Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co.

Facts:

-    CMC Trading A.G. shipped on board the M/V Anangel Sky at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation.
-    On July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order.
-    Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss.
-    Philippine First Insurance paid the claim of Philippine Steel and was thus subrogated.
-    Philippine First then instituted a complaint for recovery of the amount paid to the consignee as insured.
-    Belgian claims that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. Belgian further argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, Belgian averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment.
-    The RTC dismissed the complaint.
-    The CA reversed and ruled that Belgian were liable for the loss or the damage of the goods shipped, because they had failed to overcome the presumption of negligence imposed on common carriers. As to the extent of Belgian’s liability, the CA held that the package limitation under COGSA was not applicable, because the words "L/C No. 90/02447" indicated that a higher valuation of the cargo had been declared by the shipper.

Issues:

-    Whether the notice of loss was timely filed. (Belgian claims that pursuant to Section 3, paragraph 6 of COGSA, respondent should have filed its Notice of Loss within three days from delivery. They assert that the cargo was discharged on July 31, 1990, but that respondent filed its Notice of Claim only on September 18, 1990.)

Whether the package limitation of liability under COGSA is applicable. (Belgian contends that assuming that they are liable their liability should be limited to US$500 per package as provided in the Bill of Lading and by Section 4(5)of COGS

Held:

-    NO. Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier.
-    In this case, Belgian failed to rebut the prima facie presumption of negligence. First, as stated in the Bill of Lading, Belgian received the subject shipment in good order and condition in Germany. Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the contents thereof exposed and rusty. Third, Bad Order Tally Sheet issued by Jardine Davies Transport Services stated that the four coils were in bad order and condition. Normally, a request for a bad order survey is made in case there is an apparent or a presumed loss or damage.Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets found in bad order were wet with fresh water. Fifth, Belgian -- in a letteraddressed to the Philippine Steel --admitted that they were aware of the condition of the four coils found in bad order and condition.

-    YES. First, the provision of COGSA provides that the notice of claim need not be given if the state of the goods, at the time of their receipt, has been the subject of a joint inspection or survey. Here, prior to unloading the cargo, an Inspection Report as to the condition of the goods was prepared and signed by representatives of both parties. Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within one year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading.
-    A claim is not barred by prescription as long as the one-year period has not lapsed. In the present case, the cargo was discharged on July 31, 1990, while the Complaint51 was filed by respondent on July 25, 1991, within the one-year prescriptive period.

-    YES. In this case, there was no stipulation in the Bill of Lading limiting the carrier's liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for Belgian’s liability.
-    First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required by the bill. That notation was made only for the convenience of the shipper and the bank processing the Letter of Credit.
-    Second, a bill of lading is separate from the Other Letter of Credit arrangements. Thus, Belgian’s liability should be computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit.