Philam Insurance Company, Inc. (Now Chartis Philippines Insurance, Inc.) vs. Heung-A Shipping Corporation
Philam Insurance Company, Inc. (Now Chartis Philippines Insurance, Inc.) vs. Heung-A Shipping Corporation
Philam Insurance Company, Inc. (Now Chartis Philippines Insurance, Inc.) vs. Heung-A Shipping Corporation
and HEUNG-A to US$8,500.00 pursuant to the The foregoing judgment was reiterated in the
liability limitation under the COGSA since the CA Resolution27 dated May 8, 2009 which denied
shipper failed to declare the value of the subject the motions for reconsideration filed by PHILAM,
cargo in the bill of lading and since they could not WALLEM and HEUNG-A.
be made answerable for the two (2) unaccounted PHILAM thereafter filed a petition for review
pallets because the shipment was on a “shipper’s before the Court docketed as G.R. No. 187701.
load, count and seal” basis. WALLEM and HEUNG-A followed suit and their
_______________ petition was docketed as G.R. No. 187812.
Considering that both petitions involved similar
25 Id., at pp. 42-70; Rollo (G.R. No. 187812), pp. 42-70. parties and issue, emanated from the same Civil
527
Case No. 01-889 and assailed the same CA
VOL. 730, JULY 23, 2014 527 judgment, they were ordered consolidated in a
Philam Insurance Company, Inc. (now Chartis Philippines Resolution28 dated January 13, 2010.
Insurance, Inc.) vs. Heung-A Shipping Corporation _______________
The attorney’s fees awarded to SAGAWA, ATI
26 Rollo (G.R. No. 187701), pp. 69-70; Rollo (G.R. No.
and STEPHANIE were deleted because it was not
187812), pp. 69-70.
shown that PHILAM was motivated by malice and 27 Rollo (G.R. No. 187701), pp. 72-74; Rollo (G.R. No.
bad faith in impleading them as defendants. Thus, 187812), pp. 72-74.
the CA decision was disposed as follows: 28 Rollo (G.R. No. 187701), p. 137A; Rollo (G.R. No.
WHEREFORE, premises considered, the appealed 187812), p. 215.
528
Decision is hereby AFFIRMED with MODIFICATION.
Defendants PROTOP SHIPPING CORPORATION, HEUNG- 528 SUPREME COURT REPORTS ANNOTATED
A SHIPPING CORPORATION [and] WALLEM PHILIPPINES Philam Insurance Company, Inc. (now Chartis Philippines
SHIPPING, INC.’s solidary liability to PHILAM Insurance, Inc.) vs. Heung-A Shipping Corporation
INSURANCE COMPANY, INC. is reduced to $8,500.00 In G.R. No. 187701, PHILAM raised the following
plus interest per annum from 26 December 2001 (date grounds:
of service of summons to defendant Heung-A) until full THE HONORABLE [CA] COMMITTED SERIOUS ERROR
payment. The award of attorney’s fees in the amount WHEN IT RULED IN ITS DECISION OF 30 JANUARY 2009
of One Hundred Thousand Pesos ([P]100,000.[00]) THAT [HEUNG-A and WALLEM] HAVE THE RIGHT TO
each to SAGAWA EXPRESS PHILIPPINES, INC., ASIAN LIMIT THEIR LIABILITY UNDER THE PACKAGE
LIMITATION OF LIABILITY OF SECTION 4(5) OF THE
CARRIAGE OF GOODS BY SEA ACT, 1924, IN VIEW OF FACT THAT NO TIMELY CLAIM WAS FILED PURSUANT
ITS OBSERVATION THAT [NOWHERE] IN THE BILL OF TO ARTICLE 366 OF THE CODE OF COMMERCE OR THE
LADING DID THE SHIPPER DECLARE THE VALUE OF THE PROVISIONS OF THE BILL OF LADING NO. DNALGOBUM
SUBJECT CARGO; 005019[;]
THE HONORABLE [CA] COMMITTED SERIOUS ERROR THE [CA] GRAVELY ABUSED ITS DISCRETION
WHEN IT COMPLETELY DISREGARDED THE AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN
FUNDAMENTAL BREACHES OF [HEUNG-A and WALLEM] FINDING THAT THE CONTAINERIZED CARGO WAS
OF [THEIR] OBLIGATIONS AND RESPONSIBILITIES DAMAGED WHILE IN THE POSSESSION OR CUSTODY OF
UNDER THE CONTRACT OF CARRIAGE AND LAW OF THE VESSEL “HEUNG-A BANGKOK.” 30
defective condition of the van, some other A charter party has been defined in Planters
circumstance or occurrence contributed to the Products, Inc. v. Court of Appeals35 as:
[A] contract by which an entire ship, or some
damages sustained by the shipment. Since the
principal part thereof, is let by the owner to another
presence of sea water is highly concentrated in person for a specified time or use; a contract of
the high seas and considering HEUNG-A’s failure affreightment by which the owner of a ship or other
to demonstrate how it exercised due diligence in vessel lets the whole or a part of her to a merchant or
handling and preserving the container van while other person for the conveyance of goods, on a
in transit, it is liable for the damages sustained particular voyage, in consideration of the payment of
thereby. freight. x x x. (Citations omitted)
36
As the carrier of the subject shipment, HEUNG- A charter party has two types. First, it could be
A was bound to exercise extraordinary diligence in a contract of affreightment whereby the use of
conveying the same and its slot charter shipping space on vessels is leased in part or as a
agreement with DONGNAMA did not divest it of whole, to carry goods for others. The charter-party
such characterization nor relieve it of any provides for the hire of vessel only, either for a
accountability for the shipment. determinate period of time (time charter) or for a
Based on the testimony of single or consecutive voyage (voyage charter).
Gonzales,33 WALLEM’s employee and witness, the The shipowner supplies the ship’s stores, pay for
charter party between HEUNG-A and DONGNAMA the wages of the master and the crew, and defray
was a contract of affreightment and not a bare the expenses for the maintenance of the
boat or demise charter, viz.: ship.37 The voyage remains under the
Q: Now, the space charter that you are mentioning responsibility of the carrier and it is answerable
is not either a bareboat or a demise? for the loss of goods received for transportation.
_______________
The charterer is free from liability to third persons
33 Rollo (G.R. No. 187701), pp. 88-90. in respect of the ship.38
532 Second, charter by demise or bareboat charter
532 SUPREME COURT REPORTS ANNOTATED under which the whole vessel is let to the
Philam Insurance Company, Inc. (now Chartis Philippines charterer with a transfer to him
_______________
Insurance, Inc.) vs. Heung-A Shipping Corporation
A: Yes, sir. 34 Id., at pp. 89-90.
35 G.R. No. 101503, September 15, 1993, 226 SCRA 476. “[C]ommon carriers, as a general rule, are
36 Id., at pp. 483-484.
37 Id., at p. 484.
presumed to have been at fault or negligent if the
goods they transported deteriorated or got lost or
38 Caltex (Philippines), Inc. v. Sulpicio Lines, Inc., 374 Phil.
325, 334; 315 SCRA 709, 717 (1999). destroyed. That is, unless they prove that they
533 exercised extraordinary diligence in transporting
VOL. 730, JULY 23, 2014 533 the goods. In order to avoid responsibility for any
Philam Insurance Company, Inc. (now Chartis Philippines loss or damage, therefore, they have the burden
Insurance, Inc.) vs. Heung-A Shipping Corporation of proving that they observed such
of its entire command and possession and diligence.” 42
Further, under Article 1742 of the Civil
consequent control over its navigation, including Code, even if the loss, destruction, or
the master and the crew, who are his deterioration of the goods should be caused by
servants. The charterer mans the vessel with his
39 the faulty nature of the containers, the common
own people and becomes, in effect, the owner for carrier must exercise due diligence to forestall or
the voyage or service stipulated and hence liable lessen the loss.
for damages or loss sustained by the goods _______________
transported. 40
39 Supra note 35 at p. 484.
Clearly then, despite its contract of 40 Supra note 38 at p. 333; p. 717.
affreightment with DONGNAMA, HEUNG-A 41 Belgian Overseas Chartering and Shipping N.V. v.
remained responsible as the carrier, hence, Philippine First Insurance Co., Inc., 432 Phil. 567, 578; 383
SCRA 23, 32 (2002).
answerable for the damages incurred by the 42 Id., at p. 579; pp. 32-33.
goods received for transportation. “[C]ommon 534
carriers, from the nature of their business and for 534 SUPREME COURT REPORTS ANNOTATED
reasons of public policy, are bound to Philam Insurance Company, Inc. (now Chartis Philippines
observe extraordinary diligence and vigilance with Insurance, Inc.) vs. Heung-A Shipping Corporation
respect to the safety of the goods and the
Here, HEUNG-A failed to rebut this prima
passengers they transport. Thus, common carriers
facie presumption when it failed to give adequate
are required to render service with the greatest
explanation as to how the shipment inside the
skill and foresight and ‘to use all reasonable
container van was handled, stored and preserved
means to ascertain the nature and characteristics
to forestall or prevent any damage or loss while
of the goods tendered for shipment, and to
the same was in its possession, custody and
exercise due care in the handling and stowage,
control.
including such methods as their nature
requires.’”41
PROTOP is solidarily liable with HEUNG-A for the 372 of the Code of Commerce fills in this gap,
lost/damaged shipment in view of the bill of lading thus:
the former issued to NOVARTIS. “A bill of lading is _______________
a written acknowledgment of the receipt of goods
43 Unsworth Transport International (Phils.), Inc. v. Court of
and an agreement to transport and to deliver Appeals, G.R. No. 166250, July 26, 2010, 625 SCRA 357, 366.
them at a specified place to a person named or on 44 CIVIL CODE OF THE PHILIPPINES , Article 1766.
his or her order. It operates both as a receipt and
as a contract. It is a receipt for the goods shipped 538
and a contract to transport and deliver the same 538 SUPREME COURT REPORTS ANNOTATED
as therein stipulated.”43 PROTOP breached its Philam Insurance Company, Inc. (now Chartis Philippines
contract with NOVARTIS when it failed to deliver Insurance, Inc.) vs. Heung-A Shipping Corporation
the goods in the same quantity, quality and Article 372. The value of the goods which the
description as stated in Bill of Lading No. PROTAS carrier must pay in cases if loss or misplacement
200387. shall be determined in accordance with that
The CA did not err in applying the provisions of declared in the bill of lading, the shipper not
the COGSA specifically, the rule on Package being allowed to present proof that among the
Liability Limitation. goods declared therein there were articles of
greater value and money.
Under Article 1753 of the Civil Code, the law of
Horses, vehicles, vessels, equipment and all other
the country to which the goods are to be principal and accessory means of transportation shall
transported shall govern the liability of the be especially bound in favor of the shipper, although
common carrier for their loss, destruction or with respect to railroads said liability shall be
deterioration. Since the subject shipment was subordinated to the provisions of the laws of
being transported from South Korea to the concession with respect to the property, and to what
Philippines, the Civil Code provisions shall apply. this Code established as to the manner and form of
In all matters not regulated by the Civil Code, the effecting seizures and attachments against said
rights and obligations of common carriers shall be companies. (Emphasis ours)
governed by the Code of Commerce and by In case, however, of the shipper’s failure to
special laws,44 such as the COGSA. declare the value of the goods in the bill of lading,
While the Civil Code contains provisions making Section 4, paragraph 5 of the COGSA provides:
the common carrier liable for loss/damage to the Neither the carrier nor the ship shall in any event be
goods transported, it failed to outline the manner or become liable for any loss or damage to or in
connection with the transportation of goods in an
of determining the amount of such liability. Article
amount exceeding $500 per package lawful money of
the United States, or in case of goods not shipped in
packages, per customary freight unit, or the equivalent held responsible for any discrepancy if the
of that sum in other currency, unless the nature and description in the bill of lading is different from
value of such goods have been declared by the shipper the actual contents of the container.47
before shipment and inserted in the bill of lading. This Consonant with the ruling in the recent Asian
declaration, if embodied in the bill of lading shall
Terminals, Inc. v. Philam Insurance Co., Inc.,48 the
be prima facie evidence, but shall be conclusive on
the carrier.
prescriptive period for filing an action for
Hence, when there is a loss/damage to goods lost/damaged goods governed by contracts of
covered by contracts of carriage from a foreign carriage by sea to and from Philippine ports in
port to a Philippine port and in the absence a foreign trade is governed by paragraph 6, Section
shipper’s declaration of the value of the goods in 3 of the COGSA which states:
(6) Unless notice of loss or damage and the
the bill of lading, as in the present case, the
general nature of such loss or damage be given in
foregoing provisions of the COGSA shall apply. writing to the carrier or his agent at the port of
The CA, therefore, did discharge before or at the time of the removal of the
536 goods into the custody of the person entitled to
536 SUPREME COURT REPORTS ANNOTATED delivery thereof under the contract of carriage, such
Philam Insurance Company, Inc. (now Chartis Philippines removal shall be prima facie evidence of the delivery
Insurance, Inc.) vs. Heung-A Shipping Corporation by the carrier of the goods as described in the bill of
not err in ruling that HEUNG-A, WALLEM and lading. If the loss or damage is not apparent,
_______________
PROTOP’s liability is limited to $500 per package
or pallet.45 45 If the number of cartons inside the container is disclosed in
The Court likewise affirms the CA in the bill of lading, each carton shall be treated as the COGSA
packages. See Eastern Shipping Lines, Inc. v. Intermediate
pronouncing HEUNG-A, WALLEM and PROTOP Appellate Court, No. L-71478, May 29, 1987, 150 SCRA 464, 476-
liable only for the lost/damaged 17 pallets instead 477.
of 19 pallets stated in the bill of lading. This is 46 United States Lines, Inc. v. Commissioner of Customs, No. L-
73490, June 18, 1987, 151 SCRA 189, 194.
because, per the “Shipper’s Load and Count” 47 Id.
arrangement, the contents are not required to be 48 G.R. No. 181319, July 24, 2013, 702 SCRA 88.
checked and inventoried by the carrier at the port 537
of loading or before said carrier enters the port of VOL. 730, JULY 23, 2014 537
unloading in the Philippines since it is the shipper Philam Insurance Company, Inc. (now Chartis Philippines
who has the sole responsibility for the quantity, Insurance, Inc.) vs. Heung-A Shipping Corporation
description and condition of the cargoes shipped the notice must be given within three days of the
in container vans.46 As such, the carrier cannot be delivery.
Said notice of loss or damage maybe endorsed upon The amount which PHILAM is entitled to receive
the receipt for the goods given by the person taking shall earn a legal interest at the rate of six
delivery thereof. percent (6%) per annum
The notice in writing need not be given if the state 538
of the goods has at the time of their receipt been the 538 SUPREME COURT REPORTS ANNOTATED
subject of joint survey or inspection. In any event the
carrier and the ship shall be discharged from all
Philam Insurance Company, Inc. (now Chartis Philippines
liability in respect of loss or damage unless suit is Insurance, Inc.) vs. Heung-A Shipping Corporation
brought within one year after delivery of the goods or from the date of finality of this judgment until its
the date when the goods should have been full satisfaction pursuant to Nacar v. Gallery
delivered: Provided, That if a notice of loss or damage, Frames.49
either apparent or concealed, is not given as provided WHEREFORE, all the foregoing considered, the
for in this section, that fact shall not affect or prejudice Decision dated January 30, 2009 of the Court of
the right of the shipper to bring suit within one year Appeals in C.A.-G.R. CV No. 89482 is
after the delivery of the goods or the date when the
hereby AFFIRMED with MODIFICATION in that
goods should have been delivered.
the interest rate on the award of US$8,500.00
It was further ruled in Asian Terminals that
shall be six percent (6%) per annum from the date
pursuant to the foregoing COGSA provision, failure
of finality of this judgment until fully paid.
to comply with the notice requirement shall not
SO ORDERED.
affect or prejudice the right of the shipper to bring
Sereno (CJ., Chairperson), Leonardo-De
suit within one year after delivery of the goods.
Castro, Bersamin and Villarama, Jr., JJ., concur.
The consignee, NOVARTIS, received the subject
Judgment affirmed with modification.
shipment on January 5, 2001. PHILAM, as the
Notes.—The Civil Code does not limit the
subrogee of NOVARTIS, filed a claim against
liability of the common carrier to a fixed amount
PROTOP on June 4, 2001, against WALLEM on
per package; The Carriage of Goods by Sea Act
October 12, 2001 and against HEUNG-A on
(COGSA) supplements the Civil Code by
December 11, 2001, or all within the one-year
establishing a provision limiting the carrier’s
prescriptive period. Verily then, despite
liability in the absence of a shipper’s declaration
NOVARTIS’ failure to comply with the three-day
of a higher value in the bill of lading. (Unsworth
notice requirement, its subrogee PHILAM is not
Transport International [Phils.], Inc. vs. Court of
barred from seeking reimbursement from
Appeals, 625 SCRA 357 [2010])
PROTOP, HEUNG-A and WALLEM because the
The Carriage of Goods by Sea Act (COGSA),
demands for payment were timely filed.
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
Commonwealth Act (CA) No. 65. (Insurance
Company of North America vs. Asian Terminals,
Inc., 666 SCRA 226 [2012])
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_______________