G.R. No. 74125 - Universal Shipping Lines, Inc. vs. Intermediate Appellate Court

On or about March 22, 1974, SEVALCO, Limited, owned and operated by Universal Shipping Lines, Inc. (the petitioner), shipped two cargoes from Rotterdam, Netherlands, to Bangkok, Thailand, aboard the vessel M/V "TAIWAN."
The cargoes consisted of 50 palletized cartons each, containing 2,000 units of 25-kilogram bags of Statex R Brand carton black, with a declared gross weight of 53,000 kilos per shipment.
The shipments were consigned respectively to S. Lersen Company, Ltd. (Bill of Lading No. RB-15) and Muang Ngarm Retreads, Ltd. (Bill of Lading No. RB-16).
Both shipments were insured by Alliance Assurance Company, Ltd., a foreign insurance company domiciled in London, England, despite its withdrawal from the Philippine market on June 30, 1951.

Although the vessel arrived in Bangkok on June 28, 1974, the cargo under Bill of Lading No. RB-15 was not unloaded or delivered to S. Lersen Company, Ltd.
The cargo covered by Bill of Lading No. RB-16 was delivered with a noted shortage of 11,070 kilos, as the cargoes had been partially or completely dissolved due to saltwater intrusion in Hatch No. 2, where they were stored.
Upon arrival in Manila on July 4, 1974, the vessel’s master, Arturo C. Saavedra, filed a marine protest noting:

Indeterminate source of water intrusion, with the bilge pump having operated continuously for almost 12 hours and intermittently on other days.
The inability to inspect Hatch No. 2 due to the hold being full and inaccessible.
Suspicions that water entered externally through loosened rivets on the starboard side, with shore help engaged to pump out the water upon arrival at Bangkok.

The consignees, S. Lersen Company, Ltd. and Muang Ngarm Retreads, Ltd., filed their formal claims for loss and damage on August 7, 1974, and November 12, 1974, respectively.
Alliance Assurance Company, Ltd. paid the corresponding claims amounting to L12,180 and L2,547.18 for the respective cargoes.
On June 25, 1976, Alliance Assurance, acting as insurer–subrogee, filed an action in the Court of First Instance of Manila to recover from Universal Shipping Lines, Inc. and its Manila agent, Carlos Go Thong & Company, the sums paid to the consignees.
The trial court rendered judgment against the defendants, ordering them to jointly and severally pay the insurance company the amounts paid, along with legal interest from the filing date and attorney’s fees of P10,000.
On appeal to the Court of Appeals, the agent (Go Thong) was exonerated on the ground of non-participation in the shipment, while the liability of Universal Shipping Lines, Inc. for the loss or damage sustained was affirmed.

Universal Shipping Lines, Inc. (the petitioner) brought the appeal by certiorari alleging errors on several grounds:

Erroneously holding the petitioner liable for the loss/damage of the shipments.
Incorrectly denying that the insurer has capacity to sue in the Philippine courts.
Improperly finding that the insurer's cause of action had not prescribed.
Awarding attorney’s fees without sufficient factual, legal, or equitable justification.

Whether Universal Shipping Lines, Inc. is liable for the loss/damage incurred to the shipments, given that they were damaged while in the custody of the vessel.

Whether Alliance Assurance Company, Ltd., a foreign insurance company without a current license to conduct business in the Philippines, has capacity to sue in Philippine courts based on the marine insurance policies issued abroad.

Whether the action by Alliance Assurance is time-barred under Section 3(6) of the Carriage of Goods by Sea Act, and if the one-year period prescribed therein was validly suspended by an agreement between the parties.

Whether the court’s award of P10,000 as attorney’s fees was factually and legally justified under the circumstances of the litigation.