UCPB v Aboitiz

Facts: On June 1991, 3 units of waste water treatment plant with accessories were purchased by San Miguel
Corp from Super Max Engineering. The goods came from Charleston, USA and arrived in port of Manila on board
MV Scandutch Star. From Manila it was transported to Cebu on board of Aboitiz Supercon II. In Cebu, with
clearance from the Bureau of Customs, the goods were delivered and received by San Miguel at its plant site. It
was then discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel P1,703,381.40 representing the
value of the damaged unit. In turn, San Miguel executed a subrogation form in favor of UCPB. Then, UCPB filed
a complaint on Kuly 1992 as subrogee of San Miguel seeking to recover from Aboitiz. Aboitiz moved to admit
East Asiatic Co. as general agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic and DAMCO
solidarily liable.

CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue because UCPB failed to
file a formal notice within 24 hours from the damaged. In a memorandum, UCPB asserts that the claim
requirement does not apply to cases concerning damages to the merchandise had already been known to the
carrier. UCPB revealed that the damage to the cargo was found upon discharge from the foreign carrier
witnessed by the carrier’s representative who signed the request for bad order survey and the turnover of bad
order cargoes. This knowledge, UCPB argues, dispenses with the need to give the carrier a formal notice of claim.
Incidentally, the carrier’s representative mentioned by UCPB as present at the time the merchandise was
unloaded was in fact a representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims
that the issue of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court
and should, therefore, not have been considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held liable for the damage
to the merchandise as it acted merely as a freight forwarders agent in the transaction. It allegedly facilitated the
transhipment of the cargo from Manila to Cebu but represented the interest of the cargo owner, and not the
carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it obviously cannot be
held liable for the damage to the cargo which, by UCPBs admission, was incurred not during transhipment to
Cebu on board one of Aboitizs vessels, but was already existent at the time of unloading in Manila. Aboitiz also
argues that Art. 366 of the Code of Commerce is applicable and serves as a condition precedent to the accrual
of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by UCPB.

Ruling: UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue regarding
the applicability of the Code of Commerce, particularly the 24-hour formal claim rule, was not raised as an issue
before the trial court. The appellate court, therefore, correctly looked into the validity of the arguments raised
by Eagle Express, Aboitiz and Pimentel Customs on this point after the trial court had so ill-advisedly centered
its decision merely on the matter of extraordinary diligence.

Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened at the ICTSI
in Manila in the presence of an Eagle Express representative, the cargo had already been found damaged. In
fact, a request for bad order survey was then made and a turnover survey of bad order cargoes was issued,
pursuant to the procedure in the discharge of bad order cargo. The shipment was then repacked and
transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When the cargo was finally received by SMC
at its Mandaue City warehouse, it was found in bad order, thereby confirming the damage already uncovered
in Manila.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action
against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the
fulfilment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of Appeals,
the claims were dated October 30, 1991, more than three (3) months from receipt of the shipment and, at that,
even after the extent of the loss had already been determined by SMCs surveyor. The claim was, therefore,
clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.

Petition was denied. CA's decision was affirmed.

Eastern Shipping Line v. CA

Facts:

- 13 coils of uncoated 7-wire stress relived wire strand for prestressed concrete were shipped on board the
vessel “Japri Venture” (owned by Easter Shipping Lines) for delivery to Stresstek Post-Tensioning Phils. in Manila.
The cargo was insured by First Nationwide Assurance Corporation (FNAC).

- The vessel arrived in Manila and discharged the cargo to the custody of E.Razon Inc., from whom the
consignee’s customs broker received it for delivery to the consignee’s warehouse.

- It appears that while en route to Manila, the vessel encountered very rough seas and stormy weather and
the cargo stored in the lower hatch of the vessel was flooded with water about one foot deep. That upon survey,
it was found that several coils were rusty on one side and that the wetting of the cargo was caused by fresh
water that entered the hatch when the vessel encountered heavy weather.

- FNAC paid Stresstek about Php 172K for damage and loss to the insured cargo.

- Being subrogated to the rights of Stresstek, FNAC now seeks o recover from Eastern what it has indemnified
Stresstek less the salvage value of the goods, or the total of about Php 124K.

- The RTC ordered for the dismissal of the case.

Upon appeal, the CA held that Eastern is liable to FNAC.

Issue: Whether Easter should be held liable even if it claims that the shipment was discharged and delivered
complete into the custody of the arrastre operator under clean tally sheets.
Held:

- YES. In arriving at the decision, the SC agreed with the CA on its findings and conclusions.

- The heavy seas and rains referred to in the master’s report were not caso fortuito, but normal occurrences
that an ocean going vessel, particularly in the month of September which, in our area, is a month of rains and
heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are
conditions that ocean-going vessels would encounter and provide for, in the ordinary course of voyage.

- The rain water (not sea water) found its way into Japri Venture is a clear indication that care and foresight
did not attend the closing of the ship’s hatches so that rain water would not find its way into the cargo,

- Since Easter has failed to establish any caso fortuito, the presumption of fault or negligence on the part of
the carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence
required in Art. 1733 to escape liability.

The SC held that the presumption that the cargo was in apparent good condition when it was delivered by the
vessel to the arrastre operation by the clean tally sheets has been overturned. The evidence is clear to the effect
that the damage to the cargo was suffered while aboard petitioner’s vessel.