Case Summary (G.R. No. 171337)
Chronology and Procedural History
Benjamin Cua filed a civil action for damages on November 12, 1990, before the RTC of Manila against Wallem Philippines Shipping, Inc. (local agent) and Advance Shipping Corporation (owner/manager of M/V Argo Trader) for damage to and shortage of a cargo shipment of Brazilian Soyabean. The claimed damages amounted to ₱2,030,303.52. Advance Shipping moved to dismiss for lack of jurisdiction, asserting an arbitration clause in the Charter Party Agreement, which Cua opposed, contending he was not bound by that agreement as consignee. Meanwhile, Wallem moved to dismiss on the ground of prescription, alleging that the claim was filed beyond the one-year prescriptive period mandated by Section 3(6) of COGSA.
The RTC ruled that Cua was not bound by the arbitration clause and deferred action on the prescription defense. Subsequently, Wallem withdrew its motion to dismiss but reserved the right to raise prescription as a defense later. After trial, the RTC found respondents jointly and severally liable and awarded damages, interest, attorney’s fees, and costs to Cua. Respondents appealed to the CA, which reversed the RTC decision, ruling that prescription barred the claim because the alleged extension of the filing period, evidenced by an August 10, 1990 telex, was neither attached to Cua’s opposition nor presented in trial. Cua’s motion for reconsideration before the CA was denied, prompting the petition for review before the Supreme Court.
Legal Issues
- Whether petitioner’s claim for damages was barred by prescription under COGSA’s one-year limitation.
- Whether the admitted or presumed existence of an agreement extending the prescriptive period negated the respondents’ prescription defense.
- Whether the Court of Appeals erred in dismissing the case based on prescription despite earlier procedural history and admissions in the pleadings.
Applicable Law and Jurisprudence
- Carriage of Goods by Sea Act (COGSA) applies to contracts for carriage by sea in foreign trade to/from Philippine ports (Commonwealth Act No. 65).
- Section 3(6) of COGSA provides that carriers and ships are discharged from liability for loss or damage unless suit is brought within one year after delivery of the goods or when they should have been delivered.
- Jurisprudence permits the parties to validly agree to extend the one-year period to file suit.
- Under the Rules of Court, prescription is a ground for motion to dismiss, and courts may raise prescription motu proprio if the facts appear on record.
- Under Rule 8, Section 11 of the Rules of Court, allegations not specifically denied are deemed admitted.
- Specific denial requires the defendant to explicitly negate each material allegation.
Findings: Admission of Extension of Prescriptive Period
- The vessel arrived on July 8, 1989; suit was filed on November 12, 1990, beyond the normal one-year limit.
- Paragraph 11 of the complaint alleged an agreement extending the filing period until November 12, 1990. Under the Rules of Court, respondents were required to specifically deny this material allegation.
- Respondents’ pleadings did not specifically deny the existence of such an extension; Wallem’s motion to dismiss referenced prescription but did not deny the extension; Advance Shipping’s motion only raised arbitration.
- The joint answer denied the extension generally, but without setting forth factual basis as required for a specific denial.
- Respondents’ Memorandum unequivocally acknowledged that the case was filed “within the extended period agreed upon by the parties.” Such a statement constituted an admission of extension of the prescriptive period.
Interpretation of Prescription Under COGSA
- The Court held that the agreement to extend the one-year prescriptive period was a material fact and respondents’ failure to specifically deny it rendered it admitted.
- The absence of the August 10, 1990 telex in the record did not negate the admitted extension. Thus, Cua’s complaint, filed on November 12, 1990, was timely.
- Respondents’ reliance on Article 366 of the Code of Commerce regarding notice of claim was misp
Case Syllabus (G.R. No. 171337)
Nature of the Case and Procedural History
- Petitioner Benjamin Cua filed a petition for review on certiorari invoking the Supreme Court’s power to set aside the decisions of the Court of Appeals (CA) dated May 16, 2005 and January 31, 2006.
- The CA had reversed the December 28, 1995 decision of the Regional Trial Court (RTC), Branch 31, Manila, Civil Case No. 90-55098.
- The RTC originally ordered respondents Wallem Philippines Shipping, Inc. (Wallem) and Advance Shipping Corporation (Advance Shipping) jointly and severally liable to pay Cua damages amounting to over Php 2 million plus attorney’s fees and costs.
- The dispute arose after Cua filed a civil action on November 12, 1990 for damages due to cargo loss and shortage involving Brazilian Soybean shipment carried by M/V Argo Trader, owned by Advance Shipping and represented locally by Wallem.
Factual Background
- Cua claimed damage for 218 tons and shortage of 50 tons of Philippine-bound Brazilian Soybean cargo, evidenced by Bill of Lading No. 10.
- Advance Shipping moved to dismiss for lack of jurisdiction, insisting the claim was subject first to arbitration under the Charter Party Agreement between Advance Shipping and the charterers; Cua opposed, contending he, as consignee, was not bound by that agreement.
- Wallem separately moved to dismiss citing prescription under Section 3(6) of the Carriage of Goods by Sea Act (COGSA), asserting that suit was filed beyond one year from delivery of the goods (delivered August 16, 1989; suit filed November 12, 1990).
- Cua relied on a telex dated August 10, 1990 from Thomas Miller, manager of the UK P&I Club insurer, which extended the commencement of suit from August 14, 1990 to November 12, 1990 by mutual agreement of parties.
- Though originally deferring jurisdictional issues, the RTC ruled that Cua was not bound by the arbitration clause and later ordered that Wallem’s motion to dismiss need not be acted upon after Wallem withdrew it with reservation to reassert prescription as a defense.
- After trial, the RTC rendered a judgment in favor of Cua, awarding damages, attorney's fees, and costs, and dismissing respondents’ counterclaims.
Issues on Appeal and Rulings Below
- The respondents appealed to the CA, asserting that the claim was arbitrable and barred by prescription or laches.
- The CA dismissed Cua’s complaint, holding that the August 10, 1990 telex extending the filing period was neither attached to Cua’s opposition to the motion to dismiss nor presented at trial.
- Consequently, the CA ruled no extension existed, so Cua’s damages claim was prescribed.
- Cua’s motion for reconsideration before the CA was denied, prompting this petition.
Arguments of the Parties
Petitioner Cua’s Arguments:
- The extension of the