G.R. No. 87434 August 5, 1992
PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC., petitioners, vs. SWEET LINES, INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. and HON. COURT OF APPEALS, respondents.

FACTS

Petitioners Philippine American General Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) filed a maritime suit on May 12, 1978 against respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI), among others, to recover the cost of lost or damaged cargo. The shipment consisted of 7,000 bags of Low Density Polyethylene consigned to TPI and insured by Philamgen. The cargo was transported by the foreign vessel SS “VISHVA YASH” to Manila and then transshipped to Davao City via SLI’s interisland carrier M/V “Sweet Love.” Upon discharge and delivery on May 15, 1977, a survey revealed only 5,820 bags were delivered in good order, with 1,080 bags lost, damaged, or shortlanded. Petitioners claimed the loss was due to the defendants’ negligence. Before trial, petitioners settled with the foreign carrier and its agent. The trial court rendered judgment in favor of petitioners, ordering SLI to pay P34,902.00 and SLI and DVAPSI to pay jointly and severally P49,747.55, plus attorney’s fees and costs. The Court of Appeals reversed the trial court’s decision on the ground of prescription, dismissing the complaint. The appellate court held that the action was barred for failure to comply with the prescriptive periods stipulated in the bills of lading issued by SLI, specifically requiring suits to be instituted within 60 days from accrual of the right of action. Petitioners filed this petition, arguing that the prescriptive period was not proven, that it is null and void if it exists, and that they substantially complied with it.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint on the ground of prescription based on the stipulation in the bills of lading requiring suits to be instituted within 60 days from accrual of the right of action.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the prescriptive period for filing the action was stipulated in the bills of lading issued by SLI, which required suits to be instituted within 60 days from the accrual of the right of action. The Court found that the existence and tenor of this stipulation were properly raised as an affirmative defense in SLI’s answer and were deemed admitted by petitioners for failure to specifically deny it under oath as an actionable document. The right of action accrued on May 15, 1977, when the cargo was discharged, but the complaint was filed only on May 12, 1978, which was beyond the 60-day period. The Court ruled that such a contractual shortening of the prescriptive period is valid and binding upon the parties, as it is not contrary to law, morals, good customs, public order, or public policy. The Court also held that petitioners did not substantially comply with the prescriptive period, as the filing of the complaint almost a year after the accrual of the right of action was a clear violation of the 60-day requirement. Consequently, the action had prescribed, and the dismissal of the complaint was proper.