G.R. No. 168433 Case Digest

G.R. No. 168433, February 10, 2009

UCPB General Insurance Co., Inc.

vs Aboitiz Shipping Corp.

Ponente: Tinga

Facts:

On June 1991, 3 units of waste water treatment plant with accessories were purchased by San Miguel Corp from Super Max Engineering. The goods came from Charleston, USA and arrived in port of Manila on board MV Scandutch Star. From Manila it was transported to Cebu on board of Aboitiz Supercon II. In Cebu, with clearance from the Bureau of Customs, the goods were delivered and received by San Miguel at its plant site. It was then discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel P1,703,381.40 representing the value of the damaged unit. In turn, San Miguel executed a subrogation form in favor of UCPB. Then, UCPB filed a complaint on Kuly 1992 as subrogee of San Miguel seeking to recover from Aboitiz. Aboitiz moved to admit East Asiatic Co. as general agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic and DAMCO solidarily liable.

CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue because UCPB failed to file a formal notice within 24 hours from the damaged. In a memorandum, UCPB asserts that the claim requirement does not apply to cases concerning damages to the merchandise had already been known to the carrier. UCPB revealed that the damage to the cargo was found upon discharge from the foreign carrier witnessed by the carrier’s representative who signed the request for bad order survey and the turnover of bad order cargoes. This knowledge, UCPB argues, dispenses with the need to give the carrier a formal notice of claim. Incidentally, the carrier’s representative mentioned by UCPB as present at the time the merchandise was unloaded was in fact a representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims that the issue of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court and should, therefore, not have been considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held liable for the damage to the merchandise as it acted merely as a freight forwarders agent in the transaction. It allegedly facilitated the transhipment of the cargo from Manila to Cebu but represented the interest of the cargo owner, and not the carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it obviously cannot be held liable for the damage to the cargo which, by UCPBs admission, was incurred not during transhipment to Cebu on board one of Aboitizs vessels, but was already existent at the time of unloading in Manila. Aboitiz also argues that Art. 366 of the Code of Commerce is applicable and serves as a condition precedent to the accrual of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by UCPB.

Ruling:

UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue regarding the applicability of the Code of Commerce, particularly the 24-hour formal claim rule, was not raised as an issue before the trial court. The appellate court, therefore, correctly looked into the validity of the arguments raised by Eagle Express, Aboitiz and Pimentel Customs on this point after the trial court had so ill-advisedly centered its decision merely on the matter of extraordinary diligence.

Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened at the ICTSI in Manila in the presence of an Eagle Express representative, the cargo had already been found damaged. In fact, a request for bad order survey was then made and a turnover survey of bad order cargoes was issued, pursuant to the procedure in the discharge of bad order cargo. The shipment was then repacked and transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When the cargo was finally received by SMC at its Mandaue City warehouse, it was found in bad order, thereby confirming the damage already uncovered in Manila.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfilment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of Appeals, the claims were dated October 30, 1991, more than three (3) months from receipt of the shipment and, at that, even after the extent of the loss had already been determined by SMCs surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.

Petition was denied. CA's decision was affirmed.