United Coconut Planters Bank General Insurance Co., Inc. v. Aboitiz Shipping Corp.
REITERATIONFacts
The Antecedents: San Miguel Corporation (SMC) purchased three units of waste water treatment plant. The goods arrived in Manila and were transported to Cebu via MV "ABOITIZ SUPERCON II". Upon delivery to SMC's plant site on August 2, 1991, one electrical motor was found damaged. UCPB General Insurance Co., Inc. (UCPB), as subrogee of SMC, paid SMC ₱1,703,381.40 for the damaged unit and filed a complaint against various shipping and customs brokerage companies. Procedural History: The Regional Trial Court (RTC) initially declared DAMCO Intermodal Services, Inc. (DAMCO) in default. The complaint against East Asiatic Co. Ltd. (EAST), agent of DAMCO, was dismissed by the Supreme Court on the ground of prescription. After trial, the RTC rendered judgment holding DAMCO, Eagle Express Lines, Inc. (Eagle Express), and Aboitiz Shipping (Aboitiz) solidarily liable. The Court of Appeals (CA) reversed the RTC decision, ruling that UCPB failed to file a formal notice of claim within 24 hours as required by Article 366 of the Code of Commerce, which is a condition precedent to the accrual of a right of action. The Petition: UCPB assails the CA Decision, arguing that the 24-hour claim requirement under Article 366 of the Code of Commerce does not apply because the damage was known to the carrier's representative at the time of discharge, and a bad order survey was conducted. UCPB also claims the issue of Article 366's applicability was not raised before the RTC.
Issue(s)
Whether the Court of Appeals erred in reversing the RTC decision based on the failure to file a formal notice of claim within 24 hours as required by Article 366 of the Code of Commerce. Whether the presence of a carrier's representative during the discharge and the subsequent bad order survey dispenses with the requirement of a formal notice of claim. Whether the issue of the applicability of Article 366 of the Code of Commerce was properly raised before the trial court.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed. Double costs are assessed against the petitioner.
Ratio Decidendi
On the failure to file a formal notice of claim within 24 hours: The Court affirmed the ruling of the Court of Appeals that UCPB's right of action did not accrue because it failed to file a formal notice of claim within the 24-hour period prescribed by Article 366 of the Code of Commerce. This article mandates that claims for damage or average, if not ascertainable from the outside packaging, must be made within 24 hours of receipt of the merchandise. The Court reiterated that this requirement is a condition precedent to the accrual of a right of action against the carrier, and the shipper or consignee must allege and prove its fulfillment. In this case, the shipment was received on August 2, 1991, but the claims were dated October 30, 1991, well beyond the 24-hour period and even after SMC's surveyor had determined the extent of the loss. Therefore, UCPB's claim was clearly filed beyond the prescribed time frame. On whether the presence of a carrier's representative and bad order survey dispenses with the notice requirement: The Court found UCPB's argument that the damage was known to the carrier's representative during discharge and that a bad order survey was conducted to be unavailing. While UCPB presented a Request for Bad Order Survey and a Turn Over Survey of Bad Order Cargoes, the Court noted that the applicability of Section 3(6) of the Carriage of Goods by Sea Act (COGSA), which dispenses with written notice if there is a joint survey, was not raised before the trial court. Furthermore, the Court clarified that Eagle Express, which had a representative present, acted as an agent of the freight consolidator, not the carrier to whom the notice should have been made. Thus, Eagle Express's knowledge or participation in the survey did not constitute notice to the actual carrier or waive the requirement of a formal written notice under Article 366 of the Code of Commerce. The Court also pointed out that the dismissal of the complaint against DAMCO's representative, East Asiatic, foreclosed the notion that the bad order survey complied with the notice requirement. On whether the issue of Article 366's applicability was properly raised: The Court found UCPB's assertion that the issue of Article 366's applicability was not raised before the trial court to be a gross misrepresentation. The Court noted that Eagle Express, in its Answer to the Amended Complaint, explicitly raised the defense that the consignee made no claim against it within 24 hours following receipt of the cargo. Aboitiz Shipping also raised the defense in its Answer that UCPB did not file a claim with it and that the complaint stated no cause of action. Therefore, the appellate court correctly considered the arguments on the applicability of Article 366, as it was indeed raised as a defense in the pleadings before the trial court.
Main Doctrine
The filing of a formal notice of claim within the period prescribed by law (Article 366 of the Code of Commerce or Section 3(6) of COGSA) is a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, goods. Failure to comply with this requirement bars recovery, unless the damage was apparent from the outside packaging or the condition of the cargo was the subject of a joint survey or inspection.