G.R. No. 143133 ; June 5, 2002
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE CO., INC., respondent.

FACTS

CMC Trading A.G. shipped 242 coils of prime cold rolled steel sheets from Hamburg, Germany, to Manila, consigned to Philippine Steel Trading Corporation, aboard the M/V “Anangel Sky.” Upon discharge at the Port of Manila, four coils were found to be in bad order and were declared a total loss by the consignee. The respondent insurer paid the consignee’s claim and, being subrogated to the latter’s rights, filed a complaint for damages against the petitioner common carriers. The petitioners denied liability, attributing the damage to pre-shipment conditions, inherent vice of the goods, or perils of the sea.
The Regional Trial Court dismissed the complaint, finding that the respondent failed to prove its case with the required quantum of proof. On appeal, the Court of Appeals reversed the trial court, ruling that the petitioners failed to overcome the presumption of negligence imposed on common carriers. The appellate court ordered the petitioners to pay the respondent the value of the damaged cargo, attorney’s fees, and costs.

ISSUE

The primary issues are: (1) whether the petitioners successfully rebutted the presumption of negligence as common carriers; (2) whether the notice of loss was timely filed; and (3) whether the package limitation of liability under the Carriage of Goods by Sea Act (COGSA) is applicable.

RULING

The Supreme Court denied the petition, affirming the CA’s ruling with modification on the interest rate. The Court held that the petitioners, as common carriers, are bound by law to observe extraordinary diligence in the carriage of goods. Proof of the goods’ delivery in good order to the carrier and their arrival at the destination in bad order constitutes prima facie evidence of the carrier’s fault or negligence. The petitioners failed to present clear and convincing evidence to overcome this presumption. Their defense of pre-shipment damage, based solely on a bill of lading notation stating “metal envelopes rust stained and slightly dented,” was insufficient to prove that the specific damage rendering the coils a total loss existed prior to loading.
On the second issue, the Court found the notice of loss to have been timely filed. The demand letter from the consignee, sent within days of the cargo survey, substantially complied with the requirement under Article 366 of the Code of Commerce. Regarding the third issue, the package limitation under COGSA was deemed inapplicable. The bill of lading contained the notation “L/C No. 90/02447,” which indicated that the shipper had declared a higher value for the goods through the letter of credit, thereby removing the shipment from the statutory limitation of liability.