Case Summary (G.R. No. 246580)
Factual Background
The petitioner instituted a civil action for damages arising from loss and shortage in a shipment of Brazilian soyabean consigned to him under Bill of Lading No. 10. He alleged damage to 218 tons and a shortage of 50 tons and sought payment of P2,030,303.52. The cargo was carried by M/V Argo Trader, which was owned and managed by Advance Shipping Corporation, with Wallem Philippines Shipping, Inc. acting as local agent. The vessel arrived in Manila July 8, 1989. The respondents contested liability and, as to prescription, Wallem asserted that the goods were delivered on August 16, 1989 and that the one-year prescriptive period under Section 3(6) of the COGSA had elapsed before the filing of the complaint on November 12, 1990. The petitioner relied on an August 10, 1990 telex from Thomas Miller, manager of the UK P&I Club, notifying that Advance Shipping agreed to extend the commencement of suit for ninety days, from August 14, 1990 to November 12, 1990.
Trial Court Proceedings
Advance Shipping moved to dismiss on the ground that the claim was subject to arbitration under the charter party, while Wallem moved to dismiss solely on the ground of prescription under Section 3(6) of the COGSA. The RTC deferred resolution of jurisdictional questions, later ruled that the petitioner as consignee was not bound by the charter party arbitration clause, and required the defendants to answer. Wallem subsequently withdrew its motion to dismiss by omnibus motion filed February 11, 1992, expressly reserving the defense of prescription and laches. The case proceeded to trial. On December 28, 1995, the RTC rendered judgment in favor of the petitioner, declaring the respondents jointly and severally liable to pay P2,030,000.00, plus interest until full payment, the sum of P100,00.00 as attorneys’ fees, and the costs of suit, and dismissed the respondents’ counterclaims.
Court of Appeals Ruling
The respondents appealed and the Court of Appeals, in a decision dated May 16, 2005, reversed the RTC. The CA found merit in the plea of prescription after determining that the August 10, 1990 telex was neither attached to the petitioner’s opposition to Wallem’s motion to dismiss nor offered in evidence at trial; on that basis the CA held there was no proof of an agreement extending the prescriptive period and dismissed the complaint. The CA denied the petitioner’s motion for reconsideration in a resolution dated January 31, 2006.
Parties' Contentions
The petitioner argued that the agreement extending the period to file suit was an admitted fact and that the respondents could not deny it except by showing palpable mistake; he emphasized that Wallem’s withdrawal of its motion to dismiss and the RTC’s order made presentation of the telex unnecessary. The petitioner therefore sought reversal of the CA and reinstatement of the RTC judgment. The respondents countered that no admission was made as to the telex because it was not attached to the petitioner’s opposition and thus there was no need to deny it; they maintained that Wallem’s withdrawal of its motion did not constitute an admission and pointed to the RTC order which noted that Wallem withdrew its motion without waiving its defense of prescription.
Issue Presented
The controlling issue was whether the petitioner’s action for damages had prescribed under Section 3(6) of the COGSA.
Ruling of the Supreme Court
The Supreme Court held that the petitioner timely filed his claim. It set aside the Court of Appeals decision dated May 16, 2005 and the CA resolution dated January 31, 2006, and reinstated the decision of the Regional Trial Court dated December 28, 1995. The Court ordered costs against the respondents.
Legal Basis and Reasoning
The Court first recognized that prescription may be considered by courts motu proprio when the facts supporting the defense are apparent from the pleadings or the evidence on record, citing Rule 16, Section 1 and related provisions. Nevertheless, the Court found that the material averment in the complaint alleging that the defendants agreed to extend the time to file suit to November 12, 1990 was a specific allegation that, under Rule 8, Section 11, required a specific denial by the respondents or else was deemed admitted. The Court reviewed the respondents’ pleadings and concluded that they failed to specifically deny the allegation of extension. Wallem’s motion to dismiss referenced only the lateness of the complaint, Advance Shipping’s motion addressed arbitration, and the joint answer presented a bare and unsupported denial that did not set forth facts to refute the extension. The respondents’ later memorandum invoked Article 366 of the Code of Commerce rather than Section 3(6) of the COGSA, and thus did not refute the complaint’s COGSA-based averment. The Court also p
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Case Syllabus (G.R. No. 246580)
Parties and Procedural Posture
- BENJAMIN CUA (CUA ULAN TEK), PETITIONER filed a petition for review on certiorari under Rule 45 to assail the decision and resolution of the Court of Appeals in CA-G.R. CV No. 53538.
- WALLEM PHILIPPINES SHIPPING, INC., RESPONDENT acted as local agent of the vessel that carried the cargo.
- ADVANCE SHIPPING CORPORATION, RESPONDENT was the owner and manager of the M/V Argo Trader that transported the cargo.
- The Regional Trial Court, Branch 31, Manila rendered judgment on December 28, 1995 in Civil Case No. 90-55098 in favor of the petitioner.
- The Court of Appeals reversed and dismissed the complaint by decision dated May 16, 2005 and denied reconsideration in a resolution dated January 31, 2006.
- The Supreme Court resolved the petition by decision promulgated on July 30, 2012.
Key Factual Allegations
- The cargo consisted of Brazilian soybean consigned to the petitioner under Bill of Lading No. 10 and included an alleged damage to 218 tons and a shortage of 50 tons.
- The petitioner claimed damages in the amount of P2,030,303.52 in the complaint filed on November 12, 1990.
- The vessel M/V Argo Trader arrived in Manila on July 8, 1989 and the respondents alleged delivery of the goods on August 16, 1989.
- The petitioner averred in paragraph 11 of his complaint that the defendants agreed to extend the time for filing suit up to November 12, 1990.
- The petitioner relied on an August 10, 1990 telex from A.R. Filder of Thomas Miller, manager of the UK P&I Club, as the basis for the agreed extension to November 12, 1990.
Procedural History
- ADVANCE SHIPPING CORPORATION moved to dismiss on grounds of lack of jurisdiction by reason of an arbitration clause in the Charter Party Agreement.
- WALLEM PHILIPPINES SHIPPING, INC. separately moved to dismiss on the ground of prescription under Section 3(6) of the Carriage of Goods by Sea Act (COGSA).
- The RTC initially deferred resolving jurisdictional issues and later ruled that the consignee was not bound by the arbitration clause.
- Wallem later withdrew its motion to dismiss but expressly reserved the defense of prescription in its pleadings and the RTC ordered the defendants to file an Answer.
- After trial the RTC rendered judgment for the petitioner, and the CA reversed on prescription grounds because the telex extension was neither attached to the opposition nor presented at trial.
Issues Presented
- Whether the petition for damages filed on November 12, 1990 was barred by the one-year prescriptive period under COGSA, Section 3(6).
- Whether the respondents’ pleadings or other filings constituted an admission of the agreement extending the prescriptive period.
- Whether the Court of Appeals correctly considered prescription motu proprio despite the respondents’ alleged waiver.
Statutory Framework
- Carriage of Goods by Sea Act (COGSA), Section 3(6) prescribes that suit must be brought within one year after delivery of the goods unless the parties agree otherwise.
- Rules of Court, Rule 8, Section 11 treats material averments in the complai