UCPB GENERAL INSURANCE CO., INC. vs. ABOITIZ SHIPPING CORP. ET. AL.

The 3 units of waste water treatment plant with accessories which were purchased by San
Miguel Corporation (SMC) arrived from US via “Scandutch Star” (a foreign carrier) at the
port of Manila. The “East Asiatic Co. Ltd.”, as freight forwarder, was in charge of
transshipment of the said transaction. Then it was transferred from Manila to Cebu via
Aboitiz Shipping (as the ship owner) with its freight forwarder Eagle Express Line. Upon
receiving by the SMC in their plant storage, one of the units was found to be damaged.
UCPB upon learning the same paid the equivalent value of the damage as the insurer of the
merchandise.

Subrogated by UCPB by virtue of insurance, it filed a claim for the damage suffered by SMC
due to contract of carriage with Aboitiz. The case was filed against the three defendants
namely Aboitiz Shipping (the ship owner), Eagle Express and East Asiatic (both freight
forwarders which are responsible for the transfer of the goods from the ship to land or vice
versa; via truck or other non-vessel operating common carrier)

Lower court decided in favor of UCPB making the defendants liable for payment of
indemnity due to the damage suffered by SMC. The law provides that if the goods are lost,
destroyed or deteriorated, common carriers are presumed to have been at fault or to have
acted negligently.

On appeal by the East Asiatic, being the sole appellant at that time, with its contention on
the ground of prescription, CA decided in favor of the East Asiatic which became final and
executory to such appellant only.

RTC ruled that Aboitiz and Eagle Express to be solidarily liable for the damage to the
cargo, to be paid to UCPB, there being negligence on the part of the carrier.

Thus, the remaining defendants(Eagle and Aboitiz) subsequently filed an appeal on the
ground that the right to claim for indemnity against the damage unit has already elapsed
pursuant to Art. 366 where they shall be informed of the said damage within 24hrs after
the receipt of the cargo.

In the CA, it ruled in favor of the defendants finding its contention tenable that there is no
more cause of action to speak of when such right had already prescribed pursuant to art
366 of code of commerce.

This prompts the appeal on the part of UCPB. They further alleged that the Art 366 of code
of commerce will not be applicable in this case because by revealing that such damage in
the cargo was sustained even before the transfer to the defendant's ship which proves
during the inspection of transshipment, there was already damage to the said unit where
one of the agents of the defendants was aware of for being present during the inspection.
Issues:

1. Whether or not UCPB can claim indemnity against Aboitiz Shipping for the damage to the
cargo.

2. Whether the knowledge of the defendant carrier of the damage to the cargo prior to its
transshipment will bar the applicability of Art. 366 of Code of Commerce, making them
liable.

Ruling:

SC sustained the ruling of the CA.

1. UCPB cannot claim for the indemnity of the damaged cargo since it failed to comply with
the requirement under Art. 366 of Code of Commerce that the claim be made within 24 hrs
aftr the receipt of the merchandise because obviously, the defendants were only notified
upon receipt of the complaint against them.

2. Even assuming arguendo that Art. 366 of Code of Commerce is not applicable in this case
for the fact that the damage to the cargo happened before the shipment to Aboitiz, the more
reason that the court shall relieve the defendants from liability because the damage did not
take place during the shipping from Manila to Cebu. Hence, no negligence can be imputed
to Aboitiz being the carrier in the case at bar.