666 SCRA 226

G.R. No. 180784 February 15, 2012

INSURANCE COMPANY OF NORTH AMERICA, Petitioner,

FACTS:
On November 9, 2002, Macro-Lite Korea Corporation shipped to San Miguel
Corporation, through M/V "DIMI P" vessel, one hundred eighty-five (185) packages
(231,000 sheets) of electrolytic tin free steel, complete and in good order condition and
covered by Bill of Lading No. POBUPOHMAN20638.2 The shipment had a declared
value of US$169,850.353 and was insured with petitioner Insurance Company of North
America against all risks under Marine Policy No. MOPA-06310.4
The carrying vessel arrived at the port of Manila on November 19, 2002, and when the
shipment was discharged therefrom, it was noted that seven (7) packages thereof were
damaged and in bad order.5 The shipment was then turned over to the custody of
respondent Asian Terminals, Inc. (ATI) on November 21, 2002 for storage and
safekeeping pending its withdrawal by the consignee's authorized customs broker, R.V.
Marzan Brokerage Corp. (Marzan).
On November 22, 23 and 29, 2002, the subject shipment was withdrawn by Marzan
from the custody of respondent. On November 29, 2002, prior to the last withdrawal of
the shipment, a joint inspection of the said cargo was conducted per the Request for
Bad Order Survey6 dated November 29, 2002, and the examination report, which was
written on the same request, showed that an additional five (5) packages were found to
be damaged and in bad order.
On January 6, 2003, the consignee, San Miguel Corporation, filed separate claims7
against respondent and petitioner for the damage to 11,200 sheets of electrolytic tin free
steel. Petitioner engaged the services of an independent adjuster/surveyor, BA
McLarens Phils., Inc., to conduct an investigation and evaluation on the claim and to
prepare the necessary report.8 BA McLarens Phils., Inc. submitted to petitioner an
Survey Report9 dated January 22, 2003 and another report10 dated May 5, 2003
regarding the damaged shipment. It noted that out of the reported twelve (12) damaged
skids, nine (9) of them were rejected and three (3) skids were accepted by the
consignee’s representative as good order. BA McLarens Phils., Inc. evaluated the total
cost of damage to the nine (9) rejected skids (11,200 sheets of electrolytic tin free steel)
to be ₱431,592.14.
The petitioner, as insurer of the said cargo, paid the consignee the amount of
₱431,592.14 for the damage caused to the shipment, as evidenced by the Subrogation
Receipt dated January 8, 2004. Thereafter, petitioner, formally demanded reparation
against respondent. As respondent failed to satisfy its demand, petitioner filed an action
for damages with the RTC of Makati City.
The trial court dismissed the complaint on the ground that the petitioner’s claim was
already barred by the statute of limitations. It held that COGSA, embodied in
Commonwealth Act (CA) No. 65, applies to this case, since the goods were shipped from
a foreign port to the Philippines. The trial court stated that under the said law,
particularly paragraph 4, Section 3 (6)15 thereof, the shipper has the right to bring a
suit within one year after the delivery of the goods or the date when the goods should
have been delivered, in respect of loss or damage thereto.

Petitioner’s motion for reconsideration was denied by the trial court in the
Order17 dated December 4, 2007. Petitioner filed this petition under Rule 45 of the
Rules of Court directly before this Court, alleging that it is raising a pure question of law
Petitioner states that while it is in full accord with the trial court in finding respondent
liable for the damaged shipment, it submits that the trial court’s dismissal of the
complaint on the ground of prescription under the COGSA is legally erroneous. It
contends that the one-year limitation period for bringing a suit in court under the
COGSA is not applicable to this case, because the prescriptive period applies only to the
carrier and the ship. It argues that respondent, which is engaged in warehousing,
arrastre and stevedoring business, is not a carrier as defined by the COGSA, because it
is not engaged in the business of transportation of goods by sea in international trade
as a common carrier. Petitioner asserts that since the complaint was filed against
respondent arrastre operator only, without impleading the carrier, the prescriptive
period under the COGSA is not applicable to this case.

Moreover, petitioner contends that the term "carriage of goods" in the COGSA covers
the period from the time the goods are loaded to the vessel to the time they are
discharged therefrom. It points out that it sued respondent only for the additional five
(5) packages of the subject shipment that were found damaged while in respondent’s
custody, long after the shipment was discharged from the vessel.

ISSUE:

1. Whether or not the one-year prescriptive period for filing a suit under the COGSA
applies to this action for damages against respondent arrastre operator
2. Whether or not petitioner is entitled to recover actual damages in the amount of
₱431,592.14 from respondent.

RULING:

1. NO. The Carriage of Goods by Sea Act (COGSA), Public Act No. 521 of the 74th
US Congress, was accepted to be made applicable to all contracts for the carriage
of goods by sea to and from Philippine ports in foreign trade by virtue of CA No.
65. The term "carriage of goods" covers the period from the time when the goods
are loaded to the time when they are discharged from the ship; thus, it can be
inferred that the period of time when the goods have been discharged from the
ship and given to the custody of the arrastre operator is not covered by the
COGSA.

In any event the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after delivery of
the goods or the date when the goods should have been delivered: Provided, That
if a notice of loss or damage, either apparent or concealed, is not given as
provided for in this section, that fact shall not affect or prejudice the right of the
shipper to bring suit within one year after the delivery of the goods or the date
when the goods should have been delivered.
2. YES. Petitioner is entitled to recover actual damages in the amount of
₱431,592.14 from respondent. The Court notes that petitioner, who filed this
action for damages for the five (5) skids that were damaged while in the custody
of respondent, was not forthright in its claim, as it knew that the damages it
sought in the amount of ₱431,592.14, which was based on the Evaluation Report
of its adjuster/surveyor, BA McLarens Phils., Inc., covered nine (9) skids. Based
on the same Evaluation Report, only four of the nine skids were damaged in the
custody of respondent. Petitioner should have been straightforward about its
exact claim, which is borne out by the evidence on record, as petitioner can be
granted only the amount of damages that is due to it.

Respondent Asian Terminals, Inc. is ordered to pay petitioner Insurance