Cua v. Wallem Philippines Shipping, Inc.
REITERATIONFacts
The Antecedents: Petitioner Benjamin Cua, as consignee, received a shipment of 218 tons of Brazilian Soyabean via M/V Argo Trader, owned and managed by Advance Shipping Corporation (a foreign corporation) with Wallem Philippines Shipping, Inc. as local agent; the vessel arrived in Manila on July 8, 1989, with delivery occurring on August 16, 1989, revealing damage to 218 tons and shortage of 50 tons per Bill of Lading No. 10, amounting to P2,030,303.52 in losses. Cua attributed the loss to respondents' failure to exercise extraordinary diligence in cargo carriage. Amid claims, a telex message dated August 10, 1990 from Mr. A.R. Filder of Thomas Miller (manager of UK P&I Club, insurer) confirmed Advance Shipping's agreement, with insurer concurrence, to extend the suit commencement period by 90 days from August 14, 1990 to November 12, 1990. Cua alleged in his complaint (paragraph 11) that defendants agreed to extend the filing period up to November 12, 1990. On November 12, 1990—exactly within the extended period—Cua filed a civil action for damages before RTC Manila, Branch 31 (Civil Case No. 90-55098), seeking indemnity plus interests, attorney's fees, and costs. Procedural History: Advance Shipping moved to dismiss for lack of jurisdiction, claiming arbitration under Charter Party; RTC deferred then ruled Cua, as consignee, not bound by arbitration clause. Wallem separately moved to dismiss solely on COGSA prescription (one year from delivery), alleging filing beyond August 16, 1990; Cua opposed citing the August 10, 1990 telex (supposedly attached). Wallem withdrew its motion via omnibus motion on February 11, 1992, expressly reserving prescription defense for answer if needed; RTC on June 5, 1992 deemed motion withdrawn without action, ordered answer. Respondents filed joint answer denying key allegations generally and asserting prescription/laches. After trial, RTC on December 28, 1995 ruled for Cua, holding respondents jointly liable for P2,030,000 plus interests, P100,000 attorney's fees, costs, dismissing counterclaims. CA on appeal (CA-G.R. CV No. 53538) reversed on May 16, 2005, finding prescription due to absent telex evidence; MR denied January 31, 2006. The Petition: Cua petitioned for review on certiorari under Rule 45, arguing respondents admitted the extension via Wallem's withdrawal post-Cua's telex reference, dispensing proof need; withdrawal implied admission unless palpably mistaken. Respondents countered no admission occurred, telex unpresented/unattached, withdrawal explicitly reserved prescription per RTC order; bare denial in answer suffices, no waiver despite memorandum statement.
Issue(s)
Whether Cua’s action for damages prescribed under COGSA Section 3(6), considering alleged extension and respondents’ pleadings, specifically focusing on the adequacy of respondents' denial of the extension and their subsequent admissions. Whether courts may motu proprio consider prescription despite defendant’s withdrawal/reservation of the defense. Whether the respondents' failure to specifically deny the extension allegation in Cua's complaint, coupled with their memorandum admission, effectively renders the action timely, overriding any potential prescription defense.
Ruling
The petition is GRANTED. The CA decision dated May 16, 2005 and resolution dated January 31, 2006 in CA-G.R. CV No. 53538 are SET ASIDE. The RTC decision dated December 28, 1995 in Civil Case No. 90-55098 is REINSTATED. Costs against respondents.
Ratio Decidendi
On Prescription under COGSA and Validity of Extension: Section 3(6) COGSA mandates suit within one year post-delivery, discharging carrier liability otherwise; however, jurisprudence upholds agreements extending this period. Cua’s complaint alleged extension to November 12, 1990. Respondents’ motions to dismiss and joint answer lacked Rule 8, Sec. 10/11 specific denial of the extension. The memorandum admitted the filing was 'within the extended period agreed upon by the parties,' deeming the extension fact established, thus the action was timely. On Motu Proprio Dismissal Power Despite Waiver Arguments: Rule 16, Sec. 1(f) lists prescription as a motion to dismiss ground; Rule 9, Sec. 1 allows motu proprio dismissal if facts apparent from pleadings/records. Wallem’s withdrawal reserving the defense is irrelevant; the CA correctly considered prescription motu proprio but erred factually by ignoring deemed admissions and the memorandum concession. No reversible error in CA’s approach, but merits demand reversal as records affirmatively show non-prescription via admissions. On the Effect of Respondents' Failure to Specifically Deny and Subsequent Admission: The respondents' failure to specifically deny the extension allegation, as required by Rule 8, Sections 10 and 11, coupled with their explicit admission in the memorandum that the action was filed within the agreed-upon extended period, effectively waived their right to assert prescription as a defense. This admission, in essence, established the timeliness of the action, precluding any argument to the contrary.
Main Doctrine
Under Section 3(6) of the Carriage of Goods by Sea Act (COGSA), a carrier is discharged from liability for loss or damage to cargo unless suit is brought within one year after delivery, but this prescriptive period may be validly extended by agreement between the parties, as recognized in jurisprudence. Material allegations in a complaint, such as the existence of an extension agreement, must be specifically denied under Section 11, Rule 8 of the Rules of Court; failure to do so results in a deemed admission, relieving the plaintiff of the burden to prove the fact. Courts possess the authority under Section 1, Rule 9 to motu proprio dismiss an action on the ground of prescription if the supporting facts are apparent from the pleadings or evidence on record, even if not raised or waived by the defendant. A general denial or bare assertion of prescription in an answer does not suffice as a specific denial; the defendant must set forth the substance of matters relied upon to controvert the allegation. Respondents' own admission in their memorandum that the case was filed 'within the extended period agreed upon by the parties' further solidifies the extension as an established fact, rendering the action timely filed.