PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. AND TAGUM PLASTICS, INC., PETITIONERS, VS. SWEET LINES, INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. AND HON. COURT OF A…

A maritime suit^[1] was
commenced on May 12, 1978 by herein petitioner Philippine American General
Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) against private
respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port
Services, Inc. (DVAPSI), along with S.C.I. Line (The Shipping Corporation of
India Limited) and F.E. Zuellig, Inc., as co-defendants in the court a quo,
seeking recovery of the cost of lost or damaged shipment plus exemplary
damages, attorney’s fees and costs allegedly due to defendant’s negligence,
with the following factual backdrop yielded by the findings of the court below
and adopted by respondent court:

“It would appear that in or about March 1977, the vessel SS
‘VISHVA YASH’ belonging to or operated by the foreign common carrier, took on
board at Baton Rouge, LA, two (2) consignments of cargoes for shipment to
Manila and later for transhipment to Davao City, consisting of 600 bags Low
Density Polyethylene 631 and another 6,400 bags Low Density Polyethylene 647,
both consigned to the order of Far East Bank and Trust Company of Manila, with
arrival notice to Tagum Plastics, Inc., Madaum, Tagum, Davao City. Said cargoes were covered, respectively, by
Bills of Lading Nos. 6 and 7 issued by the foreign common carrier (Exhs. E and
F). The necessary packing or Weight
List (Exhs. A and B), as well as the Commercial Invoices (Exhs. C and D)
accompanied the shipment. The cargoes
were likewise insured by the Tagum Plastics Inc. with plaintiff Philippine
American General Insurance Co., Inc., (Exh. G).

“In the course of time, the said vessel arrived at Manila and
discharged its cargoes in the Port of Manila for transhipment to Davao
City. For this purpose, the foreign
carrier awaited and made use of the services of the vessel called M/V ‘Sweet
Love’ owned and operated by defendant interisland carrier.

“Subject cargoes were loaded in Holds Nos. 2 and 3 of the
interisland carrier. These were
commingled with similar cargoes belonging to Evergreen Plantation and also
Standtilco.

“On May 15, 1977, the shipment(s) were discharged from the
interisland carrier into the custody of the consignee. A later survey conducted on July 8, 1977,
upon the instance of the plaintiff, shows the following:

“Of the cargo covered by Bill of Lading No. 25 or (2)6,
supposed to contain 6,400 bags of Low Density Polyethylene 647 originally
inside 160 pallets, there were delivered to the consignee 5,413 bags in good
order condition. The survey shows
shortages, damages and losses to be as follows:

Undelivered/Damaged, bags as tallied during
discharge from vessel-173 bags; undelivered and damaged as noted and observed
whilst stored at the pier-699 bags; and shortlanded-110 bags (Exhs. P and P-1).

“Of the 600 bags of Low Density Polyethylene 631, the survey
conducted on the same day shows an actual delivery to the consignee of only 507
bags in good order condition. Likewise
noted were the following losses, damages and shortages, to wit:

Undelivered/damaged bags and tally sheets
during discharge from vessel-17 bags. Undelivered and damaged as noted and observed whilst stored at the
pier-66 bags; Shortlanded-10 bags.

Therefore, of said shipment totalling 7,000
bags, originally contained in 175 pallets, only a total of 5,820 bags were
delivered to the consignee in good order condition, leaving a balance of 1,080
bags. Such loss from this particular
shipment is what any or all defendants may be answerable to (sic).

“As already stated, some bags were either shortlanded or were
missing, and some of the 1,080 bags were torn, the contents thereof partly
spilled or were fully/partially emptied, but, worse, the contents thereof
contaminated with foreign matters and therefore could no longer serve their
intended purpose. The position taken by
the consignee was that even those bags which still had some contents were
considered as total losses as the remaining contents were contaminated with
foreign matters and therefore did not (sic) longer serve the intended purpose
of the material. Each bag was valued,
taking into account the customs duties and other taxes paid as well as charges
and the conversion value then of a dollar to the peso, at P110.28 per bag (see
Exhs. L and L-1 M and O.”^[2]

Before trial, a compromise agreement was entered into between
petitioners, as plaintiffs, and defendants S.C.I. Line and F.E. Zuellig, upon
the latter’s payment of P532.65 in settlement of the claim against them. Whereupon, the trial court in its order of
August 12, 1981^[3]
granted plaintiffs motion to dismiss grounded on said amicable settlement and
the case as to S.C.I. Line and F.E. Zuellig was consequently “dismissed
with prejudice and without pronouncement as to costs.”

The trial court thereafter rendered judgment in favor of herein
petitioners on this dispositive portion:

“WHEREFORE, judgment is hereby rendered in favor of the
plaintiff Philippine General American Insurance Company Inc. and against the
remaining defendants, Sweet Lines Inc. and Davao Veterans Arrastre Inc. as
follows:

Defendant Sweet Lines, Inc. is ordered to pay said plaintiff the
sum of P34,902.00, with legal interest thereon from date of extrajudicial
demand on April 28, 1978 (Exh. M) until fully paid;

Defendant Sweet Lines Inc. and Davao Veterans Arrastre and (Port)
Services Inc. are directed to pay jointly and severally, the plaintiff the sum
of P49,747.55, with legal interest thereon from April 28, 1978 until fully
paid;

Each of said defendants are ordered to pay the plaintiffs the
additional sum of P5,000 as reimbursable attorney’s fees and other litigation
expenses;

Each of said defendants shall pay one-fourth (1/4) costs.”^[4]

Due to the reversal on appeal by respondent court of the trial
court’s decision on the ground of prescription,^[5] in
effect dismissing the complaint of herein petitioners; and the denial of their
motion for reconsideration,^[6]
petitioners filed the instant petition for review on certiorari,
faulting respondent appellate court with the following errors: (1) in upholding, without proof, the
existence of the so-called prescriptive period; (2) granting arguendo
that the said prescriptive period does exist, in not finding the same to be
null and void; and (3) assuming arguendo that the said prescriptive
period is valid and legal, in failing to conclude that petitioners substantially
complied therewith.^[7]

Parenthetically, we observe that herein petitioners are jointly
pursuing this case, considering their common interest in the shipment subject
of the present controversy, to obviate any question as to who the real party in
interest is and to protect their respective rights as insurer and insured. In any case, there is no impediment to the
legal standing of petitioner Philamgen, even if it alone were to sue herein
private respondents in its own capacity as insurer, it having been subrogated
to all rights of recovery for loss of or damage to the shipment insured under
its Marine Risk Note No. 438734 dated March 31, 1977^[8] in
view of the full settlement of the claim thereunder as evidenced by the
subrogation receipt^[9]
issued in its favor by Far East Bank and Trust Co., Davao Branch, for the
account of petitioner TPI.

Upon payment of the loss covered by the policy, the insurer’s
entitlement to subrogation pro tanto, being
of the highest equity, equips it with a cause of action against a third party
in case of contractual breach.^[10]
Further, the insurer’s subrogatory right to sue for recovery under the bill of
lading in case of loss of or damage to the cargo is jurisprudentially upheld.^[11]
However, if an insurer, in the exercise of its subrogatory right, may proceed
against the erring carrier and for all intents and purposes stands in the place
and in substitution of the consignee, a fortiori such insurer is
presumed to know and is just as bound by the contractual terms under the bill
of lading as the insured.

On the first issue, petitioners contend that it was error for the
Court of Appeals to reverse the appealed decision on the supposed ground of
prescription when SLI failed to adduce any evidence in support thereof and that
the bills of lading said to contain the shortened periods for filing a claim
and for instituting a court action against the carrier were never offered in
evidence. Considering that the
existence and tenor of this stipulation on the aforesaid periods have allegedly
not been established, petitioners maintain that it is inconceivable how they
can possibly comply therewith.^[12] In
refutation, SLI avers that it is standard practice in its operations to issue
bills of lading for shipments entrusted to it for carriage and that it in fact
issued bills of lading numbered MD-25 and MD-26 therefore with proof of their
existence manifest in the records of the case.^[13] For
its part, DVAPSI insists on the propriety of the dismissal of the complaint as
to it due to petitioners’ failure to prove its direct responsibility for the
loss of and/or damage to the cargo.^[14]

On this point, in denying petitioner’s motion for
reconsideration, the Court of Appeals resolved that although the bills of
lading were not offered in evidence, the litigation obviously revolves on such
bills of lading which are practically the documents or contracts sued upon,
hence, they are inevitably involved and their provisions cannot be disregarded
in the determination of the relative rights of the parties thereto.^[15]

Respondent court correctly passed upon the matter of
prescription, since that defense was so considered and controverted by the
parties. This issue may accordingly be
taken cognizance of by the court even if not inceptively raised as a defense so
long as its existence is plainly apparent on the face of relevant pleadings.^[16]
In the case at bar, prescription as an affirmative defense was seasonably
raised by SLI in its answer,^[17]
except that the bills of lading embodying the same were not formally offered in
evidence, thus reducing the bone of contention to whether or not prescription
can be maintained as such defense and, as in this case, consequently upheld on
the strength of mere references thereto.

As petitioners are suing upon SLI’s contractual obligation under
the contract of carriage as contained in the bills of lading, such bills of
lading can be categorized as actionable documents which under the Rules must be
properly pleaded either as causes of action or defenses,^[18]
and the genuineness and due execution of which are deemed admitted unless
specifically denied under oath by the adverse party.^[19]
The rules on actionable documents cover and apply to both a cause of action or
defense based on said documents.^[20]

In the present case and under the aforestated assumption that the
time limit involved is a prescriptive period, respondent carrier duly raised
prescription as an affirmative defense in its answer setting forth paragraph 5
of the pertinent bills of lading which comprised the stipulation thereon by
parties, to wit:

“5. Claims for shortage, damage, must be made at
the time of delivery to consignee or agent, if container shows exterior signs
of damage or shortage. Claims for
non-delivery, misdelivery, loss or damage must be filed within 30 days from
accrual. Suits arising from shortage,
damage or loss, non-delivery or misdelivery shall be instituted within 60 days
from date of accrual of right of action. Failure to file claims or institute judicial proceedings as herein
provided constitutes waiver of claim or right of action. In no case shall carrier be liable for any
delay, non­delivery, misdelivery, loss of damage to cargo while cargo is not in
actual custody of carrier.”^[21]

In their reply thereto, herein petitioners, by their own
assertions that –

“2. In connection with Pars. 14 and 15 of
defendant Sweet Lines, Inc.’s Answer, plaintiffs state that such agreements are
what the Supreme Court considers as contracts of adhesion (see Sweet Lines,
Inc. vs. Hon. Bernardo Teves, et al., G.R. No. L-37750, May 19, 1978) and,
consequently, the provisions therein which are contrary to law and public
policy cannot be availed of by answering defendant as valid defenses.”^[22]

thereby failed to controvert the
existence of the bills of lading and the aforequoted provisions therein, hence
they impliedly admitted the same when they merely assailed the validity of
subject stipulations.

Petitioner’s failure to specifically deny the existence, much
less the genuineness and due execution, of the instruments in question amounts
to an admission. Judicial admissions,
verbal or written, made by the parties in the pleadings or in the course of the
trial or other proceedings in the same case are conclusive, no evidence being
required to prove the same, and cannot be contradicted unless shown to have
been made through palpable mistake or that no such admission was made.^[23]
Moreover, when the due execution and genuineness of an instrument are deemed
admitted because of the adverse party’s failure to make a specific verified
denial thereof, the instrument need not be presented formally in evidence for
it may be considered an admitted fact.^[24]

Even granting that petitioners’ averment in their reply amounts
to a denial, it has the procedural earmarks of what in the law on pleadings is
called a negative pregnant, that is, a denial pregnant with the admission of
the substantial facts in the pleading responded to which are not squarely
denied. It is in effect an admission of
the averment it is directed to.^[25]
Thus, while petitioners objected to the validity of such agreement for being
contrary to public policy, the existence of the bills of lading and said
stipulations were nevertheless impliedly admitted by them.

We find merit in respondent court’s comments that petitioners
failed to touch on the matter of the non-presentation of the bills of lading in
their brief and earlier on in the appellate proceedings in this case, hence it
is too late in the day to now allow the litigation to be overturned on that
score, for to do so would mean an over indulgence in technicalities. Hence, for the reasons already advanced, the
non-inclusion of the controverted bills of lading in the formal offer of
evidence cannot, under the facts of this particular case, be considered a fatal
procedural lapse as would bar respondent carrier from raising the defense of
prescription. Petitioner’s feigned
ignorance of the provisions of the bills of lading, particularly on the time
limitations for filing a claim and for commencing a suit in court, as their
excuse for non-compliance therewith does not deserve serious attention.

It is to be noted that the carriage of the cargo involved was
effected pursuant to an “Application for Delivery of Cargoes without
Original Bill of Lading” issued on May 20, 1977 in Davao City^[26]
with the notation therein that said application corresponds to and is subject
to the terms of bills of lading MD-25 and MD-26. It would be a safe assessment to interpret this to mean that,
sight unseen, petitioners acknowledged the existence of said bills of
lading. By having the cargo shipped on
respondent carrier’s vessel and later making a claim for loss on the basis of
the bills of lading, petitioners for all intents and purposes accepted said
bills. Having done so they are bound by
all stipulations contained therein.^[27]
Verily, as petitioners are suing for recovery on the contract, and in fact even
went as far as assailing its validity by categorizing it as a contract of
adhesion, then they necessarily admit that there is such a contract, their
knowledge of the existence of which with its attendant stipulations they cannot
now be allowed to deny.

On the issue of the
validity of the controverted paragraph 5 of the bills of lading above quoted
which unequi­vocally prescribes a time frame of thirty (30) days for filing a
claim with the carrier in case of loss of or damage to the cargo and sixty (60)
days from accrual of the right of action for instituting an action in court,
which periods must concur, petitioners posit that the alleged shorter
prescriptive period which is in the nature of a limitation on petitioners’
right of recovery is unreasonable and that SLI has the burden of proving
otherwise, citing the earlier case of Southern Lines, Inc. vs. Court of
Appeals, et al.,^[28] They postulate this on the theory that the
bills of lading containing the same constitute contracts of adhesion and are,
therefore, void for being contrary to public policy, supposedly pursuant to the
dictum in Sweet Lines, Inc. vs. Teves, et al.^[29]

Furthermore, they contend,
since the liability of private respondents has been clearly established, to bar
petitioners’ right of recovery on a mere technicality will pave the way for
unjust enrichment.^[30] Contrarily, SLI asserts and defends the
reasonableness of the time limitation within which claims should be filed with
the carrier; the necessity for the same, as this condition for the carrier’s
liability is uniformly adopted by nearly all shipping companies if they are to
survive the concomitant rigors and risks of the shipping industry; and the
countervailing balance afforded by such stipulation to the legal presumption of
negligence under which the carrier labors in the event of loss of or damage to
the cargo.^[31]

It has long been held
that Article 366 of the Code of Commerce applies not only to overland and river
transportation but also to maritime transportation.^[32] Moreover, we agree that in this
jurisdiction, as viewed from another angle, it is more accurate to state that
the filing of a claim with the carrier within the time limitation therefor
under Article 366 actually constitutes a condition precedent to the accrual of
a right of action against a carrier for damages caused to the merchandise. The shipper or the consignee must allege and
prove the fulfillment of the condition and if he omits such allegations and
proof, no right of action against the carrier can accrue in his favor. As the requirements in Article 366, restated
with a slight modification in the assailed paragraph 5 of the bills of lading,
are reasonable conditions precedent, they are not limitations of action.^[33] Being conditions precedent, their
performance must precede a suit for enforcement^[34] and the vesting of the right to file suit
does not take place until the happening of these conditions.^[35]

Now, before an action can
properly be commenced all the essential elements of the cause of action must be
in existence, that is, the cause of action must be complete. All valid conditions precedent to the
institution of the particular action, whether prescribed by statute, fixed by
agreement of the parties or implied by law must be performed or complied with
before commencing the action, unless the conduct of the adverse party has been
such as to prevent or waive performance or excuse non-performance of the condition.^[36]

It bears restating that a
right of action is the right to presently enforce a cause of action, while a
cause of action consists of the operative facts which give rise to such right
of action. The right of action does not
arise until the performance of all conditions precedent to the action and may
be taken away by the running of the statute of limitations, through estoppel,
or by other circumstances which do not affect the cause of action.^[37] Performance or fulfillment of all conditions
precedent upon which a right of action depends must be sufficiently alleged,^[38] considering that the burden of proof to show
that a party has a right of action is upon the person initiating the suit.^[39]

More particularly, where
the contract of shipment contains a reasonable requirement of giving notice of
loss of or injury to the goods, the giving of such notice is a condition
precedent to the action for loss or injury or the right to enforce the
carrier’s liability. Such requirement is
not an empty formalism. The fundamental
reason or purpose of such a stipulation is not to relieve the carrier from just
liability, but reasonably to inform it that the shipment has been damaged and
that it is charged with liability therefor, and to give it an opportunity to
examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an
investigation of a claim while the matter is fresh and easily investigated so
as to safeguard itself from false and fraudulent claims.^[40]

Stipulations in bills of lading
or other contracts of shipment which require notice of claim for loss of or
damage to goods shipped in order to impose liability on the carrier operate to
prevent the enforcement of the contract when not complied with, that is, notice
is a condition precedent and the carrier is not liable if notice is not given
in accordance with the stipulation,^[41] as the failure to comply with such a
stipulation in a contract of carriage with respect to notice of loss or claim
for damage bars recovery for the loss or damage suffered.^[42]

On the other hand, the
validity of a contractual limitation of time for filing the suit itself against
a carrier shorter than the statutory period therefor has generally been upheld
as such stipulation merely affects the shipper’s remedy and does not affect the
liability of the carrier. In the
absence of any statutory limitation and subject only to the requirement on the
reasonableness of the stipulated limitation period, the parties to a contract
of carriage may fix by agreement a shorter time for the bringing of suit on a
claim for the loss of or damage to the shipment than that provided by the
statute of limitations. Such limitation
is not contrary to public policy for it does not in any way defeat the complete
vestiture of the right to recover, but merely requires the assertion of that
right by action at an earlier period than would be necessary to defeat it
through the operation of the ordinary statute of limitations.^[43]

In the case at bar, there
is neither any showing of compliance by petitioners with the requirement for
the filing of a notice of claim within the prescribed period nor any allegation
to that effect. It may then be said
that while petitioners may possibly have a cause of action, for failure to
comply with the above condition precedent they lost whatever right of action
they may have in their favor or, taken in another sense, that remedial right or
right to relief had prescribed.^[44]

The shipment in question
was discharged into the custody of the consignee on May 15, 1977, and it was
from this date that petitioners’ cause of action accrued, with thirty (30) days
therefrom within which to file a claim with the carrier for any loss or damage
which may have been suffered by the cargo and thereby perfect their right of
action. The findings of respondent
court as supported by petitioners’ formal offer of evidence in the court below
show that the claim was filed with SLI only on April 28, 1978, way beyond the
period provided in the bills of lading^[45] and violative of the contractual provision,
the inevitable consequence of which is the loss of petitioners’ remedy or right
to sue. Even the filing of the
complaint on May 12, 1978 is of no remedial or practical consequence, since the
time limits for the filing thereof, whether viewed as a condition precedent or
as a prescriptive period, would in this case be productive of the same result,
that is, that petitioners had no right of action to begin with or, at any rate,
their claim was time-barred.

What the court finds
rather odd is the fact that petitioner TPI filed a provisional claim with
DVAPSI as early as June 14, 1977^[46] and, as found by the trial court, a survey
fixing the extent of loss of and/or damage to the cargo was conducted on July
8, 1977 at the instance of petitioners.^[47] If petitioners had the opportunity and
awareness to file such provisional claim and to cause a survey to be conducted
soon after the discharge of the cargo, then they could very easily have filed
the necessary formal, or even a provisional, claim with SLI itself^[48] within the stipulated period therefor,
instead of doing so only on April 28, 1978 despite the vessel’s arrival at the
port of destination on May 15, 1977. Their failure to timely act brings us to no inference other than the
fact that petitioners slept on their rights and they must now face the
consequences of such inaction.

The ratiocination of the
Court of Appeals on this aspect is worth reproducing:

x x x

“It must be noted, at this juncture, that the aforestated time
limitation in the presentation of claim for loss or damage, is but a
restatement of the rule prescribed under Art. 366 of the Code of Commerce which
reads as follows:

‘Art. 366. Within the
twenty-four hours following the receipt of the merchandise, the claim against
the carrier for damage or average which may be found therein upon opening the
packages, may be made, provided that the indications of the damage or average
which gives rise to the claim cannot be ascertained from the outside part of
the packages, in which case the claims shall be admitted only at the time of
the receipt.

‘After the periods mentioned have elapsed, or the transportation
charges have been paid, no claim shall be admitted against the carrier with
regard to the condition in which the goods transported were delivered.’

Gleanable therefrom is the fact that
subject stipulation even lengthened the period for presentation of claims
thereunder. Such modification has been
sanctioned by the Supreme Court. In the
case of Ong Yet (M)ua Hardware Co., Inc. vs. Mitsui Steamship Co., Ltd., et al., 59 O.G. No. 17, p. 2764, it
ruled that Art. 366 of the Code of
Commerce can be modified by a bill of lading prescribing the period of 90 days after arrival of the ship, for
filing of written claim with the carrier or agent, instead of the 24-hour time
limit after delivery provided in the aforecited legal provision.

“Tested, too, under
paragraph 5 of said Bill of Lading, it is crystal clear that the commencement
of the instant suit on May 12, 1978 was indeed fatally late. In view of the express provision that ‘suits
arising from x x x damage or loss shall be instituted within 60 days from
date of accrual of right of action,’ the present action necessarily fails
on ground of prescription.

‘In the absence of constitutional or statutory prohibition, it is
usually held or recognized that it is competent for the parties to a contract
of shipment to agree on a limitation of time shorter than the statutory period,
within which action for breach of the contract shall be brought, and such
limitation will be enforced if reasonable…’ (13 C.J.S. 496-497)

A perusal of the pertinent provisions of
law on the matter would disclose that there is no constitutional or statutory
prohibition infirming paragraph 5 of subject Bill of Lading. The stipulated period of 60 days is
reasonable enough for appellees to ascertain the facts and thereafter to sue,
if need be, and the 60-day period agreed upon by the parties which shortened
the statutory period within which to bring action for breach of contract is
valid and binding. x x x.”
(Emphasis in the original text.)^[49]

As explained above, the
shortened period for filing suit is not unreasonable and has in fact been
generally recognized to be a valid business practice in the shipping
industry. Petitioners’ advertence to
the Court’s holding in the Southern Lines case, supra, is futile as what was involved was a claim for
refund of excess payment. We ruled
therein that non-compliance with the requirement of filing a notice of claim
under Article 366 of the Code of Commerce does not affect the consignee’s right
of action against the carrier because said requirement applies only to cases
for recovery of damages on account of loss of or damage to cargo, not to an
action for refund of overpayment, and on the further consideration that neither
the Code of Commerce nor the bills of lading therein provided any time
limitation for suing for refund of money paid in excess, except only that it be
filed within a reasonable time.

The ruling in Sweet
Lines categorizing the stipulated limitation on venue of action provided
in the subject bill of lading as a contract of adhesion and, under the
circumstances therein, void for being contrary to public policy is
evidently likewise unavailing in view of the discrete environmental facts involved and the fact that the restriction therein
was unreasonable. In any case, Ong
Yiu vs. Court of Appeals, et al.,^[50] instructs us that “contracts of
adhesion wherein one party imposes a ready-made form of contract on the other x
x x are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it
entirely; if he adheres he gives his consent.” In the present case, not
even an allegation of ignorance of a party excuses non-compliance with the
contractual stipulations since the responsibility for ensuring full
comprehension of the provisions of a contract of carriage devolves not on the
carrier but on the owner, shipper, or consignee as the case may be.

While it is true that
substantial compliance with provisions on filing of claim for loss of or damage
to cargo may sometimes suffice, the invocation of such an assumption must be
viewed vis-a-vis the object or purpose which such a provision seeks to attain
and that is to afford the carrier a reasonable opportunity to determine the
merits and validity of the claim and to protect itself against unfounded
impositions.^[51] Petitioners’ would nevertheless adopt an
adamant posture hinged on the issuance by SLI of a “Report on Losses and
Damages,” dated May 15, 1977,^[52] from which petitioners theorize that this
charges private respondents with actual knowledge of the loss and damage
involved in the present case as would obviate the need for or render
superfluous the filing of a claim within the stipulated period.

Withal, it has merely to
be pointed out that the aforementioned report bears this notation at the lower
part thereof: “Damaged by Mla.
labor upon unloading; B/L noted at port of origin,” as an explanation for
the cause of loss of and/or damage to the cargo, together with an iterative
note stating that “(t)his Copy should be submitted together with your
claim invoice or receipt within 30 days from date of issue otherwise your claim
will not be honored.”

Moreover, knowledge on the part of the carrier of the loss of or
damage to the goods deducible from the issuance of said report is not equivalent to nor does it
approximate the legal purpose served by the filing of the requisite claim, that
is, to promptly apprise the carrier about a consignee’s intention to file a
claim and thus cause the prompt investigation of the veracity and merit thereof
for its protection. It would be an
unfair imposition to require the carrier, upon discovery in the process of
preparing the report on losses or damages of any and all such loss or damage, to presume the existence of a claim
against it when at that time the carrier is expectedly concerned merely with
accounting for each and every shipment and assessing its condition. Unless and until a notice of claim is therewith timely filed, the carrier
cannot be expected to presume that for every loss or damage tallied, a
corresponding claim therefor has been filed or is already in existence as would
alert it to the urgency for an immediate investigation of the soundness of the
claim. The report on losses and damages
is not the claim referred to and required by the bills of lading for it does
not fix responsibility for the loss or damage, but merely states the
condition of the goods shipped. The
claim contemplated herein, in whatever form, must be something more than a
notice that the goods have been lost or damaged; it must contain a claim for
compensation or indicate an intent to claim.^[53]

Thus, to put the legal effect of respondent carrier’s report on
losses or damages, the preparation of which is standard procedure upon
unloading of cargo at the port of destination,
on the same level as that of a notice of claim by imploring substantial
compliance is definitely far­fetched. Besides, the cited notation on the carrier’s report itself makes it
clear that the filing of a notice of claim in any case is imperative if carrier
is to be held liable at all for the loss of or damage to cargo.

Turning now to respondent
DVAPSI and considering that whatever
right of action petitioners may have against respondent carrier was lost due to their failure to seasonably file the
requisite claim, it would be awkward, to say the least, that by some convenient
process of elimination DVAPSI should proverbially be left holding the bag, and
it would be pure speculation to assume that DVAPSI is probably responsible for
the loss of or damage to cargo. Unlike
a common carrier, an arrastre operator does not labor under a presumption of
negligence in case of loss, destruction, or deterioration of goods discharged
into its custody. In other words, to
hold an arrastre operator liable for loss of and/or damage to goods entrusted
to it there must be preponderant evidence that it did not exercise due
diligence in the handling and care of the goods.

Petitioners failed to
pinpoint liability on any of the original defendants and in this seemingly wild
goose-chase, they cannot quite put their finger down on when, where, how
and under whose responsibility the loss or damage probably occurred, or as
stated in paragraph 8 of their basic complaint filed in the court below,
whether “(u)pon discharge of the cargoes from the original carrying
vessel, the SS ‘VISHVA YASH,” and/or upon discharge of the cargoes from
the interisland vessel the MV ‘SWEET LOVE,’ in Davao City and later while in
the custody of defendant arrastre operator.”^[54]

The testimony of
petitioners’ own witness, Roberto Cabato, Jr., Marine and Aviation Claims
Manager of petitioner Philamgen, was definitely inconclusive and the
responsibility for the loss or damage could still not be ascertained therefrom:

“Q   In
other words, Mr. Cabato, you only computed the loss on the basis of the figures
submitted to you and based on the documents like the survey certificate and the
certificate of the arrastre?

A     Yes,
sir.

Q    Therefore,
Mr. Cabato, you have no idea how or where these losses were incurred?

A     No,
sir.

x x x

Q    Mr.
Witness, you said that you processed and investigated the claim involving the
shipment in question. Is it not a fact
that in your processing and investigation you considered how the shipment was
transported? Where the losses could
have occurred and what is the extent of the respective responsibilities of the
bailees and/or carriers involved?

x x x

A     With
respect to the shipment being transported, we have of course to get into it in
order to check whether the shipment coming in to this port is in accordance
with the policy condition, like in this particular case, the shipment was
transported to Manila and transhipped through an interisland vessel in
accordance with the policy. With
respect to the losses, we have a general view where losses could have
occurred. Of course we will have to
consider the different bailees wherein the shipment must have passed through,
like the ocean vessel, the interisland vessel and the arrastre, but
definitely at that point and time we cannot determine the extent of each
liability. We are only interested
at that point and time in the liability as regards the underwriter in
accordance with the policy that we issued.

x x x

Q.   Mr.
Witness, from the documents, namely, the survey of Manila Adjusters and
Surveyors Company, the survey of Davao Arrastre contractor and the bills of
lading issued by the defendant Sweet Lines, will you be able to tell the
respective liabilities of the bailees and/or carriers concerned?

A     No,
sir.” (Underscoring ours.)^[55]

Neither did nor could the
trial court, much less the Court of Appeals, precisely establish the stage in
the course of the shipment when the goods were lost, destroyed or damaged. What can only be inferred from the factual
findings of the trial court is that by the time the cargo was discharged to
DVAPSI, loss or damage had already occurred and that the same could not have
possibly occurred while the same was in the custody of DVAPSI, as demonstrated
by the observations of the trial court quoted at the start of this opinion.

ACCORDINGLY, on the foregoing premises, the instant
petition is DENIED and the dismissal of the complaint in the court a quo as
decreed by respondent Court of Appeals in its challenged judgment is hereby
AFFIRMED.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, and Nocon, JJ., concur.

---

^[1]
Civil Case No. 115376, Regional Trial Court of Manila, Branch II.

^[2]
Annex F, Petition; Rollo, 47-49.

^[3]
Original Record, 88.

^[4]
Annex E, Petition; Rollo, 40; Judge Rosalio A. De Leon, presiding.

^[5]
C.A.-G.R. CV No. 04620; Per Justice Fidel P. Purisima, with Justices Segundino
Chua and Nicolas P. Lapeña, Jr., concurring; Annex F, Petition; Rollo,
41-55.

^[6]
Annex I, Petition; Rollo, 66-70.

^[7]Rollo,
10.

^[8]
Exhibit G; Original Record, 176.

^[9]
Exhibit R; Ibid., 197.

^[10]
Fireman’s Fund Insurance Company, Inc., et al., vs. Jamila &
Company, Inc., et al., 70 SCRA 323 (1976).

^[11]
National Development Company vs. Court of Appeals, et al., 164 SCRA 593
(1988).

^[12]
Rollo, 11.

^[13]
Comment of SLI; Rollo, 4-5.

^[14]
Comment of DVAPSI; Ibid., 148-149.

^[15]
Annex I, Petition; Rollo, 68.

^[16]
Vda. de Portugal, et al. vs. Intermediate Appellate Court, et al., 159
SCRA 178 (1988).

^[17]
Original Record, 31; Annex B, Petition; Rollo, 23.

^[18]
Sec. 7, Rule 8, Rules of Court.

^[19]
Sec. 8, id., Ibid.

^[20]
Toribio, et al. vs. Bidin, et al., 134 SCRA 162 (1985).

^[21]
Original Record, 31; Annex B, Petition; Rollo, 26.

^[22]
Ibid., 44; Annex C, id.; Ibid., 29.

^[23]
See Sec. 4, Rule 129, Rules of Court; Sta. Ana vs. Maliwat, et al., 24
SCRA 1018 (1968); Solivio vs. Court of Appeals, et al., 182 SCRA 119
(1990).

^[24]
Asia Banking Corporation vs. Olsen, 48 Phil. 529 (1925).

^[25]
61A Am. Jur. 2d, Pleadings 172-173; Galofa vs. Nee Bon Sing, 22 SCRA 48
(1968); Tamayo vs. Callejo, et al., 46 SCRA 27 (1972).

^[26]
Exhibits H and I; Original Record, 177-178.

^[27]
Sea-Land Service, Inc. vs. Intermediate Appellate Court, et al., 153
SCRA 552 (1987).

^[28]
4 SCRA 258 (1962).

^[29]
83 SCRA 361 (1978).

^[30]
Rollo, 11-13.

^[31]
Comment of SLI; Rollo, 102-103.

^[32]
Government of the Philippine Islands vs. Inchausti & Co:, 24 Phil.
315 (1913), citing Cordoba vs. Warner, Barnes & Co., 1 Phil. 7
(1901).

^[33]
Id.; Triton Insurance Company, Ltd. vs. Jose, 33 Phil. 194
(1916).

^[34]
Dikowski vs. Metropolitan Life Ins. Co., 24 A. 2d 173, 175, 128 N.J.L.
124.

^[35]
Newark Gas & Fuel Co. vs. City of Newark, 8 Ohio Dec. 418, 421, 7
Ohio N.P. 76.

^[36]
1 Am. Jur: 2d, Actions 608.

^[37]
Ibid., id., 541.

^[38]
61A Am. Jur. 2d, Pleading 89.

^[39]
13 C.J.S., Carriers 537.

^[40]
Ibid., 463, 508; 14 Am. Jur. 2d, Carriers 97; Cf. Roldan vs.
Lim Ponzo & Co., 37 Phil. 285 (1917); Consunji vs. Manila Port
Service, et al., 110 Phil 231 (1960).

^[41]
Ibid., 462.

^[42]
14 Am. Jur. 2d, Carriers 104-105.

^[43]
Ibid., id., 98, 117; Ang, et al. vs. Fulton
Fire Insurance Co., et al., 2 SCRA 945 (1961).

^[44]
There can be no right of action without a cause of action being first
established (see Español vs. The Chairman, etc. of the Philippine
Veterans Administration, (137 SCRA 314 [1985]). On the other hand, the cause of action is distinct from the
remedy (Tonn vs. Inner Shoe Tire Co., Tex. Civ. App., 260 S.W. 1078,
1080) and the cause of action may exist though the remedy does not (Chandler vs.
Horne, 23 Ohio App. 1, 154 N.E. 748, 750.)

^[45]
Annex F, Petition; Rollo, 52; Exhibit M, Original Record, 184.

^[46]
Exhibit N; Original Record, 186.

^[47]
Annex F, Petition; Rollo, 48.

^[48]
See Esso Standard Eastern, Inc. vs. Manila Railroad Co., 93 SCRA 307
(1979).

^[49]
Rollo, 52-54.

^[50]
91 SCRA 223 (1979).

^[51]
14 Am. Jur. 2d, Carriers 104-105.

^[52]
Exhibit J; Original Record, 180.

^[53]
14 Am. Jur, 2d, Carriers 106.

^[54]
Annex A, Petition; Rollo, 18-19.

^[55]
TSN, June 26, 1981, 16-19, 22.