thereof. Teves dishonored the draft drawn
by Yau Yue against him.
● The Hongkong and Shanghai Banking Corporation made the corresponding
protest for the draft's dishonor and returned the bill of lading to Yau Yue.
● The bill of lading was indorsed to Ang.
● The defendants filed a motion to dismiss Ang's complaint on the ground of
lack of cause of action.
25.Ang v Compania Maritima ● Ang opposed the motion.
GR L-30805 o As already stated, the trial court on May 22, 1964 dismissed the
December 26,1984 complaint on the grounds of lack of cause of action and prescription
BELTRAN since the action was filed beyond the one-year period provided in
Topic: Prescription in International Carriage of Goods the Carriage of Goods by Sea Act.
Petitioner: Domingo Ang
Respondent: Compania Maritama, Maritime Company of the PH and Diokno ISSUE:
Ponente: Aquino W/N the action has prescribed? - NO
DOCTRINES:
RULING:
● In the American Steamship Agencies cases, it was held that the action of Ang is
based on misdelivery of the cargo which should be distinguished from loss
thereof.
● The one-year period provided for in section 3 (6) of the Carriage of Goods by
Sea Act refers to loss of the cargo.
● What is applicable is the four-year period of prescription for quasi- delicts
prescribed in article 1146 (2) of the Civil Code or ten years for violation of a
written contract as provided for in article 1144 (1) of the same Code.L
● As Ang filed the action less than three years from the date of the alleged
misdelivery of the cargo, it has not yet prescribed.
o Ang, as indorsee of the bill of lading, is a real party in interest with a
cause of action for damages.
26. G.R. No. 119571 March 11, 1998 MITSUI O.S.K. LINES LTD.,
represented by MAGSAYSAY AGENCIES, INC., petitioner, vs. COURT
OF APPEALS and LAVINE LOUNGEWEAR MFG. CORP., respondents.
Topic: Prescription in International Carriage of Goods
Petitioner: MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY
AGENCIES, INC. (common carrier)
Respondent: LAVINE LOUNGEWEAR MFG. CORP
Doctrine:
● "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 one-year prescriptive period to file a claim per COGSA only
applies when the basis of the claim is due to loss- meaning damage
or deterioration of the goods, and not to other claims of damages
such as misdelivery or deterioration of value due to other causes
(such as late delivery).
Facts:
● Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation
represented in the Philippines by its agent, Magsaysay Agencies.
● Entered into a contract of carriage with private respondent Lavine
Loungewear Manufacturing Corporation
● The contract was for the transportation of goods of Lavine Lounge
from Manila to Le Havre, France
● Petitioner undertook to deliver the goods to France 28 days from
initial loading
● On July 24, 1991, petitioner's vessel loaded private respondent's
container van for carriage at the said port of origin
● In Kaoshiung, Taiwan the goods were not transshipped
immediately, with the result that the shipment arrived in Le Havre
only on November 14, 1991 (more than 28 days from loading)
● 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 (lower value due to delay, not due to deterioration of
goods).
● Remaining half was allegedly charged to the account of private
respondent which in turn demanded payment from petitioner
through its agent.
● Petitioner denied private respondent's claim, the latter filed a case
in the Regional Trial Court on April 14, 1992.
 ○ On May 20, 1993, it amended its complaint by impleading ● Said one-year period of limitation is designed to meet the
petitioner as defendant in lieu of its agent. exigencies of maritime hazards. In a case where the goods shipped
● Petitioner filed a motion to dismiss alleging that the claim against it were neither lost nor damaged in transit but were, on the contrary,
had prescribed under the Carriage of Goods by Sea Act. delivered in port to someone who claimed to be entitled thereto, the
● Regional Trial Court, as aforesaid, denied petitioner's motion situation is different, and the special need for the short period of
● Court of Appeals sustained the trial court's orders. limitation in cases of loss or damage caused by maritime perils
does not obtain
Issue: WON the 1 year prescriptive period per COGSA applies to the ● In the case at bar, there is neither deterioration nor
claim of private respondent. NO. disappearance nor destruction of goods caused by the
carrier's breach of contract. Whatever reduction there may
Ruling: have been in the value of the goods is not due to their
deterioration or disappearance because they had been
● Section 3 of COGSA provides: damaged in transit.
○ (6) Unless notice of loss or damage...notice must be given ● We conclude by holding that as the suit below is not for "loss or
within three days of the delivery. damage" to goods contemplated in §3(6), the question of
○ In any event the carrier and the ship shall be discharged prescription of action is governed not by the COGSA but by Art.
from all liability in respect of loss or damage unless suit is 1144 of the Civil Code which provides for a prescriptive period of
brought within one year after delivery of the goods or the ten years.
date when the goods should have been delivered…
● "Loss" refers to the deterioration or disappearance of goods WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
● 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
● 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

● 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
 27
Cua v. Wallem Philippines Shipping, Inc.
[G.R. NO. 171337 - July 11, 2012]
BRION, J.

By: Lacbayo
____________________________________________________________________

Petitioner: BENJAMIN CUA (CUA UlAN TEK)

Respondents: WALLEM PHILIPPINES SHIPPING, INC. and ADVANCE SHIPPING
CORPORATION
Topic: Prescription in Overland Transportation and Coastwide Shipping -
Prescription in International Carriage of Goods
Doctrines:

____________________________________________________________________

Facts:

● Cua filed a civil action for damages against Wallem and Advance Shipping
before the RTC seeking 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. 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.
● 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.
● 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
 ● RTC: Prescriptive period was extended by the parties' agreement.
● CA: Dismissed Cua’s complaint and opposed RTC’s ruling as it has no
basis. 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.
Issue: WON Cua’s clain for payment of damages against the respondents has
prescribed. - NO
Held:
● The failure to raise or plead the grounds generally amounts to a waiver,
except if the ground pertains to (1) lack of jurisdiction over the subject
matter, (2) litis pendentia, (3) res judicata, or (4) prescription. If the facts
supporting any of these four listed grounds are apparent from the
pleadings or the evidence on record, the courts may consider these
grounds motu proprio and accordingly dismiss the complaint.
Accordingly, no reversible error may be attributed to the CA in
considering prescription as a ground to dismiss Cua's action despite
Wallem's supposed waiver of the defense. 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. Court finds
that 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 specific denial is made by specifying each material allegation of fact,
the truth of which the defendant does not admit and, whenever
practicable, setting forth the substance of the matters upon which he
relies to support his denial. The purpose of requiring the defendant to
make a specific denial is to make him disclose the matters alleged in the
complaint which he succinctly intends to disprove at the trial, together
with the matter which he relied upon to support the denial.
● 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. Advance Shipping's motion to
dismiss, on the other hand, focused solely on its contention that the
action was premature for failure to first... undergo arbitration. While the
joint answer submitted by the respondents denied Cua's allegation of an
extension, they made no further statement other than a bare and
unsupported contention that Cua's "complaint is barred by... prescription
and/or laches[.]" The respondents did not provide in their joint answer
any factual basis for their belief that the complaint had prescribed.
● The Court cannot consider the respondents' discussion on prescription in
their Memorandum filed with the RTC,] since their arguments were based
on Cua's supposed failure to comply with Article 366 of the Code of
Commerce, not Section 3(6) of the COGSA the relevant and material
provision in this case. Article 366 of the Code of Commerce requires that
a claim be made with the carrier within 24 hours from the delivery of the
cargo; the respondents alleged that they were informed of the damage
and shortage only on September 13, 1989, months after the vessel's
arrival in Manila.
 ● 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. This presumed
admission is further bolstered by the express admission made by the
respondents themselves in their Memorandum which is a clear admission
by the respondents that there was indeed an agreement to extend the
period to file the claim. In light of this admission, it would be unnecessary
for Cua to present a copy of the August 10, 1990 telex message to prove
the existence of the agreement. Thus, Cua timely filed a claim for the
damage to and shortage of the cargo.
Dispositive:
WHEREFORE, the decision dated May 16, 2005 and the resolution dated January
31, 2006 of the Court of Appeals in CA-G.R. CV No. 53538 are SET ASIDE. The
decision dated December 28, 1995 of the Regional Trial Court of Manila, Branch 31,
in Civil Case No. 90-55098 is REINSTATED. Costs against the respondents.
28. Filipino Merchants Insurance Co., Inc. v. Alejandro
G.R. No. L-54140. October 14, 1986
GUTIERREZ, JR., J
By: Yana Mendoza
________________________________________________________________________
[G.R. No. L-54140. October 14, 1986.]
FILIPINO MERCHANTS INSURANCE COMPANY, INC., petitioner, vs.
HONORABLE JOSE ALEJANDRO, Presiding Judge of Branch XXVI of the
Court of First Instance of Manila and FROTA OCEANICA BRASILIERA,
respondents.
[G.R. No. L-62001. October 14, 1986.]
FILIPINO MERCHANS INSURANCE COMPANY, INC., petitioner, vs.
HONORABLE ALFREDO BENIPAYO, Presiding Judge of Branch XVI of the
Court of First Instance of Manila and AUSTRALIA-WEST PACIFIC LINE,
respondents.
Doctrine:
1. Abcdefghij
2. Fraud is defined as …
________________________________________________________________________
FACTS: Plaintiff Choa Tiek Seng filed a complaint against 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 P35, 987.26. 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.
Petitioner disclaims liability and imputes against plaintiff the commission of
fraud. A similar complaint was filed by Joseph Benzon Chua against the
petitioner 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.
Petitioner filed third-party complaints against private respondents for
indemnity, subrogation, or reimbursement in the event that it is held liable to
the plaintiff.
The private respondents, carriers Frota Oceanica Brasiliera and Australia-
West Pacific Line 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
Petitioner contended that provision relied upon by the respondents applies
only to the shipper and not to the insurer of the goods.
Respondent judge dismissed both third-party complaints.
ISSUE: Whether or not the one-year period within which to file a suit against
the carrier and the ship, in case of damage or loss as provided for in the
Carriage of Goods by Sea Act applies to the insurer of the goods.
HELD: 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 the petitioner's 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 petitioner's action has been 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.
29. Federal Express Corporation v. American Home Assurance Company
G.R. No. 150094
August 18, 2004
Topic: Prescription in International Carriage of Goods
DOCTRINES: The filing of a claim with the carrier within the time limitation therefor
actually constitutes 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. If it fails to do so, no right of action
against the carrier can accrue in favor of the former.
NOTE: In case ma’am asks; a Certificate of Insurance and an Airway Bill were
issued. This Certificate was used as basis for the identification of liability between
parties.
FEDEX : Carrier
GETC: Customs broker
FACTS:
● Shipper SMITHKLINE USA delivered to carrier Burlington Air Express
(BURLINGTON), an agent of [Petitioner] Federal Express Corporation, a
shipment of 109 cartons of veterinary biologicals for delivery to
consignee SMITHKLINE and French Overseas Company in Makati City.
○ The shipment was covered by Burlington Airway Bill No.
11263825 with the words, ‘REFRIGERATE WHEN NOT IN
TRANSIT’ and ‘PERISHABLE’ stamp marked on its face.
○ That same day, Burlington insured the cargoes with American
Home Assurance Company (AHAC).
● The following day, Burlington turned over the custody of said cargoes to
FEDEX which transported the same to Manila.
● The shipments arrived in Manila and was immediately stored at
[Cargohaus Inc.’s] warehouse. Prior to the arrival of the cargoes, FEDEX
informed GETC Cargo International Corporation, the customs broker
hired by the consignee to facilitate the release of its cargoes from the
Bureau of Customs, of the impending arrival of its client’s cargoes.
● 12 days after the cargoes arrived in Manila, DIONEDA, a non-licensed
custom’s broker who was assigned by GETC, found out, while he was
 about to cause the release of the said cargoes, that the same [were]
stored only in a room with 2 air conditioners running, to cool the place
instead of a refrigerator.
● DIONEDA, upon instructions from GETC, did not proceed with the
withdrawal of the vaccines and instead, samples of the same were taken
and brought to the Bureau of Animal Industry of the Department of
Agriculture in the Philippines by SMITHKLINE for examination
○ wherein it was discovered that the ‘ELISA reading of vaccinates
sera are below the positive reference serum.’
● As a consequence of the foregoing result of the veterinary biologics test,
SMITHKLINE abandoned the shipment and, declaring ‘total loss’ for the
unusable shipment, filed a claim with AHAC through its representative in
the Philippines, the Philam Insurance Co., Inc. (PHILAM) which
recompensed SMITHKLINE for the whole insured amount. Thereafter,
PHILAM filed an action for damages against the FEDEX imputing
negligence on either or both of them in the handling of the cargo.
● RTC: Trial ensued and ultimately concluded with the FEDEX being held
solidarily liable for the loss.
○ Aggrieved, petitioner appealed to the CA.
● CA: The appellate court ruled in favor of PHILAM and held that the
shipping Receipts were a prima facie proof that the goods had indeed
been delivered to the carrier in good condition.
ISSUE: Is FEDEX liable for damage to or loss of the insured goods // NO
HELD: petition granted. Assailed decision reversed insofar as it pertains to FEDEX
Prescription of Claim
From the initial proceedings in the trial court up to the present, petitioner has
tirelessly pointed out that respondents’ claim and right of action are already
barred. Indeed, this fact has never been denied by respondents and is plainly
evident from the records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
“6. No action shall be maintained in the case of damage to or partial loss of the
shipment unless a written notice, sufficiently describing the goods concerned, the
approximate date of the damage or loss, and the details of the claim, is presented
by shipper or consignee to an office of Burlington within (14) days from the date
the goods are placed at the disposal of the person entitled to delivery, or in the
case of total loss (including non-delivery) unless presented within (120) days from
the date of issue of the [Airway Bill]. xxx
Relevantly, petitioner’s airway bill states:
“12./12.1 The person entitled to delivery must make a complaint to the carrier in
writing in the case:
12.1.1 of visible damage to the goods, immediately after discovery of the damage
and at the latest within fourteen (14) days from receipt of the goods; xxx
Article 26 of the Warsaw Convention, on the other hand, provides:
Xxx (2) In case of damage, the person entitled to delivery must complain to the
carrier forthwith after the discovery of the damage, and, at the latest, within 3 days
from the date of receipt in the case of baggage and 7 days from the date of receipt
in the case of goods. xx
(3) Every complaint must be made in writing upon the document of
transportation or by separate notice in writing dispatched within the times
aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie against the
carrier, save in the case of fraud on his part.” xxx
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time limitation
therefor actually constitutes 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. If it fails to do so,
no right of action against the carrier can accrue in favor of the former. The
aforementioned requirement is a reasonable condition precedent; it does not
constitute a limitation of action.
The requirement of giving notice of loss of or injury to the goods is not an empty
formalism. The fundamental reasons for such a stipulation are (1) to inform the
carrier that the cargo has been damaged, and that it is being charged with liability
therefor; and (2) 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 fresh and easily investigated so as to
safeguard itself from false and fraudulent claims.
NOTES: as to proper payee:
The Certificate specifies that loss of or damage to the insured cargo is “payable to
order x x x upon surrender of this Certificate.” Such wording conveys the right of
collecting on any such damage or loss, as fully as if the property were covered by a
special policy in the name of the holder itself. At the back of the Certificate
appears the signature of the representative of Burlington. This document has thus
been duly indorsed in blank and is deemed a bearer instrument.
Since the Certificate was in the possession of Smithkline, the latter had the right of
collecting or of being indemnified for loss of or damage to the insured shipment, as
fully as if the property were covered by a special policy in the name of the holder.
Hence, being the holder of the Certificate and having an insurable interest in the
goods, Smithkline was the proper payee of the insurance proceeds.
Subrogation
Upon receipt of the insurance proceeds, the consignee (Smithkline) executed a
subrogation Receipt in favor of respondents. The latter were thus authorized “to
file claims and begin suit against any such carrier, vessel, person, corporation or
government.” Undeniably, the consignee had a legal right to receive the goods in
the same condition it was delivered for transport to petitioner. If that right was
violated, the consignee would have a cause of action against the person
responsible therefor.
WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED
insofar as it pertains to Petitioner Federal Express Corporation. No
pronouncement as to costs.
30 PHILIPPINE AIRLINES, INC. v. SAVILLO
G.R. No. 149547; July 4, 2008
Chico-Nazario, J.
By: Ericka Agustin
________________________________________________________________________
Topic: Notice of Claim and Prescription in Air Transportation – Rules under
the Warsaw Convention
Petitioner: Philippine Airlines, Inc.
Respondent: Hon. Adriano Savillo, Presiding Judge of RTC Branch 30, Iloilo
City, and Simplicio Griño
Doctrine: The prescriptive period under the Warsaw Convention is two years
from the date of arrival at the destination, or from the date the aircraft ought
to have arrived or from the date on which the transportation stopped.
________________________________________________________________________
FACTS:
● Simplicio Griño was invited to participate in the 1993 ASEAN
Seniors Annual Golf Tournament in Jakarta, Indonesia. He and his
companions bought their respective passenger tickets from PAL
with the following points of passage: MANILA-SINGAPORE-
JAKARTA-SINGAPORE-MANILA.
○ They were made to understand by PAL that its plane
would take them from Manila to Singapore, while
Singapore Airlines would take them from Singapore to
Jakarta.
● On 3 October 1993, Griño and his companions took the PAL flight to
Singapore and arrived at about 6PM. Upon their arrival, they
proceeded to the Singapore Airlines office to check-in for their flight
to Jakarta scheduled at 8PM.
○ Singapore Airlines rejected their tickets because they were
not endorsed by PAL, and it was explained to them that if
Singapore Airlines honored the tickets without PAL’s
endorsement, PAL would not pay Singapore Airlines for
their passage.
 ○ Grino tried to contact PAL’s office at the airport, only to
find out that it was closed.
● Stranded at the airport in Singapore and left with no recourse, Grino
was in panic and at loss where to go; and subjected to humiliation,
embarrassment, mental anguish, serious anxiety, fear and distress.
Eventually, the group were forced to purchase tickets from Garuda
Airlines and board its last flight bound to Jakarta.
○ When they arrived in Jakarta, at 12MN, the party who was
supposed to fetch them from the airport already left and
they had to arrange their transportation to the hotel at a
very late hour.
○ After the series of nerve-wracking experiences, Grino
became ill and was unable to participate in the
tournament.
● Upon his return to the Philippines, Grino brought the matter to PAL.
He sent a demand letter to PAL and another to Singapore Airlines.
However, both airlines disowned liability and blamed each other for
the fiasco.
● Grino filed a complaint for Damages before the RTC for moral
damages in the amount of P1Million and attorney’s fees.
● PAL filed a Motion to Dismiss on the ground that the complaint was
barred by prescription under Sec.1(f) of Rule 16 of the ROC. PAL
argued that the Warsaw Convention, particularly Art. 29 thereof,
governed this case, as it provides that any claim for damages in
connection with the international transportation of persons is
subject to the prescription period of 2 years. Since the complaint
was filed on 15 August 1997, more that 3 years after PAL received
the demand letter on 25 January 1994, it was already barred by
prescription.
● RTC: denied the MTD. It maintained that the provision of the Civil
Code and other pertinent laws of the Philippines not the Warsaw
Convention were applicable to the present case.
● CA: dismissed the Petition for Certiorari filed by PAL and affirmed
the order of the RTC. It pronounced that the application of the
Warsaw Convention must not be construed to preclude the
application of the Civil Code and other pertinent laws. By applying
Art. 1144 of the Civil Code, which allowed for a 10-year prescription
period, the appellate court declared that the Complaint filed by
Grino should not be dismissed. Hence, the present petition.
ISSUE: W/N the Civil Code or the Warsaw Convention applies in this case,
and if the latter, whether the complaint was already barred by prescription.
HELD:
- The Warsaw Convention applies to "all international
transportation of persons, baggage or goods performed by any
aircraft for hire." It seeks to accommodate or balance the
interests of passengers seeking recovery for personal injuries
and the interests of air carriers seeking to limit potential
liability. It employs a scheme of strict liability favoring
passengers and imposing damage caps to benefit air carriers.
The cardinal purpose of the Warsaw Convention is to provide
uniformity of rules governing claims arising from international
air travel; thus, it precludes a passenger from maintaining an
action for personal injury damages under local law when his or
her claim does not satisfy the conditions of liability under the
Convention.
- Art. 19 of the Warsaw Convention provides for liability on the
part of a carrier for "damages occasioned by delay in the
transportation by air of passengers, baggage or goods." Article
24 excludes other remedies by further providing that "(1) in the
cases covered by articles 18 and 19, any action for damages,
however founded, can only be brought subject to the
conditions and limits set out in this convention." Therefore, a
claim covered by the Warsaw Convention can no longer be
recovered under local law, if the statute of limitations of two
years has already lapsed.
- Nevertheless, this Court notes that jurisprudence in the
Philippines and the United States also recognizes that the
Warsaw Convention does not "exclusively regulate" the
relationship between passenger and carrier on an international
flight. This Court finds that the present case is substantially
similar to cases in which the damages sought were considered
to be outside the coverage of the Warsaw Convention.
- In United Airlines v. Uy, the Court distinguished between the (1)
damage to the passenger’s baggage and (2) humiliation he
suffered at the hands of the airline’s employees. The first
cause of action was covered by the Warsaw Convention which
 prescribes in two years, while the second was covered by the
provisions of the Civil Code on torts, which prescribes in four
years.
- In this case, Grino’s complaint alleged that both PAL and
Singapore Airlines were guilty of gross negligence, which
resulted in his being subjected to "humiliation, embarrassment,
mental anguish, serious anxiety, fear and distress." The
emotional harm suffered by Grino as a result of having been
unreasonably and unjustly prevented from boarding the plane
should be distinguished from the actual damages which
resulted from the same incident. Under the Civil Code
provisions on tort, such emotional harm gives rise to
compensation where gross negligence or malice is proven.
- This case is comparable to the Lathigra case, where it was
held that the airlines’ negligent act of reconfirming the
passenger’s reservation days before departure and failing to
inform the latter that the flight had already been discontinued
is not among the acts covered by the Warsaw Convention,
since the alleged negligence did not occur during the
performance of the contract of carriage but, rather, days before
the scheduled flight.
- In the case at hand, Singapore Airlines barred private
respondent from boarding the Singapore Airlines flight
because PAL allegedly failed to endorse the tickets of private
respondent and his companions, despite PAL’s assurances to
respondent that Singapore Airlines had already confirmed their
passage. While this fact still needs to be heard and established
by adequate proof before the RTC, an action based on these
allegations will not fall under the Warsaw Convention, since
the purported negligence on the part of PAL did not occur
during the performance of the contract of carriage but days
before the scheduled flight. Thus, the present action cannot
be dismissed based on the statute of limitations provided
under Article 29 of the Warsaw Convention.
- Had the present case merely consisted of claims incidental to
the airlines’ delay in transporting their passengers, the private
respondent’s Complaint would have been time-barred under
Article 29 of the Warsaw Convention. However, the present
case involves a special species of injury resulting from the
failure of PAL and/or Singapore Airlines to transport private
respondent from Singapore to Jakarta – the profound distress,
fear, anxiety and humiliation that private respondent
experienced when, despite PAL’s earlier assurance that
Singapore Airlines confirmed his passage, he was prevented
from boarding the plane and he faced the daunting possibility
that he would be stranded in Singapore Airport because the
PAL office was already closed.
- These claims are covered by the Civil Code provisions on tort,
and not within the purview of the Warsaw Convention. Hence,
the applicable prescription period is that provided under
Article 1146 of the Civil Code:
Art. 1146. The following actions must be instituted within four
years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict.
- Grino’s complaint was filed with the RTC on 15 August 1997,
which was less than four years since PAL received his
extrajudicial demand on 25 January 1994. Thus, Grino’s claims
have not yet prescribed and PAL’s Motion to Dismiss must be
denied.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed
Decision of the Court of Appeals in CA-G.R. SP No. 48664, promulgated on
17 August 2001 is AFFIRMED. Costs against the petitioner.