EASTERN SHIPPING VS.

IAC
(May 29, 1987)
Facts:
In G.R. No. 69044, sometime in or prior to June, 1977, the M/S ASIATICA, a vessel operated by petitioner Eastern Shipping Lines, Inc.,
(referred to hereinafter as Petitioner Carrier) loaded at Kobe, Japan for transportation to
Manila, 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc.,
and 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both sets of goods were insured against
marine risk for their stated value with respondent Development Insurance and Surety Corporation.

In G.R. No. 71478, during the same period, the same vessel took on board 128 cartons of garment fabrics and
accessories, in two (2) containers, consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to
Aman Enterprises and General Merchandise. The 128 cartons were insured for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2 cases by respondent Dowa Fire & Marine Insurance Co., Ltd., for US $11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught
fire and sank, resulting in the total loss of ship and cargo. The respective respondent Insurers paid the corresponding marine
insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

G.R. NO. 69044

On May 11, 1978, respondent Development Insurance & Surety Corporation (Development Insurance, for short), having been
subrogated unto the rights of the two insured companies, filed suit against petitioner Carrier for the
recovery of the amounts it had paid to the insured before the then Court of First instance of Manila, Branch XXX (Civil CaseNo. 6087).
Petitioner-Carrier denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event, hence, it is not
liable under the law.

On August 31, 1979, the Trial Court rendered judgment in favor of Development Insurance in the amounts
of P256,039.00 and P92,361.75, respectively, with legal interest, plus P35,000.00 as attorney's fees and costs.
Petitioner Carrier took an appeal to the then Court of Appeals which, on August 14, 1984, affirmed.

Issue:
Petitioner Carrier avers that its liability if any, should
not exceed US $500 per package as provided in section 4(5) of
the COGSA

Ruling:
It is to be noted that the Civil Code does not of itself limit the liability of the common carrier to a fixed amount per
package although the Code expressly permits a stipulation limiting such liability. Thus, the COGSA which is suppletory to the
provisions of the Civil Code, steps in and supplements the Code by establishing a statutory provision limiting the carrier's liability in
the absence of a declaration of a higher value of the goods by the shipper in the bill of lading. The provisions of the Carriage of
Goods by.Sea Act on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof as
though placed therein by agreement of the parties.

In G.R. No. 69044, there is no stipulation in the respective Bills of Lading (Exhibits "C-2" and "I-3") limiting the
carrier's liability for the loss or destruction of the goods. Nor is there a declaration of a higher value of the goods. Hence, Petitioner
Carrier's liability should not exceed US $500 per package, or its peso equivalent, at the time of payment of the value of the goods
lost, but in no case "more than the amount of damage actually sustained."

The actual total loss for the 5,000 pieces of calorized lance pipes was P256,039 (Exhibit "C"), which was exactly the
amount of the insurance coverage by Development Insurance (Exhibit "A"), and the amount affirmed to be paid by
respondent Court. The goods were shipped in 28 packages (Exhibit "C-2") Multiplying 28 packages by $500 would result in a product
of $14,000 which, at the current exchange rate of P20.44 to US $1, would be P286,160, or "more than the amount of damage
actually sustained." Consequently, the aforestated amount of P256,039 should be upheld.
With respect to the seven (7) cases of spare parts (Exhibit "I-3"), their actual value was P92,361.75 (Exhibit "I"),
which is likewise the insured value of the cargo (Exhibit "H") and amount was affirmed to be paid by respondent Court.however,
multiplying seven (7) cases by $500 per package at the present prevailing rate of P20.44 to US $1 (US $3,500 x P20.44) would yield
P71,540 only, which is the amount that should be paid by Petitioner Carrier for those spare parts, and not P92,361.75.

In G.R. No. 71478, in so far as the two (2) cases of surveying instruments are concerned, the amount awarded to
DOWA which was already reduced to $1,000 by the Appellate Court following the statutory $500 liability per package, is in order. In
respect of the shipment of 128 cartons of garment fabrics in two (2) containers and insured with NISSHIN, the Appellate Court also
limited Petitioner Carrier's liability to $500 per package and affirmed the award of $46,583 to NISSHIN. it multiplied 128 cartons
(considered as COGSA packages) by $500 to arrive at the figure of $64,000, and explained that "since this amount is more than the
insured value of the goods, that is $46,583, the Trial Court was correct in awarding said amount only for the 128 cartons, which
amount is less than the maximum limitation of the carrier's liability."

CALTEX VS. SULPICIO

(September 30, 1999)
Facts:
The trial court rendered decision dismissing, the third party complaint against petitioner. The dispositive
portion reads: WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant-3rd party
plaintiff Sulpicio Lines, Inc., to wit:
 For the death of Sebastian E. Canezal and his 11-year old daughter Corazon G. Canezal, including loss of future earnings of said
Sebastian, moral and exemplary damages, attorney's fees, in the total amount of P 1,241,287.44

The Court of Appeals modified the trial court’s ruling

and included petitioner Caltex as one of those liable for
damages, thus:
Third party defendants Vector Shipping Co.
and Caltex (Phils.), Inc. are held equally liable under
the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. of the abovementioned
damages, attorney's fees and costs which
the latter is adjudged to pay plaintiffs, the same to
be shared half by Vector Shipping Co. (being the
vessel at fault for the collision) and the other half by
Caltex (Phils.), Inc. (being the charterer that
negligently caused the shipping of combustible cargo
aboard an unseaworthy vessel).
Issue:
Is the charterer of a sea vessel liable for damages
resulting from a collision between the chartered vessel and a
passenger ship?
Ruling:
Caltex, the charterer of a vessel has no obligation
before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty
rests upon the common carrier simply for being engaged in
"public service."
Because of the implied warranty of seaworthiness,
shippers of goods, when transacting with common carriers,
are not expected to inquire into the vessel's seaworthiness,
genuineness of its licenses and compliance with all maritime
laws. To demand more from shippers and hold them liable in
case of failure exhibits nothing but the futility of our
maritime laws insofar as the protection of the public in
general is concerned.
Thus, the nature of the obligation of Caltex demands
ordinary diligence like any other shipper in shipping his
cargoes.
A cursory reading of the records convinces us that
Caltex had reasons to believe that MT Vector could legally
transport cargo that time of the year.
The Court hereby GRANTS the petition and SETS
ASIDE the decision of the Court of Appeals in CA-G.R. CV No.
39626, promulgated on April 15, 1997, insofar as it held
Caltex liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. the
damages the latter is adjudged to pay plaintiffs-appellees.
The Court AFFIRMS the decision of the Court of Appeals
insofar as it orders Sulpicio Lines, Inc. to pay the heirs of
Sebastian E. Canezal and Corazon Canezal damages as set
forth therein. Third-party defendant-appellee Vector Shipping
Corporation and Francisco Soriano are held liable to
reimburse/indemnify defendant Sulpicio Lines, Inc. whatever
damages, attorneys' fees and costs the latter is adjudged to
pay plaintiffs-appellees in the case.

Mayer Steel Pipe Corp. V. CA (1997)

124050  June 19, 1997

Lessons Applicable: Ancillary Contracts (transportation)

FACTS:

 1983: Hongkong Government Supplies Department (Hongkong) contracted Mayer Steel Pipe

Corporation (Mayer) to manufacture and supply various steel pipes and fittings
 August to October, 1983: Mayer shipped the pipes and fittings to Hongkong as evidenced by
Invoice Nos. MSPC-1014, MSPC-1015, MSPC-1025, MSPC-1020, MSPC-1017 and MSPC-1022
 Prior to the shipping, Mayer insured the pipes and fittings against all risks with South Sea Surety
and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Charter)
 South Sea:Invoice Nos. MSPC-1014, 1015 and 1025 for US$212,772.09
 Charter: Invoice Nos. 1020, 1017 and 1022 for US$149,470.00
 Mayer and Hongkong jointly appointed Industrial Inspection (International) Inc. as third-party
inspector to examine whether the pipes and fittings are manufactured in accordance with the
specifications in the contract
 Industrial Inspection certified all the pipes and fittings to be in good order condition before
they were loaded in the vessel
 When the goods reached Hongkong, it was discovered that a substantial portion thereof was
damaged
 Mayer and Hongkong a claim against private respondents for indemnity under the insurance
contract
 Charter paid petitioner Hongkong the amount of HK$64,904.75
 demanded payment of the balance of HK$299,345.30 which was refused
 April 17, 1986: filed an action to recover HK$299,345.30
 Defense: insurance surveyor's report allegedly showed that the damage is a factory defect
 Trial Court: in favor of Mayer and Hongkong
 CA: reversed 
 affirmed the finding of the trial court that the damage is not due to factory defect and that it
was covered by the "all risks" insurance policies 
 BUT held that Section 3(6) of the Carriage of Goods by Sea Act provides that "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
 applies not only to the carrier but also to the insurer
ISSUE: W/N Section 3(6) of the Carriage of Goods by Sea also applies to insurer

HELD: NO.  Petition is granted. CA reversed. RTC reinstated

 Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be
discharged from all liability for loss or damage to the goods if no suit is filed within one year after
delivery of the goods or the date when they should have been delivered.  Under this provision, only
the carrier's liability is extinguished if no suit is brought within one year.  But the liability of the insurer
is not extinguished because the insurer's liability is based not on the contract of carriage but on the
contract of insurance - governed by the Insurance Code
 An insurance contract is a contract whereby one party, for a consideration known as the premium,
agrees to indemnify another for loss or damage which he may suffer from a specified peril
 "all risks" insurance policy covers all kinds of loss other than those due to willful and
fraudulent act of the insured
 prescribes in ten years, in accordance with Article 1144 of the New Civil Code

MAYER STEEL VS. CA

(June 19, 1997)
Facts:
Petitioner Hongkong Government Supplies
Department (Hongkong) contracted petitioner Mayer Steel
Pipe Corporation (Mayer) to manufacture and supply various
steel pipes and fittings. Prior to the shipping, petitioner
Mayer insured the pipes and fittings against all risks with
private respondents South Sea Surety and Insurance Co., Inc.
(South Sea) and Charter Insurance Corp. (Charter).
A third-party inspector jointly hired by petitioners
certified all the pipes and fittings to be in good order
condition before they were loaded in the vessel.
Nonetheless, when the goods reached Hongkong, it was
discovered that a substantial portion thereof was damaged.
Petitioners Mayer and Hongkong filed a claim against
private respondents for indemnity under the insurance
contract. Respondent Charter paid Hongkong the amount of
HK$64,904.75. Petitioners demanded payment of the
balance of HK$299,345.30 representing the cost of repair of
the damaged pipes. Private respondents refused to pay
because the insurance surveyor’s report allegedly showed
that the damage is a factory defect.
Petitioners filed an action against private
respondents South Sea and Charter to recover the sum of
HK$299,345.30. The trial court ruled in favor of petitioners.
Private respondents elevated the case to respondent Court of
Appeals. Respondent court affirmed the finding of the trial
court that the damage is not due to factory defect and that it
was covered by the “all risks” insurance policies issued by private respondents to petitioner Mayer. However, it set
aside the decision of the trial court and dismissed the
complaint on the ground of prescription. It held that the
action is barred under Section 3(6) of the COGSA since it was
filed only on April 17, 1986, more than 2 years from the time
the goods were unloaded from the vessel.
Ruling:
Section 3(6) of the Carriage of Goods by Sea Act
states that the carrier and the ship shall be discharged from
all liability for loss or damage to the goods if no suit is filed
within one year after delivery of the goods or the date when
they should have been delivered. Under this provision, only
the carrier's liability is extinguished if no suit is brought
within one year. But the liability of the insurer is not
extinguished because the insurer's liability is based not on
the contract of carriage but on the contract of insurance. A
close reading of the law reveals that the Carriage of Goods by
Sea Act governs the relationship between the carrier on the
one hand and the shipper, the consignee and/or the insurer
on the other hand. It defines the obligations of the carrier
under the contract of carriage. It does not, however, affect
the relationship between the shipper and the insurer. The
latter case is governed by the Insurance Code.
The Filipino Merchants case is different from the
case at bar. In Filipino Merchants, it was the insurer which
filed a claim against the carrier for reimbursement of the
amount it paid to the shipper. In the case at bar, it was the
shipper which filed a claim against the insurer. The basis of
the shipper's claim is the "all risks" insurance policies issued
by private respondents to petitioner Mayer.
The ruling in Filipino Merchants should apply only to
suits against the carrier filed either by the shipper, the
consignee or the insurer. When the court said in Filipino
Merchants that Section 3(6) of the Carriage of Goods by Sea
Act applies to the insurer, it meant that the insurer, like the
shipper, may no longer file a claim against the carrier beyond
the one-year period provided in the law. But it does not mean
that the shipper may no longer file a claim against the insurer
because the basis of the insurer's liability is the insurance
contract. An insurance contract is a contract whereby one
party, for a consideration known as the premium, agrees to
indemnify another for loss or damage which he may suffer
from a specified peril. An "all risks" insurance policy covers all
kinds of loss other than those due to willful and fraudulent
act of the insured. Thus, when private respondents issued the
"all risks" policies to petitioner Mayer, they bound
themselves to indemnify the latter in case of loss or damage
to the goods insured. Such obligation prescribes in ten years,
in accordance with Article 1144 of the New Civil Code.

MITSUI OSK VS. CA

(March 11, 1998)
Facts:
Petitioner Mitsui OSK Lines LTD. Is a foreign
corporation represented in the Philippines by its agent,
Magsaysay Agencies. It entered into a contract of carriage
through Meister Transport, Inc., an international freight
forwarded, with private respondent Lavine Loungewear
Manufacturing Corporation to transport goods of the latter
from Manila to Le Havre, France. Petitioner undertook to
deliver the goods to France 28 days from initial loading. On
July 24, 1991, petitioner’s vessel loaded private respondent’s
container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan, the goods were not
transshipped immediately, with the result that the shipment
arrived in Le Havre only on November 14, 1991. The
consignee allegedly paid only half of the value of the said
goods on the ground that they did not arrive in France until
the off season in that country. The remaining half was
allegedly charged to the account of private respondent which
in turn demanded payment from petition through its agent.
As petitioner denied private respondent’s claim, the
latter filed a case in RTC on April 14, 1992. Petitioner filed a
motion to dismiss alleging that the claim against it had
prescribed under the COGSA. The RTC denied the motion
which was affirmed by the CA.
Ruling:
In Ang v. American Steamship Agencies, Inc., the
question was whether an action for the value of goods which
had been delivered to a party other than the consignee is for
"loss or damage" within the meaning of §3(6) of the COGSA. It
was held that there was no loss because the goods had simply
been misdelivered. "Loss" refers to the deterioration or
disappearance of goods.
In the case at bar, there is neither deterioration nor
disappearance nor destruction of goods caused by the
carrier's breach of contract. Whatever reduction there may
have been in the value of the goods is not due to their
deterioration or disappearance because they had been
damaged in transit.
Indeed, what is in issue in this petition is not the
liability of petitioner for its handling of goods as provided by
§3(6) of the COGSA, but its liability under its contract of
carriage with private respondent as covered by laws of more
general application.
The question before the trial court is not the
particular sense of "damages" as it refers to the physical loss
or damage of a shipper's goods as specifically covered by
§3(6) of COGSA but petitioner's potential liability for the
damages it has caused in the general sense and, as such, the
matter is governed by the Civil Code, the Code of Commerce
and COGSA, for the breach of its contract of carriage with
private respondent.
We conclude by holding that as the suit below is not
for "loss or damage" to goods contemplated in §3(6), the
question of prescription of action is governed not by the
COGSA but by Art. 1144 of the Civil Code which provides for a
prescriptive period of ten years.