Maritime Law cases.pdf

8/22/2019 Maritime Law cases.pdf

1/38

1

THIRD DIVISION

INSURANCE COMPANY OFNORTH AMERICA,

Petitioner,

- versus -

ASIAN TERMINALS, INC.,

Respondent.

G.R. No. 180784

Present:

CARPIO,*J.,

PERALTA,Acting Chairperson,

ABAD,PEREZ,**and

MENDOZA,JJ.

Promulgated:

February 15, 2012

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

PERALTA,J.:

This is a petition for review on certiorari[1]of the Decision of the Regional Trial Court (RTC) of Makati City, Branch

138 (trial court) in Civil Case No. 05-809 and its Order dated December 4, 2007 on the ground that the trial court

committed reversible error of law.

The trial court dismissed petitioners complaint for actual damages on the ground of prescription under the

Carriage of Goods by Sea Act (COGSA).

The facts are as follows:

On November 9, 2002, Macro-Lite Korea Corporation shipped to San Miguel Corporation, through M/V "DIMI P

vessel, one hundred eighty-five (185) packages (231,000 sheets) of electrolytic tin free steel, complete and in good order

condition and covered by Bill of Lading No. POBUPOHMAN20638.[2]The shipment had a declared value of

US$169,850.35[3]and was insured with petitioner Insurance Company of North America against all risks under Marine

Policy No. MOPA-06310.[4]

The carrying vessel arrived at the port of Manila on November 19, 2002, and when the shipment was discharged

therefrom, it was noted that seven (7) packages thereof were damaged and in bad order.[5]The shipment was then

turned over to the custody of respondent 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On November 22, 23 and 29, 2002, the subject shipment was withdrawn by Marzan from the custody of

respondent. 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 [6]dated November 29, 2002, and the examination report, which
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn1


2/38

2

was written on the same request, showed that an additional five (5) packages were found to be damaged and in bad

order.

On January 6, 2003, the consignee, San Miguel Corporation, filed separate claims[7]against respondent and

petitioner for the damage to 11,200 sheets of electrolytic tin free steel.

Petitioner engaged the services of an independent adjuster/surveyor, BA McLarens Phils., Inc., to conduct an

investigation and evaluation on the claim and to prepare the necessary report.[8] BA McLarens Phils., Inc. submitted to

petitioner an Survey Report[9] dated January 22, 2003 and another report[10]dated May 5, 2003 regarding the damaged

shipment. It noted that out of the reported twelve (12) damaged skids, nine (9) of them were rejected and three (3

skids were accepted by the consignees representative as good order. BA McLarens Phils., Inc. evaluated the total cost

of damage to the nine (9) rejected skids (11,200 sheets of electrolytic tin free steel) to be P431,592.14.

The petitioner, as insurer of the said cargo, paid the consignee the amount of P431,592.14 for the damage

caused to the shipment, as evidenced by the Subrogation Receipt dated January 8, 2004. Thereafter, petitioner,

formally demanded reparation against respondent. As respondent failed to satisfy its demand, petitioner filed an action

for damages with the RTC of Makati City.

The trial court found, thus:

The Court finds that the subject shipment indeed suffered additional damages. The Request for

Bad Order Survey No. 56422 shows that prior to the turn over of the shipment from the custody of

ATI to the consignee, aside from the seven (7) packages which were already damaged upon arrival at

the port of Manila, five (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 defendant ATI. This evidence of the plaintiff was refuted

by the defendant 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.[11]

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'sliability for damage to cargoes in its custody is limited to P5,000.00 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 l ist to the contractor by the interested party or parties before the discharge

or lading unto vessel of the goods.
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn9


3/38

3

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.[12]

Further, the trial court found that there was a valid subrogation between the petitioner and the

assured/consignee San Miguel Corporation. The respondent admitted the existence of Global Marine Policy No. MOPA-

06310 with San Miguel Corporation and Marine Risk Note No. 3445,[13]which showed that the cargo was indeed insured

with petitioner. The trial court held that petitioners claim is compensable because the Subrogation Receipt, 16 which

was admitted as to its existence by respondent, was sufficient to establish not only the relationship of the insurer and

the assured, but also the amount paid to settle the insurance claim.[14]

However, the trial court dismissed the complaint on the ground that the petitioners 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.

The trial court held:

In the case at bar, the records show that the shipment was delivered to the consignee on 22, 23and 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.

WHEREFORE, the complaint and counterclaim are hereby DISMISSED.[16]

Petitioners motion for reconsideration was denied by the trial court in the Order[17]dated December 4, 2007.

Petitioner filed this petition under Rule 45 of the Rules of Court directly before this Court, alleging that it is raisin

a pure question of law:
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn15http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn15http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn15http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn15http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn14


4/38

4

THE TRIAL COURT COMMITTED A PURE AND SERIOUS ERROR OF LAW IN APPLYING THE ONE-

YEAR PRESCRIPTIVE PERIOD FOR FILING A SUIT UNDER THE CARRIAGE OF GOODS BY SEA ACT (COGSA) TO

AN ARRASTRE OPERATOR.[18]

Petitioner states that while it is in full accord with the trial court in finding respondent liable for the damaged

shipment, it submits that the trial courts dismissal of the complaint on the ground of prescription under the COGSA is

legally erroneous. It contends that the one-year limitation period for bringing a suit in court under the COGSA is not

applicable to this case, because the prescriptive period applies only to the carrier and the ship. It argues that

respondent, which is engaged in warehousing, arrastre and stevedoring business, is not a carrier as defined by the

COGSA, because it is not engaged in the business of transportation of goods by sea in international trade as a common

carrier. Petitioner asserts that since the complaint was filed against respondent arrastre operator only, without

impleading the carrier, the prescriptive period under the COGSA is not applicable to this case.

Moreover, petitioner contends that the term carriage of goods in the COGSA covers the period from the time

the goods are loaded to the vessel to the time they are discharged therefrom. It points out that it sued respondent only

for the additional five (5) packages of the subject shipment that were found damaged while in respondents custody

long after the shipment was discharged from the vessel. The said damage was confirmed by the trial court and proved

by the Request for Bad Order Survey No. 56422.[19]

Petitioner prays that the decision of the trial court be reversed and set aside and a new judgment be

promulgated granting its prayer for actual damages.

The main issues are: (1) whether or not the one-year prescriptive period for filing a suit under the COGSA applies

to this action for damages against respondent arrastre operator; and (2) whether or not petitioner is entitled to recover

actual damages in the amount of P431,592.14 from respondent.

To reiterate, petitioner came straight to this Court to appeal from the decision of the trial court under Rule 45 o

the Rules of Court on the ground that it is raising only a question of law.

Microsoft Corporation v. Maxicorp, Inc.[20] explains the difference between questions of law and questions of

fact, thus:

The distinction between questions of law and questions of fact is settled. A question of law exists

when the doubt or difference centers on what the law is on a certain state of facts. A question of fact

exists if the doubt centers on the truth or falsity of the alleged facts. Though this delineation seems

simple, determining the true nature and extent of the distinction is sometimes problematic. For example,

it is incorrect to presume that all cases where the facts are not in dispute automatically involve

purely questions of law.

There is a question of law if the issue raised is capable of being resolved without need of reviewing
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn22http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn22http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn22http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn22http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn20


5/38

5

the probative value of the evidence. The resolution of the issue must rest solely on what the law provides

on the given set of circumstances. Once it is clear that the issue invites a review of the evidence

presented, the question posed is one of fact. If the query requires a re-evaluation of the credibility of

witnesses, or the existence or relevance of surrounding circumstances and their relation to each other,

the issue in that query is factual. x x x[21]

In this case, although petitioner alleged that it is merely raising a question of law, that is, whether or not the

prescriptive period under the COGSA applies to an action for damages against respondent arrastre operator, yet

petitioner prays for the reversal of the decision of the trial court and that it be granted the relief sought, which is the

award of actual damages in the amount of P431,592.14. For a question to be one of law, it must not involve an

examination of the probative value of the evidence presented by the litigants or any of them.[22] However, to resolve

the issue of whether or not petitioner is entitled to recover actual damages from respondent requires the Court to

evaluate the evidence on record; hence, petitioner is also raising a question of fact.

Under Section 1, Rule 45, providing for appeals by certioraribefore the Supreme Court, it is clearly enunciated

that only questions of law may be set forth.[23]The Court may resolve questions of fact only when the case falls under

the following exceptions:

(1) when the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the

inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of

discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact

are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case,

or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the

findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of

specific evidence on which they are based; (9) when the facts set forth in the petition as well as in thepetitioner's main and reply briefs are not disputed by the respondent; and (10) when the findings of fact

are premised on the supposed absence of evidence and contradicted by the evidence on record .[24]

In this case, the fourth exception cited above applies, as the trial court rendered judgment based on a

misapprehension of facts.

We first resolve the issue on whether or not the one-year prescriptive period for filing a suit under the COGSA

applies to respondent arrastre operator.

The Carriage of Goods by Sea Act (COGSA), Public Act No. 521 of the 74 th US Congress, was accepted to be made

applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by virtue of CA

No. 65.

Section 1 of CA No. 65 states:
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn25http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn25http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn25http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn26http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn26http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn26http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn26http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn25http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn23


6/38

6

Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the

Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred and thirty-

six, be accepted, as it is hereby accepted to be made applicable to all contracts for the carriage of

goods by sea to and from Philippine ports in foreign trade : Provided, That nothing in the Act shall be

construed as repealing any existing provision of the Code of Commerce which is now in force, or as

limiting its application.

Section 1, Title I of CA No. 65 defines the relevant terms in Carriage of Goods by Sea, thus:

Section 1. When used in this Act -

(a) The term "carrier" includes the owner or the charterer who enters into a contract of carriage

with a shipper.

(b) The term "contract of carriage" applies only to contracts of carriage covered by a bill of lading

or any similar document of title, insofar as such document relates to the carriage of goods by sea,

including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter

party from the moment at which such bill of lading or similar document of title regulates the relations

between a carrier and a holder of the same.

(c) The term "goods" includes goods, wares, merchandise, and articles of every kind whatsoever,

except live animals and cargo which by the contract of carriage is stated as being carried on deck and is

so carried.

(d) The term "ship" means any vessel used for the carriage of goods by sea.

(e) The term "carriage of goods" covers the period from the time when the goods are loaded to

the time when they are discharged from the ship .[25]

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.
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn27


7/38

7

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.[26]

From the provision above, the carrier and the ship may put up the defense of prescription if the action fodamages is not brought within one year after the delivery of the goods or the date when the goods should have bee

delivered. It has been held that not only the shipper, but also the consignee or legal holder of the bill may invoke th

prescriptive period.[27] However, the COGSA does not mention that an arrastre operator may invoke the prescriptiv

period of one year; hence, it does not cover the arrastre operator.

Respondent arrastre operators 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 CONTRACTORshall, 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 (P5,000.00) 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 (P5,000.00) 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 packagereceived, 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 byforce 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 .[28]

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


8/38

8

delivery/loss, the consignee has fifteen (15) days within which to file a formal claim covering the loss, injury, damage o

non-delivery of such goodswith all accompanying documentation against the arrastre operator.

Petitioner clarified that it sued respondent only for the additional five (5) packages of the subject shipment that

were found damaged while in respondents custody, which fact of damage was sustained by the trial court and proved

by the Request for Bad Order Survey No. 56422.[29]

Petitioner pointed out the importance of the Request for Bad Order Survey by citing New Zealand Insurance

Company Limited v. Navarro.[30]In the said case, the Court ruled thatthe request for, and the result of, the bad order

examination, which were filed and done within fifteen days from the haulage of the goods from the vessel, served

thepurpose of a claim, which is to afford the carrier or depositary reasonable opportunity and facilities to check the

validity of the claims while facts are still fresh in the minds of the persons who took part in the transaction and

documents are still available. Hence, even if the consignee therein filed a formal claim beyond the stipulated period of

15 days, the arrastre operator was not relieved of liability as the purpose of a formal claim had already been satisfied by

the consignees timely request for the bad order examination of the goods shipped and the result of the said bad order

examination.

To elaborate, New Zealand Insurance Company, Ltd. v. Navarro held:

We took special note of the above pronouncement six (6) years later in Firemans Fund

Insurance Co. v. Manila Port Service Co., et al. There, fifteen (15) cases of nylon merchandise had been

discharged from the carrying vessel and received by defendant Manila Port Service Co., the arrastre

operator, on 7 July 1961. Out of those fifteen (15) cases, however, only twelve (12) had been delivered

to the consignee in good condition. Consequently, on 20 July 1961, the consignee's broker requested a

bad order examination of the shipment, which was later certified by defendant's own inspector to be

short of three (3) cases. On 15 August 1961, a formal claim for indemnity was then filed by theconsignee, who was later replaced in the action by plaintiff Fireman's Fund Insurance Co., the insurer of

the goods. Defendant, however, refused to honor the claim, arguing that the same had not been filed

within fifteen (15) days from the date of discharge of the shipment from the carrying vessel, as required

under the arrastre Management Contract then in force between itself and the Bureau of Customs. The

trial court upheld this argument and hence dismissed the complaint. On appeal by the consignee, this

Court, speaking through Mr. Justice J.B.L. Reyes, reversed the trial court and found the defendant

arrastre operator liable for the value of the lost cargo, explaining as follows:

However,the trial court has overlooked the significance of the request for, and the result of,

the bad order examination, which were filed and done within fifteen days from the haulage of the

goods from the vessel. Said request and result, in effect, served the purpose of a claim, which is

to afford the carrier or depositary reasonable opportunity and facilities to

check the validity of the claims while facts are still fresh in the minds of the persons

who took part in the transaction and documents are still available. (Consunji vs.

Manila Port Service, L-15551, 29 November 1960)

Indeed, the examination undertaken by the defendant's own inspector not only gave the defendant an

opportunity to check the goods but is itself a verification of its own liabilityx x x.
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn31


9/38

9

In other words, what the Court considered as the crucial factor in declaring the defendant

arrastre operator liable for the loss occasioned, in the Fireman's Fundcase, was the fact that defendant,

by virtue of the consignee's request for a bad order examination, had been able formally to verify the

existence and extent of its liability within fifteen (15) days from the date of discharge of the shipment

from the carrying vessel -- i.e.,within the same period stipulated under the Management Contract for

the consignee to file a formal claim. That a formal claim had been filed by the consignee beyond the

stipulated period of fifteen (15) days neither relieved defendant of liability nor excused payment

thereof, the purpose of a formal claim, as contemplated in Consunji, having already been fully served

and satisfied by the consignee's timely request for, and the eventual result of, the bad orderexamination of the nylon merchandise shipped.

Relating the doctrine ofFireman's Fundto the case at bar, the record shows that delivery to the

warehouse of consignee Monterey Farms Corporation of the 5,974 bags of soybean meal, had been

completed by respondent Razon (arrastre operator) on 9 July 1974. On that same day, a bad order

examination of the goods delivered was requested by the consignee and was, in fact, conducted by

respondent Razon's own inspector, in the presence of representatives of both the Bureau of Customs

and the consignee. The ensuing bad order examination report what the trial court considered a

"certificate of loss confirmed that out of the 5,974 bags of soybean meal loaded on board the M/S

"Zamboanga" and shipped to Manila, 173 bags had been damaged in transitu while an additional 111

bags had been damaged after the entire shipment had been discharged from the vessel and placed in

the custody of respondent Razon. Hence, as early as 9 July 1974 (the date of last delivery to the

consignee's warehouse), respondent Razon had been able to verify and ascertain for itself not only the

existence of its liability to the consignee but, more significantly, the exact amount thereof -

i.e., P5,746.61, representing the value of 111 bags of soybean meal. We note further that such

verification and ascertainment of liability on the part of respondent Razon, had been accomplished

"within thirty (30) days from the date of delivery of last package to the consignee, broker or importer"

as well as "within fifteen (15) days from the date of issuance by the Contractor [respondent Razon] of

a certificate of loss, damage or injury or certificate of non-delivery " the periods prescribed under

Article VI, Section 1 of the Management Contract here involved, within which a request for certificate of

loss and a formal claim, respectively, must be filed by the consignee or his agent. Evidently, therefore,

the rule laid down by the Court in Fireman's Fundfinds appropriate application in the case at bar.[31]

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 withdrawa

on November 29, 2002, the broker of the importer, Marzan, requested for a bad order survey in the presence of

Customs representative and other parties concerned. The joint inspection of cargo was conducted and it was found tha

an additional five (5) packages were found in bad order as evidenced by the document entitled Request for Bad Orde

Survey[32]dated November 29, 2002, which document also contained the examination report, signed by the Custom

representative, Supervisor/Superintendent, consignees 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. Th

certificate of non-delivery referred to in the Contract is similar to or identical with the examination report on the reques

for bad order survey.[33] Like in the case ofNew Zealand Insurance Company Ltd. v. Navarro, the verification an

ascertainment of liability by respondent ATI had been accomplished within thirty (30) days from the date of delivery o

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-da


10/38

10

period from the issuance of the examination report on the request for bad order survey, the purpose of the tim

limitations for the filing of claims had already been fully satisfied by the request of the consignees broker for a bad orde

survey and by the examination report of the arrastre operator on the result thereof, as the arrastre operator had becom

aware of and had verified the facts giving rise to its liability.[34]Hence, the arrastre operator suffered no prejudice by th

lack of strict compliance with the 15-day limitation to file the formal complaint.[35]

The next factual issue is whether or not petitioner is entitled to actual damages in the amount of P431,592.14

The payment of the said amount by petitioner to the assured/consignee was based on the Evaluation Repor t[36]of B

McLarens Phils., Inc., thus:

x x x x

CIRCUMSTANCES OF LOSS

As reported, the shipment consisting of 185 packages (344.982 MT) Electrolytic Tin Free Steel, JISG

3315SPTFS, MRT-4CA, Matte Finish arrived Manila viaOcean Vessel, M/V DIMI P V-075 on November 9,

2002 and subsequently docked alongside Pier No. 9, South Harbor, Manila. The cargo of Electrolyic Tin

Free Steel was discharged ex-vessel complete with seven (7) skids noted in bad order condition by the

vessel[s] representative. These skids were identified as nos. 2HD804211, 2HD804460, SHD804251,

SHD803784, 2HD803763, 2HD803765 and 2HD803783and covered with Bad Order Tally Receipts No.

3709, 3707, 3703 and 3704. Thereafter, the same were stored inside the warehouse of Pier No.

9, South Harbor, Manila, pending delivery to the consignees warehouse.

On November 22, 23 and 29, 2002, the subject cargo was withdrawn from the Pier by the consignee

authorized broker, R. V. Marzan Brokerage Corp. and the same was delivered to the consignees final

warehouse located at Silangan, Canlubang, Laguna complete with twelve (12) skids in bad order

condition.

VISUAL INSPECTION

We conducted an ocular inspection on the reported damaged Electrolytic Tin Free Steel, Matte Finish at

the consignees warehouse located at Brgy. Silangan, Canlubang, Laguna and noted thatout of the

reported twelve (12) damaged skids, nine (9) of them were rejected and three (3) skids were

accepted by the consignees representative as complete and without exceptions.

x x x x

EVALUATION OF INDEMNITY

We evaluated the loss/damage sustained by the subject shipments and arrived as follows:

PRODUCT NOS. PRODUCTS NAMED NO. OF SHEETS NET WT.

PER PACKING LIST

2HD803763 Electrolytic Tin Free 1,200 1,908

Steel JISG3315

2HD803783 -do- 1,200 1,908

2HD803784 -do- 1,200 1,908

2HD804460 -do- 1,400 1,698


11/38

11

2HD803765 -do- 1,200 1,908

2HD804522 -do- 1,200 1,987

2HD804461 -do- 1,400 1,698

2HD804540 -do- 1,200 1,987

2HD804549 -do- 1,200 1,987

9 SKIDS TOTAL 11,200 16,989 kgs.

P9,878,547.58 P478,959.88

------------------ = 42.7643 x 11,200231,000

Less: Deductible 0.50% based on sum insured 49,392.74

Total P429,567.14

Add: Surveyors Fee 2,025.00

Sub-Total P431,592.14

Note: Above evaluation is Assureds tentative liability as the salvage proceeds on the damaged stocks

has yet to be determined.

RECOVERY ASPECT

Prospect ofrecovery would be feasible against the shipping company and the Arrastre

operatorconsidering the copies ofBad Order Tally Receipts and Bad Order Certificate issued by the

subject parties.[37]

To clarify, based on the Evaluation Report, seven (7) skids were damaged upon arrival of the vessel per the Ba

Order Cargo Receipts[38]issued by the shipping company, and an additional five (5) skids were damaged in the custody o

the arrastre operator per the Bad Order Certificate/Examination Report[39]issued by the arrastre contractor. Th

Evaluation Report states that out of the reported twelve damaged skids, only nine were rejected, and three weraccepted as good order by the consignees representative.Out of the nine skids that were rejected, five skids wer

damaged upon arrival of the vessel as shown by the product numbers in the Evaluation Report, which product number

matched those in the Bad Order Cargo Receipts[40]issued by the shipping company. It can then be safely inferred tha

the four remaining rejected skids were damaged in the custody of the arrastre operator , as the Bad Orde

Certificate/Examination Report did not indicate the product numbers thereof.

Hence, it should be pointed out that the Evaluation Report shows that the claim for actual damages in th

amount of P431,592.14 covers five (5)[41]out of the seven (7) skids that were found to be damaged upon arrival of th

vessel and covered by Bad Order Cargo Receipt Nos. 3704, 3706, 3707 and 3709,

[42]

which claim should have been filewith the shipping company. Petitioner must have realized that the claim for the said five (5) skids was already barre

under COGSA; hence, petitioner filed the claim for actual damages only against respondent arrastre operator.

As regards the four (4) skids that were damaged in the custody of the arrastre operator, petitioner is still entitle

to recover from respondent. The Court has ruled that the Request for Bad Order Survey and the examination report o

the said request satisfied the purpose of a formal claim, as respondent was made aware of and was able to verify tha

five (5) skids were damaged or in bad order while in its custody before the last withdrawal of the shipment on Novembe

29, 2002. Hence, even if the formal claim was filed beyond the 15-day period stipulated in the Contract, respondent wa
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn39http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn39http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn39http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn40http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn40http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn40http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn41http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn41http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn41http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn42http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn42http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn42http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn42http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn41http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn40http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn39


12/38

12

not prejudiced thereby, since it already knew of the number of skids damaged in its possession per the examinatio

report on the request for bad order survey.

Remand of the case to the trial court for the determination of the liability of respondent to petitioner is no

necessary as the Court can resolve the same based on the records before it.[43] The Court notes that petitioner, who file

this action for damages for the five (5) skids that were damaged while in the custody of respondent, was not forthright i

its claim, as it knew that the damages it sought in the amount of P431,592.14, which was based on the Evaluation Repo

of its adjuster/surveyor, BA McLarens Phils., Inc., covered nine (9) skids. Based on the same Evaluation Report, only fou

of the nine skids were damaged in the custody of respondent . Petitioner should have been straightforward about it

exact claim, which is borne out by the evidence on record, as petitioner can be granted only the amount of damages tha

is due to it.

Based on the Evaluation Report[44]of BA McLarens Phils., Inc., dated May 5, 2003, the four (4) skids damage

while in the custody of the arrastre operator and the amount of actual damages therefore are as follows:

PRODUCT NOS. PRODUCTS NAMED NO. OF SHEETS NET WT. PERPACKING LIST

2HD804522 Electrolytic Tin Free 1,200 1,987

Steel JISG3315

2HD804461 -do- 1,400 1,698

2HD804540 -do- 1,200 1,987

2HD804549 -do- 1,200 1,987

----------------------------------------------------------------------------------------------------------

4 SKIDS TOTAL 5,000

P9,878,547.58 (Insured value)[45] P213,821.50

------------------ = 42.7643 x 5,000

231,000 (Total number of sheets)Less: Deductible 0.50% based on sum insured[46] 49,392.74

Total P164,428.76

In view of the foregoing, petitioner is entitled to actual damages in the amount of P164,428.76 for the four (4

skids damaged while in the custody of respondent.

WHEREFORE, the petition is GRANTED. The Decision of the Regional Trial Court of Makati City, Branch 138, date

October 17, 2006, in Civil Case No. 05-809, and its Order dated December 4, 2007, are hereby REVERSED and SE

ASIDE. Respondent Asian Terminals, Inc. is ORDERED to pay petitioner Insurance Company of North America actudamages in the amount of One Hundred Sixty-Four Thousand Four Hundred Twenty-Eight Pesos and Seventy-Si

Centavos (P164,428.76). Twelve percent (12%) interest per annum shall be imposed on the amount of actual damage

from the date the award becomes final and executory until its full satisfaction.

Costs against petitioner.

SO ORDERED.
http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn45http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn45http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn45http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn48http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn48http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn48http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn48http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/180784.htm#_ftn45


13/38

13

THIRD DIVISION

G.R. No. 171591 25 June 2012

ACE NAVIGATION CO., INC., petitioner,

vs.

FGU INSURANCE CORPORATION and PIONEER INSURANCE AND SURETY CORPORATION, Respondents.

D E C I S I O N

PERLAS-BERNABE,J.:

This is an appeal under Rule 45 of the Rules of Court seeking to reverse the June 22, 2004 Decision1and February 17,

2006 Resolution2of the Court of Appeals (CA) ordering petitioner Ace Navigation Co., Inc., jointly and severally with

Cardia Limited, to pay respondents FGU Insurance Corp. and Pioneer Insurance and Surety Corp. the sum of P213,518.20

plus interest at the rate of six percentum (6%) from the filing of the complaint until paid.

The Facts

On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port China, 8,260metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila and delivered to its

consignee, Heindrich Trading Corp. (HEINDRICH). The subject shipment was insured with respondents, FGU Insurance

Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against all risks under Marine Open Policy No.

062890275 for the amount of P18,048,421.00.3

The subject vessel is owned by P.T. Pakarti Tata (PAKARTI) which it chartered to Shinwa Kaiun Kaisha Ltd.

(SHINWA).4Representing itself as owner of the vessel, SHINWA entered into a charter party contract with Sky

International, Inc. (SKY), an agent of Kee Yeh Maritime Co. (KEE YEH),5which further chartered it to Regency Express

Lines S.A. (REGENCY). Thus, it was REGENCY that directly dealt with consignee HEINDRICH, and accordingly, issued Clean

Bill of Lading No. SM-1.6

On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However, upon inspection of

HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was found that out of the 165,200 bags

of cement, 43,905 bags were in bad order and condition. Unable to collect the sustained damages in the amount of

P1,423,454.60 from the shipper, CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of the cargo,

each paid the consignee, HEINDRICH, the amounts of P427,036.40 and P284,690.94, respectively,7and consequently

became subrogated to all the rights and causes of action accruing to HEINDRICH.

Thus, on August 8, 1991, respondents filed a complaint for damages against the following defendants: "REGENCY

EXPRESS LINES, S.A./ UNKNOWN CHARTERER OF THE VESSEL 'PAKARTI TIGA'/ UNKNOWN OWNER and/or DEMIFE (sic)

CHARTERER OF THE VESSEL 'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC."8which

was docketed as Civil Case No. 90-2016.

In their answer with counterclaim and cross-claim, PAKARTI and SHINWA alleged that the suits against them cannot

prosper because they were not named as parties in the bill of lading. 9

Similarly, ACENAV claimed that, not being privy to the bill of lading, it was not a real party-in-interest from whom the

respondents can demand compensation. It further denied being the local ship agent of the vessel or REGENCY and

claimed to be the agent of the shipper, CARDIA.10
http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt1http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt10http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt9http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt8http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt7http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt6http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt5http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt4http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt3http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt2http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt1


14/38

14

For its part, SKY denied having acted as agent of the charterer, KEE YEH, which chartered the vessel from SHINWA, which

originally chartered the vessel from PAKARTI. SKY also averred that it cannot be sued as an agent without impleading its

alleged principal, KEE YEH.11

On September 30, 1991, HEINDRICH filed a similar complaint against the same parties and Commercial Union Assurance

Co. (COMMERCIAL), docketed as Civil Case No. 91-2415, which was later consolidated with Civil Case No. 91-2016.

However, the suit against COMMERCIAL was subsequently dismissed on joint motion by the respondents and

COMMERCIAL.12

Proceedings Before the RTC and the CA

In its November 26, 2001 Decision,13the RTC dismissed the complaint, thefallo of which reads:

WHEREFORE, premises considered, plaintiffs complaint is DISMISSED. Defendants counter-claim against the plaintiffs

are likewise dismissed, it appearing that plaintiff[s] did not act in evident bad faith in filing the present complaint against

them.

Defendant Pakarti and Shinwas cross-claims against their co-defendants are likewise dismissed for lack of sufficient

evidence.

No costs.

SO ORDERED.

Dissatisfied, the respondents appealed to the CA which, in its assailed June 22, 2004 Decision,14found PAKARTI,

SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the respondents' claim, with the remaining 30% to be

shouldered solidarily by CARDIA and its agent, ACENAV, thus:

WHEREFORE, premises considered, the Decision dated November 26, 2001 is hereby MODIFIED in the sense that:

a) defendant-appellees P.T. Pakarti Tata, Shinwa Kaiun Kaisha, Ltd., Kee Yeh Maritime Co., Ltd. and the latters

agent Sky International, Inc. are hereby declared jointly and severally liable, and are DIRECTED to pay FGU

Insurance Corporation the amount of Two Hundred Ninety Eight Thousand Nine Hundred Twenty Five and

45/100 (P298,925.45) Pesos and Pioneer Insurance and Surety Corp. the sum of One Hundred Ninety Nine

Thousand Two Hundred Eighty Three and 66/100 (P199,283.66) Pesos representing Seventy (70%) percentum of

their respective claims as actual damages plus interest at the rate of six (6%) percentum from the date of the

filing of the complaint; and

b) defendant Cardia Ltd. and defendant-appellee Ace Navigation Co., Inc. are DECLARED jointly and severally

liable and are hereby DIRECTED to pay FGU Insurance Corporation One Hundred Twenty Eight Thousand One

Hundred Ten and 92/100 (P128,110.92) Pesos and Pioneer Insurance and Surety Corp. Eighty Five Thousand

Four Hundred Seven and 28/100 (P85,407.28) Pesos representing thirty (30%) percentum of their respective

claims as actual damages, plus interest at the rate of six (6%) percentum from the date of the filing of thecomplaint.

SO ORDERED.

Finding that the parties entered into a time charter party, not a demise or bareboat charter where the owner completely

and exclusively relinquishes possession, command and navigation to the charterer, the CA held PAKARTI, SHINWA, KEE

YEH and its agent, SKY, solidarily liable for 70% of the damages sustained by the cargo. This solidarity liability was borne

by their failure to prove that they exercised extraordinary diligence in the vigilance over the bags of cement entrusted to
http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt11http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt14http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt13http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt12http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt11


15/38

15

them for transport. On the other hand, the CA passed on the remaining 30% of the amount claimed to the shipper,

CARDIA, and its agent, ACENAV, upon a finding that the damage was partly due to the cargo's inferior packing.

With respect to REGENCY, the CA affirmed the findings of the RTC that it did not acquire jurisdiction over its person for

defective service of summons.

PAKARTI's, SHINWA's, SKY's and ACENAV's respective motions for reconsideration were subsequently denied in the CA's

assailed February 17, 2006 Resolution.

Issues Before the Court

PAKARTI, SHINWA, SKY and ACENAV filed separate petitions for review on certiorari before the Court, docketed as G.R.

Nos. 171591, 171614, and 171663, which were ordered consolidated in the Courts Resolution dated July 31, 2006. 15

On April 21, 2006, SKY manifested16that it will no longer pursue its petition in G.R. No. 171614 and has preferred to

await the resolution in G.R. No. 171663 filed by PAKARTI and SHINWA. Accordingly, an entry of judgment 17against it

was made on August 18, 2006. Likewise, on November 29, 2007, PAKARTI and SHINWA moved18for the withdrawal of

their petitions for lack of interest, which the Court granted in its January 21, 2008 Resolution. 19The corresponding entry

of judgment20against them was made on March 17, 2008.

Thus, only the petition of ACENAV remained for the Court's resolution, with the lone issue of whether or not it may be

held liable to the respondents for 30% of their claim.

Maintaining that it was not a party to the bill of lading, ACENAV asserts that it cannot be held liable for the damages

sought to be collected by the respondents. It also alleged that since its principal, CARDIA, was not impleaded as a party-

defendant/respondent in the instant suit, no liability can therefore attach to it as a mere agent. Moreover, there is

dearth of evidence showing that it was responsible for the supposed defective packing of the goods upon which the

award was based.

The Court's Ruling

A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent, describing the freight so as to

identify it, stating the name of the consignor, the terms of the contract for carriage, and agreeing or directing that the

freight to be delivered to the order or assigns of a specified person at a specified place." 21

It operates both as a receipt and as a contract. As a receipt, it recites the date and place of shipment, describes the

goods as to quantity, weight, dimensions, identification marks and condition, quality, and value. As a contract, it names

the contracting parties, which include the consignee, fixes the route, destination, and freight rates or charges, and

stipulates the rights and obligations assumed by the parties.22As such, it shall only be binding upon the parties who

make them, their assigns and heirs.23

In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI; and (c) the

consignee HEINDRICH. However, by virtue of their relationship with PAKARTI under separate charter arrangements,SHINWA, KEE YEH and its agent SKY likewise became parties to the bill of lading. In the same vein, ACENAV, as admitted

agent of CARDIA, also became a party to the said contract of carriage.

The respondents, however, maintain24that ACENAV is a ship agent and not a mere agent of CARDIA, as found by both

the CA25and the RTC.26

The Court disagrees.
http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt15http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt22http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt22http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt22http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt23http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt23http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt23http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt26http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt25http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt24http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt23http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt22http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt21http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt20http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt19http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt18http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt17http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt16http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt15


16/38

16

Article 586 of the Code of Commerce provides:

ART. 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for the obligations

contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed

was invested therein.

By ship agent is understood the person entrusted with the provisioning of a vessel, or who represents her in the port in

which she may be found. (Emphasis supplied)

Records show that the obligation of ACENAV was limited to informing the consignee HEINDRICH of the arrival of the

vessel in order for the latter to immediately take possession of the goods. No evidence was offered to establish that

ACENAV had a hand in the provisioning of the vessel or that it represented the carrier, its charterers, or the vessel at any

time during the unloading of the goods. Clearly, ACENAV's participation was simply to assume responsibility over the

cargo when they were unloaded from the vessel. Hence, no reversible error was committed by the courts a quo in

holding that ACENAV was not a ship agent within the meaning and context of Article 586 of the Code of Commerce, but

a mere agent of CARDIA, the shipper.

On this score, Article 1868 of the Civil Code states:

ART. 1868. By the contract of agency, a person binds himself to render some service or to do something inrepresentation or on behalf of another, with the consent or authority of the latter.

Corollarily, Article 1897 of the same Code provides that an agent is not personally liable to the party with whom he

contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient

notice of his powers.

Both exceptions do not obtain in this case. Records are bereft of any showing that ACENAV exceeded its authority in the

discharge of its duties as a mere agent of CARDIA. Neither was it alleged, much less proved, that ACENAV's limited

obligation as agent of the shipper, CARDIA, was not known to HEINDRICH.

Furthermore, since CARDIA was not impleaded as a party in the instant suit, the liability attributed upon it by the

CA27on the basis of its finding that the damage sustained by the cargo was due to improper packing cannot be borne by

ACENAV. As mere agent, ACENAV cannot be made responsible or held accountable for the damage supposedly caused

by its principal.28

Accordingly, the Court finds that theCA erred in ordering ACENAV jointly and severally liable with CARDIA to pay 30o/o

of the respondents' claim.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are hereby REVERSED.1awp++i1 The

complaint against petitioner Ace Navigation Co., Inc. is hereby DISMISSED.

SO ORDERED.
http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt27http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt28http://www.lawphil.net/judjuris/juri2012/jun2012/gr_171591_2012.html#fnt27


17/38

17

THIRD DIVISION

G.R. No. 160088 July 13, 2011

AGUSTIN P. DELA TORRE, Petitioner,

vs.

THE HONORABLE COURT OF APPEALS, CRISOSTOMO G. CONCEPCION, RAMON "BOY" LARRAZABAL, PHILIPPINETRIGON SHIPYARD CORPORATION, and ROLAND G. DELA TORRE, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 160565

PHILIPPINE TRIGON SHIPYARD CORPORATION and ROLAND G. DELA TORRE, Petitioners,

vs.

CRISOSTOMO G. CONCEPCION, AGUSTIN DELA TORRE and RAMON "BOY" LARRAZABAL, Respondents.

D E C I S I O N

MENDOZA,J.:

These consolidated petitions1for review on certiorari seek to reverse and set aside the September 30, 2002

Decision2and September 18, 2003 Resolution3of the Court of Appeals (CA) in CA-G.R. CV No. 36035, affirming in toto

the July 10, 1991 Decision4of the Regional Trial Court, Branch 60, Angeles City (RTC). The RTC Decision in Civil Case No.

4609, an action for Sum of Money and Damages, ordered the defendants, jointly and severally, to pay various damages

to the plaintiff.

The Facts:

Respondent Crisostomo G. Concepcion (Concepcion) owned LCT-Josephine, a vessel registered with the Philippine Coast

Guard. On February 1, 1984, Concepcion entered into a "Preliminary Agreement"5with Roland de la Torre (Roland) for

the dry-docking and repairs of the said vessel as well as for its charter afterwards.6Under this agreement, Concepcion

agreed that after the dry-docking and repair of LCT-Josephine, it "should" be chartered for P 10,000.00 per month with

the following conditions:

1. The CHARTERER will be the one to pay the insurance premium of the vessel

2. The vessel will be used once every three (3) months for a maximum period of two (2) weeks

3. The SECOND PARTY (referring to Concepcion) agreed that LCT-Josephine should be used by the FIRST PARTY

(referring to Roland) for the maximum period of two (2) years

4. The FIRST PARTY (Roland) will take charge[x] of maintenance cost of the said vessel. [Underscoring Supplied]

On June 20, 1984, Concepcion and the Philippine Trigon Shipyard Corporation7(PTSC), represented by Roland, entered

into a "Contract of Agreement,"8wherein the latter would charter LCT-Josephine retroactive to May 1, 1984, under the

following conditions:
http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt1http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt1http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt2http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt2http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt3http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt3http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt4http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt4http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt4http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt5http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt5http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt5http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt6http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt6http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt6http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt7http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt7http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt7http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt8http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt8http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt8http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt8http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt7http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt6http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt5http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt4http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt3http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt2http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt1


18/38

18

a. Chartered amount of the vessel P 20,000.00 per month effective May 1, 1984;

j. The owner (Concepcion) shall pay 50% downpayment for the dry-docking and repair of the vessel and the

balance shall be paid every month in the amount of P 10,000.00, to be deducted from the rental amount of the

vessel;

k. In the event that a THIRD PARTY is interested to purchase the said vessel, the SECOND PARTY (PTSC/ Roland)

has the option for first priority to purchase the vessel. If the SECOND PARTY (PTSC/Roland) refuses the offer of

the FIRST PARTY (Concepcion), shall give the SECOND PARTY (PTSC/Roland) enough time to turn over the vesselso as not to disrupt previous commitments;

l. That the SECOND PARTY (PTSC/Roland) has the option to terminate the contract in the event of the SECOND

PARTY (PTSC/Roland) decide to stop operating;

m. The SECOND PARTY (PTSC/Roland) shall give 90 days notice of such termination of contract;

n. Next x x year of dry-docking and repair of vessel shall be shouldered by the SECOND PARTY (PTSC/Roland);

(Underscoring Supplied]

On August 1, 1984, PTSC/Roland sub-chartered LCT-Josephine to Trigon Shipping Lines (TSL), a single proprietorshipowned by Rolands father, Agustin de la Torre (Agustin).9The following are the terms and conditions of that "Contract of

Agreement:"10

a. Chartered amount of the vessel P 30,000.00 per month effective August, 1984;

b. Downpayment of the 50% upon signing of the contract and the balance every end of the month;

c. Any cost for the additional equipment to be installed on the vessel will be borne by the FIRST PARTY (PTSC/

Roland) and the cost of the equipment will be deductible from the monthly rental of the vessel;

d. In the event the vessel is grounded or other [force majeure] that will make the vessel non-opera[xx]ble, the

rental of the vessel shall be suspended from the start until the vessel will be considered operational;

e. The cost for the dry-docking and/or repair of vessel shall not exceed P 200,000.00, any excess shall be borne

by the SECOND PARTY (TSL/Agustin);

f. The SECOND PARTY (TSL/Agustin) undertakes to shoulder the maintenance cost for the duration of the usage;

g. All cost for the necessary repair of the vessel shall be on the account of the SECOND PARTY (TSL/Agustin);

h. That the SECOND PARTY (TSL/Agustin) has the option to terminate the contract in the event the SECOND

PARTY (TSL/Agustin) decides to stop operating;

j. The FIRST PARTY (PTSC/Roland) will terminate the services of all vessels crew and the SECOND PARTY

(TSL/Agustin) shall have the right to replace and rehire the crew of the vessel.

k. Insurance premium of the vessel will be divided equally between the FIRST PARTY (PTSC/Rolando) and the

SECOND PARTY (TSL/ Agustin). [Underscoring supplied]
http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt9http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt9http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt9http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt10http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt10http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt10http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt10http://www.lawphil.net/judjuris/juri2011/jul2011/gr_160088_2011.html#fnt9


19/38

19

On November 22, 1984, TSL, this time represented by Roland per Agustins Special Power of Attorney,11sub-chartered

LCT-Josephine to Ramon Larrazabal (Larrazabal) for the transport of cargo consisting of sand and gravel to Leyte. The

following were agreed upon in that contract,12to wit:

1. That the FIRST PARTY (TSL by Roland) agreed that LCT-Josephine shall be used by the SECOND PARTY

(Larrazabal) for and in consideration on the sum of FIVE THOUSAND FIVE HUNDRED (P 5,500.00) PESOS,

Philippine currency per day charter with the following terms and conditions.

2. That the CHARTERER should pay P 2,000.00 as standby pay even that will made (sic) the vessel non-opera[xx]ble cause[d] by natur[al] circumstances.

3. That the CHARTERER will supply the consumed crude oil and lube oil per charter day.

4. That the SECOND PARTY (Larrazabal) is the one responsible to supervise in loading and unloading of cargo

load on the vessel.

5. That the SECOND PARTY (Larrazabal) shall give one week notice for such termination of contract.

6. TERMS OF PAYMENTS that the SECOND PARTY (Larrazabal) agreed to pay 15 days in advance and the balance

should be paid weekly. [Underscoring Supplied]

On November 23, 1984, the LCT-Josephine with its cargo of sand and gravel arrived at Philpos, Isabel, Leyte. The vessel

was beached near the NDC Wharf. With the vessels ramp already lowered, the unloading of the vessels cargo began

with the use of Larrazabals payloader. While the payloader was on the deck of the LCT -Josephine scooping a load of the

cargo, the vessels ramp started to move downward, the vessel tilted and sea water rushed in. Shortly thereafter, LCT -

Josephine sank.13

Concepcion demanded that PTSC/ Roland refloat LCT-Josephine. The latter assured Concepcion that negotiations were

underway for the refloating of his vessel.14Unfortunately, this did not materialize.

For this reason, Concepcion was constrained to institute a complaint for "Sum of Money and Damages" against PTSC and

Roland before the RTC. PTSC and Roland filed their answer together with a third-party complaint against Agustin.

Agustin, in turn, filed his answer plus a fourth-party complaint against Larrazabal. The latter filed his answer and

counterclaim but was subsequently declared in default by the RTC.15Eventually, the fourth-party complaint against

Larrazabal was dismissed when the RTC rendered its decision in favor of Concepcion on July 10, 1991 .16In said RTC

decision, the following observations were written:

The testimonies of Roland de la Torre and Hubart Sungayan quoted above, show: (1) that the payloader was used to

unload the cargo of sand and gravel; (2) that the payloader had to go inside the vessel and scoop up a load; (3) that the

ramp according to Roland de la Torre, "was not properly put into peak (sic) such that the front line will touch the

bottom, particularly will touch the sea x x x"; (4) that "the tires (of the payloader) will be submerged to (sic) the sea"; (5)

that according to Sungayan "the ramp of the vessel was moving down"; (6) that the payloader had to be maneuvered by

its operator who dumped the load at the side of the vessel; (7) that the dumping of the load changed the stability of thevessel and tilted it to the starboard side; and (8) that the tilting caused the sliding of the cargo toward that side and

opened the manhole through which seawater rushed in.17

Hubart Sungayan, who was the chiefmate of LCT-Josephine and under the employ of TSL/Agustin, also admitted at the

trial that it was TSL/Agustin, through its crew, who was in-charge of LCT-Josephines operations although the

responsibility of loading and unloading the cargo was under Larrazabal. Thus, the RTC declared that the "efficient cause

of the sinking of the LCT-JOSEPHINE was the improper lowering or positioning of the ramp," which was well within the

charge or responsibility of the captain and crew of the vessel.18The fallo of the RTC Decision reads:
htt

Maritime Law cases.pdf

Documents

Transcript of Maritime Law cases.pdf