TAG ARCHIVES: COGSA

July 2012 Philippine Supreme Court Decisions on Commercial Law

Posted on August 1, 2012 by Hector M. de Leon Jr Posted in Commercial Law, Philippines - Cases, Philippines - Law Tagged COGSA, diligence, insurance, prescription

Here 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 Trust Company (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. Continue reading
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February 2012 Philippine Supreme Court Decisions on Commercial Law

Posted on March 2, 2012 by Hector M. de Leon Jr Posted in Commercial Law, Philippines - Cases, Philippines - Law Tagged COGSA, insurance

Here 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 not brought 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 North America 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 bad order while in its custody. The certificate of non-delivery referred to in the Contract is similar to or identical

with the examination report on the request for bad order survey. Like in the case of New 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 and by 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 of carriage 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 to the 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 of the 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 unit unless 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 only violates a valid contractual stipulation; it has also committed fraud against the common 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 General Insurance Co., GR 146018, June 25, 2003.) Prescriptive Period The prescriptive period is 1 year from date of delivery or the date when they should have 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

3.) An extra-judicial the prescriptiveperiod

claim/demand

from

the

recipient

won't

interrupt

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, especially if certain unfortunate things would take place. If, for instance, a case was dismissed for lack of jurisdiction and the prescriptive period expired, it ruled that the recipient could file a new case within 1 year from the dismissal of the previous case (Stevens & Co vs. Nordeutscher Lloyd, 6 SCRA 180.) If, however, the case was filed against the wrong party, the prescriptive period won't be interrupted. 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 for damages will suspend the running of the prescriptive period. If the goods were delivered to the wrong person, the recipient of the goods has 10 years to file an action (for breach of contract) or 4 years (for a quasi-delict.)