G.R. No. 182864 - Eastern Shipping Lines, Inc. vs. BPI/MS Insurance Corp.

On 29 December 2004, BPI/MS Insurance Corporation and Mitsui Sumitomo Insurance Co., Ltd. filed a complaint in the Regional Trial Court (RTC) of Makati City against Eastern Shipping Lines, Inc. (ESLI) and Asian Terminals, Inc. (ATI), seeking US$17,560.48 in actual damages plus legal interest, attorney’s fees, and costs.
The insurers, having paid Calamba Steel Center, Inc.’s claim, stood in subrogation to Calamba Steel’s rights.

Shipper: Sumitomo Corporation; Vessel: M/V “Eastern Venus 22”; Cargo: 22 coils of steel sheet (159,534 kg); Bill of Lading No. ESLIYMA001; declared value US$83,857.59; insured under Policy No. 103-GG03448834.
Arrival in Manila (11 February 2004): cargo turned over to ATI; upon withdrawal by Calamba Steel’s representative, US$4,598.85 in damage was discovered; rejected as unfit.

Shipper: Sumitomo Corporation; Vessel: M/V “Eastern Venus 25”; Cargo: 50 coils of steel sheet (383,532 kg); Bill of Lading No. ESLIKSMA002; declared value US$221,455.58; insured under Policy No. 104-GG04457785.
Arrival in Manila (21 May 2004): partial damage during discharge and ATI handling; US$12,961.63 in damage; cargo rejected.

ATI denied liability, claimed due diligence, and invoked a P5,000 liability cap under its PPA contract; cross-claimed indemnity from ESLI.
ESLI denied liability, alleging damage occurred under ATI custody or with Calamba Steel; cross-claimed indemnity.
Pre-Trial Order (10 January 2006): parties admitted capacity to sue; genuineness and execution of B/Ls, invoices, insurance policies, and survey reports; identified issues on subrogation, existence and cause of damage, and liability.

BPI/MS and Mitsui offered affidavits of cargo surveyors and Calamba Steel’s manager, along with B/Ls, invoices, loss notices, subrogation forms, survey reports, and turnover surveys showing pre-turnover damage.
ESLI presented affidavits of its operations manager and an independent surveyor, plus B/Ls, PPA certificate, handling contract, damage and turnover reports.
ATI offered affidavits of its bad order inspector and claims officer, plus turnover surveys, loss notices, gatepasses, and handling contract.

Held ESLI and ATI jointly and severally liable for US$17,560.48 plus 6% interest from complaint filing, attorney’s fees (20% of claim), and costs.

Denied ESLI’s appeal; granted ATI’s appeal: absolved ATI of liability and deleted attorney’s fees; affirmed remainder of RTC judgment.

ESLI petitioned for review on certiorari, challenging its liability and COGSA limitation.
BPI/MS and Mitsui noted ESLI’s failure to implead ATI, arguing ATI was an indispensable party. ESLI blamed the insurers for ATI’s exclusion.
Supreme Court found ATI’s absolution final and proceeded to consider ESLI’s liability and limitation defenses.

Is ESLI liable for the damage to the two steel coil shipments?
Does the US$500 per package limitation under COGSA apply?
Does non-impleading ATI affect ESLI’s ability to shift or mitigate liability?
Are BPI/MS and Mitsui validly subrogated to Calamba Steel’s rights and defenses?