G.R. No. 187701 - Philam Insurance Co., Inc. vs. Heung-A Shipping Corp.

On December 19, 2000, Novartis Consumer Health Philippines, Inc. (NOVARTIS) imported 19 pallets of 200 rolls of Ovaltine laminated plastic packaging from Jinsuk Trading Co. Ltd. (JINSUK), South Korea.
JINSUK engaged Protop Shipping Corporation (PROTOP), a freight forwarder in South Korea, to forward the goods to NOVARTIS in the Philippines.
PROTOP issued Bill of Lading No. PROTAS 200387 indicating that the cargo was shipped “freight prepaid” and under “shipper’s load and count” terms, i.e., the shipper packed and loaded the goods exclusively and was solely responsible for their quantity, description, and condition.
Sagawa Express Phils., Inc. (SAGAWA) was designated as the delivery contact in the Philippines per the bill of lading.
PROTOP shipped the cargo via Dongnama Shipping Co. Ltd. (DONGNAMA), which loaded the cargo on M/V Heung-A Bangkok V-019, owned and operated by Heung-A Shipping Corporation (HEUNG-A), a Korean company.
Wallem Philippines Shipping, Inc. (WALLEM) acted as HEUNG-A’s ship agent in the Philippines.

NOVARTIS insured the shipment with Philam Insurance Company, Inc. (PHILAM, now Chartis Philippines Insurance, Inc.) under an All Risk Marine Open Insurance Policy covering all losses or damages before, during, and after transit until delivery.
The vessel arrived at Manila (South Harbor) on December 27, 2000. Cargo was discharged into Asian Terminals, Inc. (ATI) custody, acting as customs arrastre operator.
On January 4, 2001, NOVARTIS’ broker, Stephanie Customs Brokerage Corp. (STEPHANIE), withdrew the shipment from ATI’s container yard, delivering it to NOVARTIS’ premises on January 5, 2001.

NOVARTIS’ Senior Laboratory Technician, Annie Rose Caparoso (Caparoso), inspected the shipment and found the container locked with cargo intact, but the boxes were wet, damp, disarranged, and some were open or damaged.
The container van showed damage, rust, water droplets on the walls, and a wet floor. Caparoso rejected the entire shipment due to possible contamination risk.
Adjusters Renato Layug and Mario Chin surveyed the cargo; their Certificate of Survey dated January 17, 2001 confirmed the damage, including corrosion, indentations, sagging roof with minute holes, wet floor, and collapse of cartons due to wetting.
17 pallets were found wet or water damaged; 16 cartons on 2 pallets were unaccounted for, possibly short-shipped.
Laboratory tests by Precision Analytical Services, Inc. confirmed the wetting was caused by salt water.

NOVARTIS’ demands for indemnification from PROTOP, SAGAWA, ATI, and STEPHANIE were denied; PHILAM paid the insurance claim of ₱1,904,613.20 and filed suit against the liable parties as subrogee.
PHILAM impleaded WALLEM and HEUNG-A as defendants, claiming they were liable for the damage.
PROTOP, SAGAWA, ATI, STEPHANIE, WALLEM, and HEUNG-A denied liability with various defenses such as “shipper’s load and count” terms, timely notice requirements, and limitations under the Carriage of Goods by Sea Act (COGSA). SAGAWA, ATI, and STEPHANIE also filed counterclaims for damages and attorney’s fees.

The Regional Trial Court (RTC) found HEUNG-A liable as the common carrier, WALLEM liable as its agent, and PROTOP liable as the freight forwarder.
SAGAWA, ATI, and STEPHANIE were exonerated due to the “shipper’s load and count” clause and lack of negligence.
PHILAM was held effectively subrogated to NOVARTIS’ rights and entitled to recover claim amounts.
The RTC awarded damages, interest, attorney’s fees to the prevailing parties, and costs.
The Court of Appeals (CA) affirmed with modification: limited liability of PROTOP, HEUNG-A, and WALLEM to US$8,500 under COGSA; deletion of attorney’s fees for SAGAWA, ATI, and STEPHANIE.

PHILAM, and separately HEUNG-A and WALLEM, filed petitions raising issues on liability limitations, applicability of notice requirements, and the existence of the contract of carriage.

Whether the shipment was damaged while in the possession and custody of HEUNG-A, and if so, whether HEUNG-A's liability can be limited to US$500 per package under the COGSA package limitation clause.
Whether NOVARTIS/PHILAM failed to file a timely claim against HEUNG-A and/or WALLEM, thus barring recovery.