G.R. No. 171468 and G.R. No. 174241; August 24, 2011
Case Parties/Title:

NEW WORLD INTERNATIONAL DEVELOPMENT (PHILS.), INC., Petitioner, vs. NYK-FILJAPAN SHIPPING CORP., LEP PROFIT INTERNATIONAL, INC. (ORD), LEP INTERNATIONAL PHILIPPINES, INC., DMT CORP., ADVATECH INDUSTRIES, INC., MARINA PORT SERVICES, INC., SERBROS CARRIER CORPORATION, and SEABOARD-EASTERN INSURANCE CO., INC., Respondents. (G.R. No. 171468)
NEW WORLD INTERNATIONAL DEVELOPMENT (PHILS.), INC., Petitioner, vs. SEABOARD-EASTERN INSURANCE CO., INC., Respondent. (G.R. No. 174241)

FACTS

Petitioner New World International Development (Phils.), Inc. purchased three emergency generator sets from DMT Corporation through its agent, Advatech Industries, Inc. The shipment originated in Wisconsin, USA, and was transported via truck to LEP Profit International, Inc. in Chicago, then by train to Oakland, California. There, it was loaded onto the vessel S/S California Luna V59, owned and operated by respondent NYK Fil-Japan Shipping Corporation, which issued a clean bill of lading. The shipment was transshipped in Hong Kong to another NYK vessel, S/S ACX Ruby. During the voyage to Manila, the vessel encountered typhoon Kadiang. Upon arrival at Manila South Harbor on October 5, 1993, the captain filed a sea protest regarding loss and damage to the cargo. The arrastre operator, Marina Port Services, Inc., received the shipment on October 7, 1993, noting external damage on two of the three container vans. After customs clearance, petitioner’s broker, Serbros Carrier Corporation, withdrew the shipment on October 20, 1993, and delivered it to petitioner’s job site. An inspection revealed all three generator sets were extensively damaged and beyond repair. Petitioner demanded compensation from various respondents, including its insurer, Seaboard-Eastern Insurance Co., Inc. Seaboard required petitioner to submit an itemized list of damaged items for claim processing, which petitioner refused, arguing it was not required under the policy. Seaboard consequently refused to process the claim. Petitioner filed a complaint for specific performance and damages on October 11, 1994. The Regional Trial Court (RTC) held only NYK liable for negligence but dismissed the claim against it as barred by the one-year prescriptive period under the Carriage of Goods by Sea Act (COGSA), counting from the date of delivery to the arrastre operator (October 7, 1993). The RTC also absolved Seaboard, citing petitioner’s refusal to submit the required itemized list and the prejudicial effect of the late filing on subrogation rights. The Court of Appeals (CA) initially affirmed the RTC but held petitioner could still claim from Seaboard under the Insurance Code, deeming the itemized list requirement unreasonable and the COGSA prescriptive period inapplicable. Upon Seaboard’s motion for reconsideration, the CA amended its decision, reversing itself and holding the itemized list requirement was reasonable and that the COGSA prescriptive period applied to Seaboard as a subrogee. Petitioner filed separate petitions for review assailing the CA’s original decision (G.R. No. 171468) and its amended decision (G.R. No. 174241).

ISSUE

1. In G.R. No. 171468, whether the CA erred in affirming the RTC’s release from liability of respondents DMT, Advatech, LEP, LEP Profit, Marina, and Serbros.
2. In G.R. No. 174241:
a. Whether the CA erred in ruling that Seaboard’s request for an itemized list was a reasonable imposition and did not violate the insurance contract.
b. Whether the CA erred in failing to rule that the one-year COGSA prescriptive period does not apply to petitioner’s claim against Seaboard.

RULING

1. In G.R. No. 171468: The Supreme Court denied the petition. The issue of which party incurred negligence is factual, and petitioner failed to show any exception warranting a review of the lower courts’ factual findings. The Court upheld the concurrent findings of the RTC and CA that the generator sets were totally damaged during the typhoon on NYK’s vessel due to the carrier’s negligence in proceeding despite the adverse weather. The typhoon, an exempting cause under Article 1734 of the Civil Code, did not automatically relieve NYK of liability, as it failed to prove the typhoon was the proximate and only cause and that it exercised due diligence to prevent or minimize the loss.
2. In G.R. No. 174241:
a. The Supreme Court granted the petition. The requirement of an itemized list was not a substantial issue because the record showed petitioner had complied with the documentary requirements under the marine open (all-risk) insurance policy. The policy insured against all conceivable losses unless excluded. Seaboard failed to show the loss fell within any policy exception or explain why the documents already submitted (Supplier’s Invoice, Packing List, Bill of Lading, etc.) were insufficient to verify the damage. The request for an itemized list was an additional requirement not stipulated in the policy.
b. The Court ruled that the one-year prescriptive period under COGSA does not apply to the insurance claim between petitioner and Seaboard. The relationship is governed by the Insurance Code, not COGSA. The prescriptive period for filing a claim under the insurance policy is governed by the Insurance Code or the policy terms themselves, not by COGSA’s limitation for actions against the carrier.