G.R. No. L-6517 November 29, 1954
E. E. ELSER, INC., and ATLANTIC MUTUAL INSURANCE COMPANY, petitioners, vs. COURT OF APPEALS, INTERNATIONAL HARVESTER COMPANY OF THE PHILIPPINES and ISTHMIAN STEAMSHIP COMPANY, respondents.

FACTS

In December 1945, goods were shipped from New York to Manila on the S.S. Sea Hydra of Isthmian Steamship Company. The consignee, Udharam Bazar and Co., received the shipment except for one case of vanishing cream valued at P159.78. The goods were insured by Atlantic Mutual Insurance Co. The consignee claimed indemnity from the insurer and was paid the amount by the insurer’s agent, E. E. Elser Inc. The petitioners (the insurer and its agent) then filed a complaint to recover the loss. The Court of Appeals affirmed the trial court’s dismissal of the complaint, holding that the petitioners lost their right to press the claim against the carrier due to their failure to serve written notice of the claim within 30 days after becoming aware of the loss, as required by clause 18 of the bill of lading. The petitioners contend this finding is erroneous because the Carriage of Goods by Sea Act, made part of the bill of lading, governs the case.

ISSUE

Whether the requirement in clause 18 of the bill of lading for a written claim within 30 days is valid and binding, or if it is superseded by the provisions of the Carriage of Goods by Sea Act regarding the period for bringing suit.

RULING

The Supreme Court reversed the decision of the Court of Appeals. The Carriage of Goods by Sea Act, adopted via Commonwealth Act No. 65 and expressly incorporated into the bill of lading, governs. Section 3(6) of the Act provides that the carrier and the ship are discharged from liability unless suit is brought within one year after delivery of the goods, and that failure to give notice of loss or damage does not affect the right to bring suit within that one-year period. Under Section 3(8) of the Act, any clause in a contract of carriage lessening the carrier’s liability otherwise than as provided in the Act is null and void. Therefore, clause 18 of the bill of lading, which conditions liability on a written claim within 30 days, is null and void as it lessens liability contrary to the Act. The Court also held that even if the trade between the Philippines and the U.S. in 1945-1946 was not considered “foreign trade,” the Act still applies because the parties expressly agreed to subject the bill of lading to its provisions, as allowed by Section 13 of the Act. The action was brought within the one-year prescriptive period, so it has not prescribed. The notice given by petitioners on April 25, 1946, was sufficient to overcome any presumption of delivery. Respondents were ordered to pay petitioners the sum of P159.78 with legal interest from the filing of the complaint.