PHILIPPINE CHARTER INSURANCE CORPORATION VS.

CHEMOIL LIGHTERAGE
HITE GOLD CORPORATION G.R. No. 136888. June 29, 2005
Facts of the Case: Philippine Charter Insurance Corporation is a domestic
corporation engaged in the business of non-life insurance. Respondent
Chemoil Lighterage Corporation is also a domestic corporation engaged in
the transport of goods. On 24 January 1991, Samkyung Chemical Company,
Ltd., based in South Korea, shipped 62.06 metric tons of the liquid chemical
DIOCTYL PHTHALATE (DOP) on board MTTACHIBANA which was valued at
US$90,201.57 and another 436.70 metric tons of DOP valued at
US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc.
in Manila. PGP insured the cargo with Philippine Charter Insurance
Corporation against all risks. The insurance was under Marine Policies No.
MRN-30721 dated 06 February 1991. Marine Endorsement No. 2786 dated 11
May 1991 was attached and formed part of MRN-30721, amending the
latters insured value to P24,667,422.03, and reduced the premium
accordingly. The ocean tanker MT TACHIBANA unloaded the cargo to the
tanker barge, which shall transport the same to Del Pan Bridge in Pasig River
and haul it by land to PGPs storage tanks in Calamba, Laguna. Upon
inspection by PGP, the samples taken from the shipment showed
discoloration demonstrating that it was damaged. PGP thensent a letter
where it formally made an insurance claim for theloss it sustained. Petitioner
requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and
Condition Survey of the shipment which issued a report stating that DOP
samples taken were discolored. Inspection of cargo tanks showed manhole
covers of ballast tanks ceilings loosely secured and that the rubber gaskets
of the manhole covers of the ballast tanks re-acted tothe chemical causing
shrinkage thus, loosening the coversand cargo ingress. Petitioner paid PGP
the full and finalpayment for the loss and issued a Subrogation Receipt.
Meanwhile, PGP paid the respondent the as full payment for the latters
services. On 15 July 1991, an action for damages was instituted by the
petitioner-insurer against respondent-carrier before the RTC, Br.16, City of
Manila. Respondent filed an answer which admitted that it undertook to
transport the shipment, but alleged that before the DOP was loaded into its
barge, the representative of PGP, Adjustment Standard Corporation,
inspected it and found the same clean, dry, and fit for loading, thus accepted
the cargo without any protest or notice. As carrier, no fault and negligence
can be attributed against respondent as it exercised extraordinary diligence
in handling the cargo. After due hearing, the trial court rendered a Decision in
favor of plaintiff. On appeal, the Court of Appeals promulgated its Decision
reversing the trialcourt. A petition for review on certiorari was filed by
thepetitioner with this Court.
Issues: Whether or not the Notice of Claim was filed within the required
period.
Held: The Supreme Court do not believe so. As discussed at length above,
there is no evidence to confirm that the notice of claim was filed within the
period provided for under Article 366 of the Code of Commerce. Petitioners
contention proceeds from a false presupposition that the notice of claim was
timely filed. Article 366 of the Code of Commerce has profound application in
the case at bar, which provides that; Withintwenty-four hours following the
receipt of the merchandise a claim may be made against the carrier on

account of damage or average found upon opening the packages, provided

that the indications of the damage or average giving rise to the claim cannot
be ascertained from the exterior of said packages, in which case said claim
shall only be admitted at the time of 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
regard to the condition in which the goods transported were delivered. As to
the first issue, the petitioner contends that the notice of contamination was
given by PGP employee, to Ms. Abastillas, at the time of the delivery of the
cargo, and therefore, within the required period. The respondent, however,
claims that the supposed notice given by PGP over the telephone was denied
by Ms. Abastillas. The Court of Appeals declared: that a telephone call made
to defendant-company could constitute substantial compliance with the
requirement of notice. However, it must be pointed out that compliance with
the period for filing notice is an essential part of the requirement ,i.e..
immediately if the damage is apparent, or otherwise within twenty-four hours
from receipt of the goods, the clear import being that prompt examination of
the goods must bemade to ascertain damage if this is not immediately
apparent.We have examined the evidence, and we are unable to find any
proof of compliance with the required period, which is fatal to the accrual of
the right of action against the carrier.
Nothing in the trial courts decision stated that the notice of claim was
relayed or filed with the respondent-carrier immediately or within a period of
twenty-four hours from thetime the goods were received. The Court of
Appeals made thesame finding. Having examined the entire records of the
case,we cannot find a shred of evidence that will precisely andultimately
point to the conclusion that the notice of claim wastimely relayed or filed.The
requirement that a notice of claim should be filed withinthe period stated by
Article 366 of the Code of Commerce isnot an empty or worthless proviso.The
object sought to be attained by the requirement of thesubmission of claims in
pursuance of this article is to compelthe consignee of goods entrusted to a
carrier to make promptdemand for settlement of alleged damages suffered
by thegoods while in transport, so that the carrier will be enabled toverify all
such claims at the time of delivery or within twenty-four hours thereafter, and
if necessary fix responsibility andsecure evidence as to the nature and extent
of the allegeddamages to the goods while the matter is still fresh in theminds
of the parties.The filing of a claim with the carrier within the time
limitationtherefore actually constitutes a condition precedent to theaccrual of
a right of action against a carrier for loss of, or damage to, the goods. The
shipper or consignee must allegeand prove the fulfillment of the condition. If
it fails to do so, noright of action against the carrier can accrue in favor of
theformer. The aforementioned requirement is a reasonablecondition
precedent; it does not constitute a limitation of action.
ABOITIZ SHIPPING VS. INSURANCE CO. OF NORTH AMERICA G.R. No. 168402
August 6, 2008
Reyes, J:
Facts of the Case: MSAS Cargo International Limited (MSAS) procured an
open-policy marine insurance from ICNA UK Limited of London, a foreign
corporation. The insurance was for a transshipment of certain wooden work
tools and workbenches purchased by consignee Science Teaching

Improvement Project (STIP), Ecotech Center, Sudlon, Lahug, Cebu City. The
cargo, packed inside one container van was shipped from Hamburg, Germany
en route to Manila, Philippines. The ship arrived and docked where cargo was
received by Aboitiz Shipping Corporation, thereafter it issued a bill of lading
containing a notation grounded outside warehouse. It was then shipped to
Cebu City and was released to STIP. Two days after its release, Aboitiz
received a call from STIP informing it that the cargo sustained water damage.
STIP then informed the Philippine office of ICNA UK Limited of London for
insurance claims. The Insurance Company got an official weather report from
PAGASA, it would appear that heavy rains caused water damage to the
shipment, noticeably the shipment was placed outside the warehouse of
Aboitiz based on the bill of lading containing an notation grounded outside
the warehouse. Aboitiz refused to settle the claim, the insurance paid the
amount of Php 280, 176.92 to consignee STIP, and a subrogation receipt was
thereafter signed.
A case for collection of actual damages with interest and attorneys fees was
filed with RTC. Aboitiz disavowed any liability and asserted that the claim had
no factual and legal bases, and that complaint had no cause of action,
plaintiff insurance company had no personality to sue, cause of action was
barred, suit was premature there being no claim made upon Aboitiz. RTC
rendered decision against the insurance company and case was elevated to
CA, which reversed RTC decision. Case was then elevated to SC.
Issue: Whether or not the insuramce company can claim under the right of
subrogation
Held: Yes under Art. 2207 of the Civil Code. This right of subrogation,
however, has its limitations. First, both the insurer and the consignee are
bound by the contractual stipulations under the bill of lading. Second, the
insurer can be subrogated only to the rights as the insured may have against
the wrongdoer. If by its own acts after receiving payment from the insurer,
the insured releases the wrongdoer who caused the loss from liability, the
insurer loses its claim against the latter. As stated in Article 366 "Within
twenty four hours following the receipt of the merchandise, the claim against
the carrier for damages or average which may be found therein upon opening
the packages, may be made, provided that the indications of the damage or
average which give 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." The call was made 2 from delivery, a reasonable period
considering that the goods could not have corroded instantly overnight such
that it could only have sustained the damage during transit. The shipment
delivered to the consignee sustained water damage. The Court agree with the
findings of the CA that petiotioner failed to overturn this presumption.

MITSUI VS CA G.R. No. 119571 March 11, 1998

Mendoza , J:
Facts of the Case: Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation
represented in the Philippines by its agent, Magsaysay Agencies. It entered
into a contract of carriage through Meister Transport, Inc., an international

freight forwarder, with private respondent Lavine Loungewear Manufacturing

Corporation to transport goods of the latter from Manila to 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. However, in Kaoshiung,
Taiwan the goods were not transshipped immediately, with the result that the
shipment arrived in Le Havre only on November 14, 1991. The consignee
allegedly paid only half the value of the said goods on the ground that they
did not arrive in France until the "off season" in that country. The remaining
half was allegedly charged to the account of private respondent which in turn
demanded payment from petitioner through its agent
Issue: Whether or not private respondent's action is for "loss or damage" to
goods shipped, within the meaning of the Carriage of Goods by Sea Act
(COGSA)
Held: No. The suit is not for "loss or damage" to goods contemplated in
Section 3 (6), the question of prescription of action is governed not by the
COGSA but by Art. 1144 of the Civil Code which prv"ides for a prescriptive
period of ten years. 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. There would be some merit in appellan'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.
FIL MERCHANTS VS. ALEJANDRO G.R. No. L-54140 October 14, 1986
Gutierrez, Jr., J:
Facts of the Case: In 1976, Choa Tiek Seng contracted Frota Oceanica
Brasiliera for the latter to deliver goods. Choa Tiek Seng insured the goods
with Filipino Merchants Insurnace Company. The goods left the port of Manila
on December 13, 1976 and reached its point of destination on December 17,
1976. The goods were however damaged.
Choa Tiek Seng then filed an insurance claim. Filipino Merchants refused to
pay so in August 1977, it was sued by Choa Tiek Seng. In January 1978,
Filipino Merchants filed a third party complaint against the carrier Frota
Oceanica Brasiliera as it alleged that it is the carrier who is liable to pay
damages to Choa Tiek Seng. Judge Jose Alejandro of the trial court ruled
against Filipino Merchants. The Court of Appeals affirmed the ruling of the
judge. The lower courts ruled that Filipino Merchants 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 or one year from
December 17, 1976. The insurance company is already barred for it filed its
third party complaint only in January 1978.
Issue: Whether or not Filipino Merchants is precluded by the said time-bar

rule.
Held: Yes. The pertinent provision of the Carriage of Goods by Sea Act does
not only apply to the shipper but also applies to the insurer. The coverage of
the Carriage of Goods by Sea 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 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.

MAYER STEEL PIPER CORPORATION VS. COURT OF APPEALS G.R. No. 124050
June 19, 1997
Puno, J:
Facts of the Case: In 1983, Hongkong Government Supplies Department
(HGSD) contracted Mayer Steel Pipe Corporation for the latter to manufacture
and deliver various steel pipes and fittings. Before Mayer Steel shipped the
said pipes, it insured them with two insurance companies namely, South Sea
Surety and Insurance Co., Inc. and Charter Insurance Corporation each
insurer covering different portions of the shipment. The insurance policies
cover all risks which include all causes of conceivable loss or damage.
When the pipes reached Hongkong, the pipes were discovered to have been
damaged. The insurance companies refused to make payment. On April 17
1986, Mayer Steel sued the insurance companies. The case reached the
Court of Appeals. The CA ruled that the case filed by Mayer Steel should be
dismissed. It held that the action is barred under Section 3(6) of the Carriage
of Goods by Sea Act since it was filed only on April 17, 1986, more than two
years from the time the goods were unloaded from the vessel. Section 3(6) of
the Carriage of Goods by Sea Act provides that the carrier and the ship shall
be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the
goods should have been delivered. The CA ruled that this provision applies
not only to the carrier but also to the insurer, citing the case of Filipino
Merchants Insurance Co. Inc. vs. Alenjandro.
Issue: Whether or not the Court of Appeals is correct.
Held: No. Section 3(6) of the Carriage of Goods by Sea Act states that the
carrier and the ship shall be discharged from all liability for loss or damage to
the goods if no suit is filed within one year after delivery of the goods or the
date when they should have been delivered. Under this provision, only the
carriers liability is extinguished if no suit is brought within one year. But the
liability of the insurer is not extinguished because the insurers liability is
based not on the contract of carriage but on the contract of insurance. A

close reading of the law reveals that the Carriage of Goods by Sea Act
governs the relationship between the carrier on the one hand and the
shipper, the consignee and/or the insurer on the other hand. It defines the
obligations of the carrier under the contract of carriage. It does not, however,
affect the relationship between the shipper and the insurer. The latter case is
governed by the Insurance Code.
The Filipino Merchants case is different from the case at bar. In Filipino
Merchants, it was the insurer which filed a claim against the carrier for
reimbursement of the amount it paid to the shipper. In the case at bar, it was
the shipper which filed a claim against the insurer. The basis of the shippers
claim is the all risks insurance policies issued by the insurers to Mayer
Steel.
The ruling in Filipino Merchants should apply only to suits against the carrier
filed either by the shipper, the consignee or the insurer.