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Regional Container Lines (RCL) of Singapore v. The Netherlands Insurance Co. (Philippines), Inc.

 

REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA SHIPPING AGENCY, petitioners, vs. THE NETHERLANDS INSURANCE CO. (PHILIPPINES), INC., respondent

G.R. No. 168151                |              September 4, 2009

 

FACTS:

On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic Telefunken Microelectronics Philippines. U-Freight Singapore, a forwarding agent based in Singapore, contracted the services of Pacific Eagle to transport the subject cargo. The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated Container. As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0 degree Celsius. Pacific Eagle then loaded the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle.

On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep its temperature constant. Fidel Rocha, Vice-President for Operations of Marines Adjustment Corporation, accompanied by two surveyors, conducted a protective survey of the cargo. They found that based on the temperature chart, the temperature reading was constant from October 18, 1995 to October 25, 1995 at 0 degree Celsius. However, at midnight of October 25, 1995 when the cargo had already been unloaded from the ship, the temperature fluctuated with a reading of 33 degree Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container.

On November 9, 1995, Temic received the shipment. It found the cargo completely damaged.

Netherlands Insurance filed a complaint for subrogation of insurance settlement  against “the unknown owner of M/V Piya Bhum” and TMS Ship Agencies (TMS), the latter thought to be the local agent of M/V Piya Bhum’s unknown owner.

Netherlands Insurance amended the  to implead EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U- Ocean  Inc., as additional defendants. A third amended complaint was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping Agencies.

The defendants all disclaimed liability for the damage caused to the cargo, citing several reasons why Netherland Insurance’s claims must be rejected. Specifically, RCL and EDSA Shipping denied negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the shipment to their co-defendants. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the consignee was invalid. By way of affirmative defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no cause of action, and is not the real party-in-interest, and that the claim is barred by laches/prescription.

The trial court dismissed the Civil Case. The trial court ruled that while there was valid subrogation, the defendants could not be held liable for the loss or damage, as their respective liabilities ended at the time of the discharge of the cargo from the ship at the Port of Manila.

The CA reversed the dismissal of the complaint against RCL and Edsa Shipping Agency.

RCL and EDSA Shipping disclaim any responsibility for the loss or damage to the goods in question. They contend that the cause of the damage to the cargo was the “fluctuation of the temperature in the reefer van,” which fluctuation occurred after the cargo had already been discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on board M/V Piya Bhum. As the cause of the damage to the cargo occurred after the same was already discharged from the vessel and was under the custody of the arrastre operator (International Container Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the presumption of negligence provided in Article 1735 of the Civil Code should not apply. What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which exempts the carrier from liability for loss or damage to the cargo when it is caused either by an act or omission of the shipper or by the character of the goods or defects in the packing or in the containers.