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TAG ARCHIVES: COGSA

July 2012 Philippine Supreme Court Decisions on

Commercial LawPosted onAugust 1, 2012byHector M. de Leon Jr Posted inCommercial Law,Philippines - Cases,Philippines - Law

TaggedCOGSA,diligence,insurance,prescriptionHere are select July 2012 rulings of the Supreme Court of the Philippines on commercial law:

Banks; diligence required. FEBTC should have been more circumspect in dealing with its clients. It cannot be

over emphasized that the banking business is impressed with public interest. Of paramount importance is the

trust and confidence of the public in general in the banking industry. Consequently, the diligence required of

banks is more than that of a Roman pater familias or a good father of a family. The highest degree of diligence

is expected. In handling loan transactions, banks are under obligation to ensure compliance by the clients with

all the documentary requirements pertaining to the approval and release of the loan applications. For failure of

its branch manager to exercise the requisite diligence in abiding by the MORB and the banking rules and

practices, FEBTC was negligent in the selection and supervision of its employees.Far East Bank and TrustCompany (now Bank of the Philippine Islands) vs. Tentmakers Group, Inc., Gregoria Pilares Santos and Rhoel

P. Santos,G.R. No. 171050, July 4, 2012.

Carriage of Goods by Sea Act; prescription. The COGSA is the applicable law for all contracts for carriage of

goods by sea to and from Philippine ports in foreign trade; it is thus the law that the Court shall consider in the

present case since the cargo was transported from Brazil to the Philippines.Under Section 3(6) of the COGSA, the carrier is discharged from liability for loss or damage to the cargo

unless the suit is brought within one year after delivery of the goods or the date when the goods should have

been delivered. Jurisprudence, however, recognized the validity of an agreement between the carrier and the

shipper/consignee extending the one-year period to file a claim.Benjamin Cua (Cua Hian Tek) vs. Wallem

Philippines Shipping, Inc. and Advance Shipping Corporation,G.R. No. 171337. July 11, 2012.

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February 2012 Philippine Supreme Court Decisions

on Commercial LawPosted onMarch 2, 2012byHector M. de Leon Jr Posted inCommercial Law,Philippines - Cases,Philippines - LawTaggedCOGSA,insuranceHere are select February 2012 rulings of the Supreme Court of the Philippines on commercial law:

Carriage of Goods by Sea Act (COGSA); applicability of prescription period to arrastre operator. Under the

COGSA, the carrier and the ship may put up the defense of prescription if the action for damages is notbrought within one year after the delivery of the goods or the date when the goods should have been delivered.

It has been held that not only the shipper, but also the consignee or legal holder of the bill may invoke the

prescriptive period. However, the COGSA does not mention that an arrastre operator may invoke the

prescriptive period of one year; hence, it does not cover the arrastre operator.Insurance Company of NorthAmerica vs. Asian Terminals, Inc.,G.R. No. 180784, February 15, 2012.

COGSA; bad order survey. As early as November 29, 2002, the date of the last withdrawal of the goods from

the arrastre operator, respondent ATI was able to verify that five (5) packages of the shipment were in badorder while in its custody. The certificate of non-delivery referred to in the Contract is similar to or identical

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with the examination report on the request for bad order survey. Like in the case ofNew Zealand Insurance

Company Ltd. v. Navarro, the verification and ascertainment of liability by respondent ATI had been

accomplished within thirty (30) days from the date of delivery of the package to the consignee and within

fifteen (15) days from the date of issuance by the Contractor (respondent ATI) of the examination report on the

request for bad order survey. Although the formal claim was filed beyond the 15-day period from the issuance

of the examination report on the request for bad order survey, the purpose of the time limitations for the filing

of claims had already been fully satisfied by the request of the consignees broker for a bad order survey andby the examination report of the arrastre operator on the result thereof, as the arrastre operator had become

aware of and had verified the facts giving rise to its liability. Hence, the arrastre operator suffered no prejudice

by the lack of strict compliance with the 15-day limitation to file the formal complaint.Insurance Company of

North America vs. Asian Terminals, Inc.,G.R. No. 180784, February 15, 2012.

The following are important features of the Carriage of Goods by Sea Act:

1.) It acts as a supplement to the Civil Code and applies to all contracts ofcarriage of goods coming to or from Philippine ports in foreign trade.

2.) When there is damage to the goods, notice must be given by the recipient tothe carrier or his agent upon receipt of the goods. But if the damage is

apparent/externally visible, notice must be given within 3 days from receipt ofthe goods.

3.) Failure of the recipient to notify the carrier will not prevent the filing of a suit

for the loss/damage of the goods.

4.) The maximum liability is US$500.00 per package/customary freight unitunless the shipper or owner of the goods declares a higher value. It may be

lowered by agreement put down in the bill of lading.

The purpose of limiting the common carrier's liability is to protect it from fraud,such as by allowing it to take insurance to protect itself. If, for example, the

shipper or consignee/recipient understated the value of the goods, it not onlyviolates a valid contractual stipulation; it has also committed fraud against thecommon carrier by trying to make it liable for an amount greater that what was

stipulated in the bill of lading(Cokaliong Shipping Lines vs. UCPB GeneralInsurance Co., GR 146018, June 25, 2003.)

Prescriptive Period

The prescriptive period is 1 year from date of delivery or the date whenthey shouldhave been delivered. Take note of the following:

1.) Delivery is to the arrastre operator not the recipient

2.) It won't apply if the goods were delivered to the wrong person

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3.) An extra-judicial claim/demand from the recipient won't interruptthe prescriptiveperiod

It will apply only to goods damaged/lost in transit, which is why prescription

begins when the goods are handed over to the arrastre operator. If the arrastre

service was responsible for damaging the goods, another law will apply.

The SC has been known to bend the rules on the prescriptive period, especiallyif certain unfortunate things would take place. If, for instance, a case wasdismissed for lack of jurisdiction and the prescriptive period expired, it ruledthat the recipient could file a new case within 1 year from the dismissal of theprevious case (Stevens & Co vs. Nordeutscher Lloyd, 6 SCRA 180.) If, however,the case was filed against the wrong party, the prescriptive period won't beinterrupted.

The prescriptive period is interrupted by the following instances:

1.) An action has been filed in court

2.) There is an express agreement that extra-judicial claims/demands fordamages will suspend the running of the prescriptive period.

If the goods were delivered to the wrong person, the recipient of the goods has10 years to file an action (for breach of contract) or 4 years (for a quasi-delict.)