G.R. No. L-7311 - New Zealand Insurance Co., Ltd. vs. Joy

On May 20, 1950, the ship "Jupiter" (voyage No. 149) received 107 bundles of first-class loose weight hemp at Carangian, Samar.
The cargo, weighing 8,273 kilos (130.80 piculs) and valued at P6,736.20, was consigned by Lee Teh & Co., Inc. for transportation and delivery to Manila under a bill of lading.
The shiper’s branch office at Carangian, Samar, was responsible for placing the cargo on board, while the main office in Manila was designated as the consignee.

The vessel was owned by Adriano Choa Joy, doing business as South Sea Shipping Line.
The cargo was insured by New Zealand Insurance Co., Ltd., which later became involved once damage occurred.
Lee Teh & Co., Inc. functioned both as consignor (through its branch office) and as consignee (its Manila office), thereby assuming differing roles within the same corporate structure.

The ship ran aground while entering Laoang Bay, Samar, on the day of shipment due to the negligence of its captain, Jose Molina.
A Marine Board of Inquiry found Captain Molina negligent of his duties, resulting in his suspension from office for three months.

Of the cargo, only 7,590 kilos (120 piculs) were salvaged, but these were in damaged condition.
The salvaged hemp was sold for P2,040; however, following a salvage expenditure of P500, Lee Teh & Co., Inc. sustained losses amounting to P5,196.20.
The insurance company, acting as subrogee of the shipper, advanced payment to cover these losses.

The carrier (South Sea Shipping Line) refused to reimburse the damages, prompting the insurance company to file an action before the Court of First Instance in Manila.
The lower court applied Article 366 of the Code of Commerce, which mandates that claims for damages must be filed within twenty-four hours following receipt of the merchandise.
Since the cargo never reached Manila (its intended destination), there was no delivery to the consignee, and thus, no timely claim under Article 366.
Based on these findings, the lower court dismissed the case and imposed costs against the plaintiff.

The central dispute was whether the claim for damages should have been filed by Lee Teh & Co., Inc. (either as consignor or as consignee) within twenty-four hours, as mandated by Article 366 of the Code of Commerce.
It raised the question of whether the article applies when goods are not delivered to the consignee at the destination due to the carrier's failure to complete its contractual obligation.

Whether the requirement of filing a claim for damages within twenty-four hours under Article 366 of the Code of Commerce applies when the goods are not delivered to the consignee at the destination.

Does the absence of delivery at the consignee’s location exempt the parties from the statutory requirement to file a claim within twenty-four hours?
Can the carrier, having failed to deliver the cargo as stipulated in the bill of lading, invoke Article 366 as a defense against liability?

Whether the carrier’s failure to deliver the cargo results in a breach of contract that nullifies its right to rely on the conditions provided in Article 366.

Is the carrier’s non-performance sufficient to forfeit its contractual defenses under the Code of Commerce?
How does the contractual obligation of the carrier interplay with statutory requirements on the timely filing of claims?