Case Digest (G.R. No. 187701)
Facts:
On December 19, 2000, NOVARTIS CONSUMER HEALTH PHILIPPINES, INC. imported laminated packaging material shipped by JINSUK TRADING CO. LTD. through freight forwarder PROTOP SHIPPING CORPORATION under Bill of Lading No. PROTAS 200387 (shippers load and count), carried via a slot charter on M/V Heung‑A Bangkok V‑019 operated by HEUNG‑A SHIPPING CORPORATION with WALLEM PHILIPPINES SHIPPING, INC. as its local agent; the container arrived Manila December 27, 2000, was delivered to NOVARTIS January 5, 2001, and was found drenched with sea water and damaged as shown by an adjusters' survey and a laboratory report.
Thereafter PHILAM INSURANCE COMPANY, INC. paid the insured loss (P1,904,613.20), was subrogated and sued PROTOP, HEUNG‑A, WALLEM and others; the RTC held PROTOP, HEUNG‑A and WALLEM solidarily liable, the CA affirmed but limited liability to US$8,500 and deleted certain attorneys' fees, and the present consolidated petitions to the Supreme Court followed.
Issues:
- Did the shipment sustain damage while in the possession and custody of HEUNG‑A SHIPPING CORPORATION, and if so, may HEUNG‑A (and WALLEM and PROTOP) limit liability to US$500 per package under COGSA?
- Were NOVARTIS/PHILAM's claims time‑barred for failure to file a timely notice or suit under applicable law?
Ruling:
The Supreme Court affirmed the CA Decision with modification only as to interest, holding that the factual finding that the cargo was damaged by sea water while in the custody of HEUNG‑A is supported by substantial evidence and is not reviewable on certiorari. The Court upheld the limitation of liability under COGSA to US$500 per package (resulting in US$8,500 for seventeen pallets) because the shipper did not declare value in the bill of lading, and it held that PHILAM's suits were timely under COGSA's one‑year rule; interest on the award was set at six percent per annum from finality.
Ratio:
The adjusters' survey and the laboratory report established sea water ingress during carriage, supporting the courts a quo in presuming carrier fault absent proof of extraordinary diligence, which HEUNG‑A failed to provide. The slot charter was a contract of affreightment and did not divest HEUNG‑A of carrier status or its duty to exercise extraordinary diligence; Article 1742 Civil Code obliges a carrier to exercise diligence even if container defects exist. Choice‑of‑law rules (Article 1753 Civil Code) and the COGSA applied to foreign‑trade carriage; Section 4(5) of COGSA limits recovery to $500 per package where no value is declared, and Section 3(6) of COGSA provides that failure to give the three‑day notice does not bar the right to sue within one year, which PHILAM satisfied.
Doctrine:
- Common carriers are bound to exercise extraordinary diligence and are presumed at fault for loss or deterioration of goods unless they prove otherwise.
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