G.R. No. L-27798 June 15, 1977
UNION CARBIDE PHILIPPINES, INC., plaintiff-appellant, vs. MANILA RAILROAD CO., substituted by the PHILIPPINE NATIONAL RAILWAYS, MANILA PORT SERVICE and AMERICAN STEAMSHIP AGENCIES, INC., defendants-appellees.

FACTS

The vessel Daishin Maru arrived in Manila on December 18, 1961, carrying 1,000 bags of synthetic resin consigned to General Base Metals, Inc., later sold to Union Carbide Philippines, Inc. The cargo was delivered to the arrastre operator, Manila Port Service, on December 19, 1961. Out of the shipment, 25 bags were noted as damaged upon discharge from the vessel, and 102 bags were later found missing. Additionally, the contents of 25 other bags were damaged or pilfered while in the custody of the arrastre operator. The total claimed loss amounted to P7,402.78.
Union Carbide, through its broker, filed a provisional claim with both the carrier’s agent and the arrastre operator on January 3, 1962, followed by formal claims on June 11, 1962. As the claims remained unpaid, Union Carbide filed a complaint in the Court of First Instance of Manila on December 21, 1962. The complaint joined two causes of action: one against the carrier’s agent under the Carriage of Goods by Sea Act for the 25 bags damaged on the vessel, and another against the arrastre operator under its management contract for the 102 missing bags and the 25 bags damaged in its custody.

ISSUE

The primary issues are: (1) whether the action against the carrier’s agent had prescribed under the Carriage of Goods by Sea Act; and (2) whether the action against the arrastre operator was timely filed under the terms of the arrastre service contract.

RULING

The Supreme Court affirmed the dismissal of the claim against the carrier’s agent but reversed the dismissal of the claim against the arrastre operator. Regarding the carrier, the Court applied Section 3(6) of the Carriage of Goods by Sea Act, which mandates that suit must be brought within one year from the delivery of the goods or the date they should have been delivered. The one-year prescriptive period commenced on December 19, 1961, when the cargo was delivered to the arrastre operator. Since the judicial action was filed on December 21, 1962, it was two days beyond the one-year limit and was therefore barred by prescription.
For the arrastre operator, the Court applied the stipulations in the management contract, which required a provisional claim to be filed within 15 days from the date of discharge of the last package. Union Carbide complied by filing its provisional claim on January 3, 1962, the 15th day from December 19, 1961. The contract further provides that if the arrastre operator does not act on the claim, the claimant has a total of two years from the date of discharge to file a court action. Since the arrastre operator neither formally rejected nor admitted liability, the two-year period controlled. The complaint, filed on December 21, 1962, was well within the two-year period ending on December 19, 1963. Consequently, the action against the arrastre operator was timely. The Court held the arrastre operator liable for the value of the 127 bags (102 missing and 25 damaged in its custody) amounting to P6,185.22, plus interest and attorney’s fees.