G.R. No. 130068 - Far Eastern Shipping Co. vs. Court of Appeals

Petitioners Philippine American General Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) filed a maritime suit against private respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI), along with S.C.I. Line and F.E. Zuellig, Inc., seeking recovery for lost or damaged shipment, exemplary damages, attorney’s fees, and costs.
The cargo consisted of 7,000 bags of Low Density Polyethylene (LDPE 631 and 647), shipped in March 1977 from Baton Rouge, Louisiana to Manila for transshipment to Davao City.

The cargo was carried aboard the foreign common carrier SS "VISHVA YASH" to Manila, then transshipped via M/V "Sweet Love" (operated by SLI), where the cargo was loaded and commingled with other shipments.
The shipment included Bills of Lading Nos. 6 and 7 from the foreign carrier, packing lists, commercial invoices, and was insured by Philamgen for TPI under a Marine Risk Note.
Upon arrival at Davao City on May 15, 1977, only 5,820 bags were delivered in good condition out of 7,000, with documented shortages, damages, and contamination rendering the damaged bags unusable.

Before trial, S.C.I. Line and F.E. Zuellig settled their liabilities. The trial court rendered judgment in favor of petitioners against SLI and DVAPSI, ordering payment of damages, interest, attorney’s fees, and costs.
On appeal, the Court of Appeals reversed the decision, dismissing the complaint on the alleged ground of prescription (delay exceeding contractual time limits to file claims and suits), and denying petitioners’ motion for reconsideration.
Petitioners filed a petition for review, disputing the Court of Appeals’ reliance on prescription and contending that they substantially complied with the contractual claim requirements.

Philamgen, as insurer, had been subrogated by TPI to pursue recovery rights through payment of the insured loss, evidenced by a subrogation receipt.
The insurer’s right to sue under the bill of lading is well-settled jurisprudence, and they are bound by the contract terms therein.

Respondent SLI raised prescription as an affirmative defense referencing time limitations in the bills of lading requiring claims within 30 days and suits within 60 days of accrual.
Petitioners did not formally deny the existence, genuineness, or execution of such bills of lading, only challenging certain stipulations as contracts of adhesion and void against public policy.
The Court of Appeals held that the absence of formal evidence of bills of lading was not fatal because their existence was impliedly admitted, and prescription may be taken cognizance of even if not inceptively raised.

Petitioners filed their claim on April 28, 1978, nearly a year after cargo delivery, violating the 30-day claim period in the bills of lading.
Other relevant actions, such as a provisional claim with DVAPSI and a cargo survey, occurred much earlier but no claim was filed timely with SLI.
Petitioner’s reliance on a "Report on Losses and Damages" issued by SLI, dated May 15, 1977, was deemed insufficient to substitute for formal notice of claim required by contract.

Petitioners failed to prove DVAPSI’s direct liability or negligence in handling the cargo.
Testimony and facts pointed to the loss or damage occurring before delivery to DVAPSI.
Arrastre operators are not presumed negligent; petitioners bore the burden to show due diligence failures, which they did not.

Whether the Court of Appeals erred in dismissing the complaint on the ground of prescription despite the absence of formal proof of the bills of lading containing the time limitation clauses.
Whether the contractual time limitations in the bills of lading (30 days to file a claim and 60 days to institute suit) are valid, reasonable, and binding despite petitioners’ allegation of them being contracts of adhesion contrary to public policy.
Whether petitioners substantially complied with the notice and filing requirements stipulated in the bills of lading.
Whether respondent Davao Veterans Arrastre and Port Services, Inc. can be held liable for the cargo loss or damage in light of petitioners’ failure to prove its negligence or direct responsibility.