As insurer of the consignee, BSFIL Technologies, Pioneer Insurance paid the amount of P195,505.65 after evaluating the claim made by BSFIL that some of its shipments were damaged when the shipment arrived in Manila on February 2, 2012. Thus, it was subrogated to all the rights of BSFIL, and demanded from the APL Co. Pte. Ltd. (APL) payment of the amount paid to BSFIL. When the demand went unheeded, Pioneer filed a complaint for sum of money against APL. Both the MeTC and the RTC ruled in favor of Pioneer, but the Court of Appeals reversed the lower courts’ decisions, ruling that under Clause 8 of the Bill of Lading between the parties, to which Pioneer, as subrogee, is bound, the carrier shall be absolved from any liability unless a case is filed within nine (9) months after the delivery of the goods. It explained that a shorter prescriptive period may be stipulated upon, provided it is reasonable. The CA opined that the nine-month prescriptive period set out in the Bill of Lading was reasonable and provided a sufficient period of time within which an action to recover any loss or damage arising from the contract of carriage may be instituted. Thus, the action is barred by prescription.
Pioneer in its appeal to the Supreme Court, Pioneer is of the view that its action was within the one year prescriptive period under the COGSA. It argues that the nine-month period provided under the Bill of Lading was inapplicable because the Bill of Lading itself states that in the event that such time period is found to be contrary to any law compulsorily applicable, then the period prescribed by such law shall then apply.
The Issue:
Whether or not the action is barred by prescription.
The Ruling:
The petition is meritorious.
It is true that in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. (Philippine American), the Court recognized that stipulated prescriptive periods shorter than their statutory counterparts are generally valid because they do not affect the liability of the carrier but merely affects the shipper’s remedy. The CA, nevertheless, erred in applying Philippine American in the case at bench as it does not fall squarely with the present circumstances.
It is elementary that a contract is the law between the parties and the obligations it carries must be complied with in good faith. In Norton Resources and Development Corporation v. All Asia Bank Corporation, the Court reiterated that when the terms of the contract are clear, its literal meaning shall control, to wit:
The cardinal rule in the interpretation of contracts is embodied in the first paragraph of Article 1370 of the Civil Code: “[i]f the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.” This provision is akin to the “plain meaning rule” applied by Pennsylvania courts, which assumes that the intent of the parties to an instrument is “embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement”. It also resembles the “four corners” rule, a principle which allows courts in some cases to search beneath the semantic surface for clues to meaning. A court’s purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous. A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic evidence. [Emphases supplied]
After a closer persual of the the Bill of Lading, the Court finds that its provisions are clear and unequivocal leaving no room for interpretation.
In the Bill of Lading, it was categorically stated that the carrier shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought in the proper forum within nine (9) months after delivery of the goods or the date when they should have been delivered. The same, however, is qualified in that when the said nine-month period is contrary to any law compulsory applicable, the period prescribed by the said law shall apply.
The present case involves lost or damaged cargo. It has long been settled that in case of loss or damage of cargoes, the one-year prescriptive period under the COGSA applies. It is at this juncture where the parties are at odds, with Pioneer Insurance claiming that the one-year prescriptive period under the COGSA governs; whereas APL insists that the nine-month prescriptive period under the Bill of Lading applies.
A reading of the Bill of Lading between the parties reveals that the nine-month prescriptive period is not applicable in all actions or claims. As an exception, the nine-month period is inapplicable when there is a different period provided by a law for a particular claim or action—unlike in Philippine American where the Bill of Lading stipulated a prescriptive period for actions without exceptions. Thus, it is readily apparent that the exception under the Bill of Lading became operative because there was a compulsory law applicable which provides for a different prescriptive period. Hence, strictly applying the terms of the Bill of Lading, the one-year prescriptive period under the COGSA should govern because the present case involves loss of goods or cargo. In finding so, the Court does not construe the Bill of Lading any further but merely applies its terms according to its plain and literal meaning.
WHEREFORE, the petition is GRANTED. The November 3, 2015 Decision of the Regional Trial Court, Branch 137, Makati City in Civil Case No. 15-403 is REINSTATED.
SO ORDERED.
MENDOZA, J.:
G. R. No. 226345, August 2, 2017, PIONEER INSURANCE AND SURETY CORPORATION, PETITIONER, VS. APL CO. PTE. LTD., RESPONDENT.
Citations omitted.
SEE ALSO:
The absence of premium payment negates an insurance contract…