Pioneer Insurance and Surety Corporation v. APL Co. Pte. Ltd.
REITERATIONFacts
The Antecedents: On January 13, 2012, 250 bags of chili pepper were shipped from India to Manila by Chillies Export House Limited, consigned to BSFIL Technologies, Inc. The shipment was insured by Pioneer Insurance and Surety Corporation (Pioneer Insurance). Upon arrival on February 2, 2012, and subsequent delivery on February 6, 2012, BSFIL discovered that 76 bags were wet and moldy, rendering them unfit for consumption and a total loss. Pioneer Insurance paid BSFIL P195,505.65. Subrogated to BSFIL's rights, Pioneer Insurance filed a complaint for sum of money against the carrier, APL Co. Pte. Ltd. (APL), after APL refused to pay. Procedural History: The Municipal Trial Court (MTC) ruled in favor of Pioneer Insurance, holding APL liable for damages due to its presumed failure to exercise extraordinary diligence as a common carrier. The Regional Trial Court (RTC) affirmed the MTC decision. The Court of Appeals (CA) reversed the RTC and MTC, ruling that the action was barred by prescription due to the nine-month prescriptive period stipulated in the Bill of Lading. The Petition: Pioneer Insurance filed a petition for review on certiorari before the Supreme Court, arguing that the CA erred in applying the nine-month prescriptive period in the Bill of Lading and in holding that the one-year prescriptive period under the Carriage of Goods by Sea Act (COGSA) was not applicable.
Issue(s)
Whether the Court of Appeals erred in ruling that petitioner's claim against the respondent is barred by prescription, considering the provisions of the Bill of Lading. Whether the Court of Appeals erred in holding that the one-year prescriptive period provided under the Carriage of Goods by Sea Act (COGSA) is not applicable in the instant case, given the exception clause in the Bill of Lading.
Ruling
The petition is GRANTED. The November 3, 2015 Decision of the Regional Trial Court, Branch 137, Makati City in Civil Case No. 15-403 is REINSTATED.
Ratio Decidendi
On the issue of prescription and the applicability of COGSA, considering the Bill of Lading: The Court held that the petition is meritorious. While stipulated prescriptive periods shorter than statutory counterparts are generally valid, the Court of Appeals erred in applying the ruling in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. because the circumstances are not squarely the same. The Court reiterated that a contract is the law between the parties and its terms must be complied with in good faith, and when the terms are clear, their literal meaning shall control. Upon closer perusal of the Bill of Lading, its provisions are clear and unequivocal, stating that the carrier shall be discharged from all liability unless suit is brought within nine (9) months after delivery, but this is qualified by an exception: "when the said nine-month period is contrary to any law compulsorily applicable, the period prescribed by the said law shall apply." On the applicability of the one-year prescriptive period under COGSA, given the exception clause in the Bill of Lading: The present case involves lost or damaged cargo, for which it has long been settled that the one-year prescriptive period under the COGSA applies. Therefore, the exception under the Bill of Lading became operative because there was a compulsory law applicable which provides for a different prescriptive period. Strictly applying the terms of the Bill of Lading, the one-year prescriptive period under the COGSA should govern because the present case involves loss of goods or cargo. The Court is not construing the Bill of Lading further but merely applying its terms according to its plain and literal meaning. Thus, the action filed by Pioneer Insurance was within the prescriptive period provided by law.
Main Doctrine
The one-year prescriptive period under the Carriage of Goods by Sea Act (COGSA) shall govern claims for loss or damage to cargo, even if the Bill of Lading stipulates a shorter prescriptive period, provided that the Bill of Lading itself contains an exception for situations where a compulsory applicable law prescribes a different period.