Universal Shipping Lines, Inc. v. Intermediate Appellate Court
REITERATIONFacts
1. The Antecedents: On or about March 22, 1974, two shipments of 25-kilogram bags of State R Brand carton black, totaling 53,000 kilos each, were shipped from Rotterdam, Netherlands, to Bangkok, Thailand, aboard the M/V "TAIWAN," owned and operated by petitioner Universal Shipping Lines, Inc. One shipment was consigned to S. Lersen Company, Ltd., and the other to Muang Ngarm Retreads, Ltd. Both shipments were insured with respondent Alliance Assurance Company, Ltd. Upon arrival in Bangkok on June 28, 1974, the cargo under Bill of Lading No. RB-15 was not delivered, and the cargo under Bill of Lading No. RB-16 was delivered with a significant weight shortage. The losses were attributed to saltwater flooding Hatch No. 2, causing the cargo to dissolve. The vessel's marine protest indicated potential leakage from suction pipes or loose rivets on the ship's starboard side, and the bilge pump was continuously used to remove water. 2. Procedural History: Following the arrival of the vessel in Manila on July 4, 1974, the consignees filed claims for loss and damage to their cargoes on August 7, 1974, and November 12, 1974, respectively. The insurer, Alliance Assurance Company, Ltd., paid the claims amounting to £12,180 and £2,547.18. Subsequently, on June 25, 1976, the insurer, as subrogee, filed an action in the Court of First Instance of Manila against Universal Shipping Lines, Inc. and its Manila agent, Carlos Go Thong & Company, to recover the amounts paid. The trial court ruled in favor of the insurer, ordering the defendants to pay the equivalent peso amounts of the claims, plus legal interest and attorney's fees. On appeal, the then Intermediate Appellate Court (now Court of Appeals) affirmed the decision, modifying it to exculpate the ship's agent in Manila from liability. 3. The Petition: Petitioner Universal Shipping Lines, Inc. filed this appeal by certiorari seeking to set aside the decision of the Intermediate Appellate Court. The petition raises four assignments of error: (1) holding the petitioner liable for the damage/loss; (2) holding that the private respondent has the capacity to sue in Philippine jurisdiction; (3) finding that the private respondent's cause of action had not prescribed; and (4) awarding attorney's fees without sufficient justification. The Supreme Court denied the petition, finding it without merit. It upheld the appellate court's findings on the petitioner's liability based on the breach of contract of water transportation, the private respondent's capacity to sue despite being a foreign corporation without a license to do business in the Philippines, and the timeliness of the action due to an agreed extension of the prescriptive period. The award of attorney's fees was also deemed reasonable given the circumstances.
Issue(s)
Whether petitioner is liable for the damage/loss suffered by the subject shipments. Whether private respondent has the capacity to sue in Philippine jurisdiction. Whether private respondent's cause of action has prescribed. Whether the award of attorney's fees is justified.
Ruling
The petition is denied for lack of merit. The decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the issue of petitioner's liability for damage/loss: The Court held that it was incumbent upon the defendants (petitioner and its agent) to prove that the losses and damages were due to causes other than the negligence or fault of their employees. Since the defendants failed to adduce such proof, and it was shown that the losses and damages occurred while the shipments were in the custody of the M/V "TAIWAN", the liability of its owner/operator is clear. This stems from the breach of the contract of water transportation, as the carrier is presumed to have been negligent when goods under its care are lost or damaged. On the issue of private respondent's capacity to sue: The Court upheld the appellate court's ruling that the private respondent, a foreign insurance company, may sue in Philippine courts. The Court clarified that the prohibition against foreign corporations suing in the Philippines applies to doing business without the prescribed license, not merely to the lack of such a license. Since the action was based on marine insurance policies for international-bound cargoes shipped by a Philippine carrier, and not an act of engaging in business within the Philippines, the private respondent was not barred from accessing Philippine courts. On the issue of prescription of the action: The Court found that the action had not prescribed. While Section 3(6) of the Carriage of Goods by Sea Act provides a one-year period for bringing suit, this period can be suspended by express agreement of the parties. The exchange of correspondence between the parties indicated a mutual agreement to extend the time for filing suit until December 27, 1976. As the complaint was filed on June 25, 1976, it was filed within the extended period. On the issue of attorney's fees: The Court affirmed the award of attorney's fees, stating that such an award lies within the discretion of the court and depends on the circumstances. In this case, the award of P10,000.00 was deemed reasonable and justified because the petitioner's rejection of the private respondent's demand compelled the latter to litigate and incur expenses to protect and enforce its valid claim.
Main Doctrine
A foreign insurance company, even if it has withdrawn from the Philippine market and is not licensed to do business in the Philippines, may sue in Philippine courts on marine insurance policies issued abroad to cover international-bound cargoes shipped by a Philippine carrier, as the prohibition applies to doing business without a license, not merely the lack of one.