Dole Philippines, Inc. vs. Maritime Company of the Philippines

The one-year prescriptive period under Section 3(6) of the Carriage of Goods by Sea Act is not tolled or interrupted by an extrajudicial written demand under Article 1155 of the Civil Code; the general provisions of the Civil Code cannot be applied to extend the period fixed by the special law. A written extrajudicial demand cannot operate to suspend prescription indefinitely, since tolling renews the period rather than suspending it.

Dole Philippines, Inc. was the consignee of a shipment of machine parts carried by Maritime Company of the Philippines, a common carrier by sea. The Carriage of Goods by Sea Act — U.S. Public Act No. 521 — was made applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by Commonwealth Act No. 65, approved October 22, 1936, and fixes a one-year period within which suit must be brought against the carrier. Article 18 of the Civil Code makes the Code's provisions suppletory to the Code of Commerce and special laws in matters governed by the latter, while Article 1176 provides that the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws in all matters not regulated by the Civil Code.

Dole Philippines, Inc. was the consignee of a shipment of machine parts carried by Maritime Company of the Philippines, the vessel and carrier that transported the cargo. The shipment was discharged in Dadiangas unto the custody of the consignee on December 18, 1971. On May 4, 1972, Dole filed with the defendant vessel a claim for the damages sustained by the cargo.

On June 11, 1973, Dole filed a complaint in the Court of First Instance of Manila, docketed as Civil Case No. 91043, embodying three causes of action involving three separate and different shipments. The third cause of action involved the cargo now subject of the present litigation. On December 11, 1974, Judge Serafin Cuevas issued an order dismissing the first two causes of action with prejudice and without pronouncement as to costs, because the parties had settled or compromised the claims involved therein. The third cause of action, covering the cargo subject of this case, was likewise dismissed but without prejudice, as it was not covered by the settlement. The dismissal of the complaint containing the three causes of action was upon a joint motion to dismiss filed by the parties. Because of the dismissal of the complaint in Civil Case No. 91043 with respect to the third cause of action without prejudice, Dole instituted the present complaint on January 6, 1975.

To the complaint in the subsequent action, Maritime filed an answer pleading, among other matters, the affirmative defense of prescription under the provisions of the Carriage of Goods by Sea Act. Following pre-trial, Maritime moved for a preliminary hearing on said defense, which the trial court granted and scheduled for April 27, 1977. The record before the Court does not show whether or not that hearing was held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss invoking once more the ground of prescription. Dole opposed the motion. After due consideration, the trial court resolved the matter in favor of Maritime and dismissed the complaint; Dole's motion for reconsideration was denied.

Dole conceded that its action is subject to the one-year period of limitation prescribed in Section 3(6) of the Carriage of Goods by Sea Act. Its position rested on the suppletory character of the Civil Code and on the effect of its written claim of May 4, 1972 as an extrajudicial demand that tolled the prescriptive period.

• Suppletory Application of the Civil Code: Dole argued that since the provisions of the Civil Code are, by express mandate of said Code, suppletory of deficiencies in the Code of Commerce and special laws in matters governed by the latter, and there being a patent deficiency with respect to the tolling of the prescriptive period in the Carriage of Goods by Sea Act, prescription under said Act is subject to the provisions of Article 1155 of the Civil Code on tolling.
• Extrajudicial Demand as Tolling Prescription: Dole maintained that its claim for loss or damage made on May 4, 1972 amounted to a written extrajudicial demand which would toll or interrupt prescription under Article 1155, and that it therefore operated to toll prescription also in actions under the Carriage of Goods by Sea Act.
• Article 1176 of the Civil Code: Dole advanced a further argument to much the same effect based on Article 1176 of the Civil Code, which provides that the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws in all matters not regulated by the Civil Code.
• Continuation of the Tolled Period: Dole contended that the prescriptive period remained tolled as of May 4, 1972, so that in legal contemplation the case was filed on January 6, 1975, well within the one-year prescriptive period in Section 3(6) of the Carriage of Goods by Sea Act.

• Prescription Under the Carriage of Goods by Sea Act: Maritime pleaded the affirmative defense of prescription under the provisions of the Carriage of Goods by Sea Act in its answer, sought a preliminary hearing on that defense after pre-trial, and thereafter filed a formal motion to dismiss invoking once more the ground of prescription.

• Applicability of Article 1155 of the Civil Code to the Carriage of Goods by Sea Act: Whether Article 1155 of the Civil Code, providing that the prescription of actions is interrupted by the making of an extrajudicial written demand by the creditor, is applicable to actions brought under the Carriage of Goods by Sea Act, which in its Section 3, paragraph 6, provides that the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.
• Effect of the Extrajudicial Demand on the Prescriptive Period: Whether Dole's claim for damage filed with Maritime on May 4, 1972 tolled the one-year prescriptive period such that its complaint filed on January 6, 1975 was instituted within the period fixed by Section 3(6) of the Carriage of Goods by Sea Act.

• Applicability of Article 1155 of the Civil Code to the Carriage of Goods by Sea Act: No. The general provisions of the Civil Code, including Article 1155, cannot be made to apply to a case governed by the Carriage of Goods by Sea Act, because such application would have the effect of extending the one-year period of prescription fixed in the law.
• Effect of the Extrajudicial Demand on the Prescriptive Period: No. Even assuming that a written extrajudicial demand tolls prescription under the Carriage of Goods by Sea Act, the renewed one-year period counted from May 4, 1972 lapsed before Dole filed Civil Case No. 91043 on June 11, 1973; tolling is not indefinite suspension.

• Applicability of Article 1155 of the Civil Code to the Carriage of Goods by Sea Act: Dole's arguments, though they might merit weightier consideration, had already received a definitive answer adverse to its position in The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs. American President Lines, Inc., where, in a parallel factual situation involving a suit to recover for damage to cargo shipped by vessel from Tokyo to Manila and filed more than two years after the consignee's receipt of the cargo, the contention that an extrajudicial demand tolled the prescriptive period under the Carriage of Goods by Sea Act was rejected. In that case the Court held that the general provisions of the new Civil Code, specifically Article 1155, cannot be made to apply, as such application would have the effect of extending the one-year period of prescription fixed in the law. The reason given was that it is desirable that matters affecting transportation of goods by sea be decided in as short a time as possible, and the application of Article 1155 would unnecessarily extend the period and permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose of the law. The suppletory character of the Civil Code under Article 18, and the reference in Article 1176 to the Code of Commerce and special laws, therefore do not authorize the importation of Article 1155 into a regime whose one-year limitation the special law itself has fixed.

• Effect of the Extrajudicial Demand on the Prescriptive Period: The Court held that no different result would obtain even if it were to accept the proposition that a written extrajudicial demand does toll prescription under the Carriage of Goods by Sea Act. The demand in this instance would be the claim for damage filed by Dole with Maritime on May 4, 1972. The effect of that demand would have been to renew the one-year prescriptive period from the date of its making; stated otherwise, under Dole's theory, when its claim was received by Maritime the one-year prescriptive period was interrupted — "tolled" would be the more precise term — and began to run anew from May 4, 1972, affording Dole another period of one year counted from that date within which to institute action on its claim for damage. Dole let the new period lapse without filing action, instituting Civil Case No. 91043 only on June 11, 1973, more than one month after that period had expired and its right of action had prescribed. Dole's contention that the prescriptive period remained tolled as of May 4, 1972, so that in legal contemplation the case was filed on January 6, 1975 well within the one-year prescriptive period, equated tolling with indefinite suspension; the contention is clearly fallacious and merits no consideration.

• Non-tolling of the COGSA one-year prescriptive period — The one-year period under Section 3(6) of the Carriage of Goods by Sea Act, within which suit must be brought against the carrier and the ship for loss or damage to cargo, is not interrupted or tolled by an extrajudicial written demand under Article 1155 of the Civil Code. The general provisions of the Civil Code cannot be applied to a case governed by COGSA, because such application would have the effect of extending the one-year period of prescription fixed in the law, contrary to the clear intent and purpose of the statute that matters affecting the transportation of goods by sea be decided in as short a time as possible.
• Suppletory application of the Civil Code does not extend a special law's prescriptive period — Although the Civil Code is, by its Article 18, suppletory to the Code of Commerce and special laws in matters governed by the latter, and although Article 1176 provides that the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws in all matters not regulated by the Civil Code, these provisions do not authorize the application of Article 1155 to COGSA. Suppletory application may fill a gap, but it may not be used to extend a period of prescription that the special law has itself fixed.
• Tolling distinguished from indefinite suspension — A written extrajudicial demand, assuming it tolls prescription, merely renews the prescriptive period from the date of the demand; it does not suspend the period indefinitely. The creditor must institute action within the renewed one-year period counted from the date of the demand, failing which the right of action prescribes. Equating tolling with indefinite suspension is fallacious.

• "Similarly, we now hold that in such a case the general provisions of the new Civil Code (Art. 1155) cannot be made to apply, as such application would have the effect of extending the one-year period of prescription fixed in the law. It is desirable that matters affecting transportation of goods by sea be decided in as short a time as possible; the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the period and permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose of the law." — This is the ratio decidendi of the decision, quoted from Yek Tong Lin and adopted by the Court; it states the controlling reason why Article 1155 of the Civil Code cannot be read into the Carriage of Goods by Sea Act.
• "We have already decided that in a case governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.)" — This passage from the Yek Tong Lin opinion, reproduced in the decision, establishes the antecedent ruling that general prescription provisions are excluded from COGSA-governed cases, which the Court extended to Article 1155 of the Civil Code.
• "The effect of that demand would have been to renew the one-year prescriptive period from the date of its making. Stated otherwise, under Dole's theory, when its claim was received by Maritime, the one-year prescriptive period was interrupted — 'tolled' would be the more precise term — and began to run anew from May 4, 1972, affording Dole another period of one (1) year counted from that date within which to institute action on its claim for damage." — This passage defines the Court's understanding of tolling as the renewal of the period rather than its suspension, and supplies the framework for the alternative holding that Dole's action had prescribed even on its own theory.
• "Dole's contention that the prescriptive period '*** remained tolled as of May 4, 1972 *** (and that) in legal contemplation *** (the) case (Civil Case No. 96353) was filed on January 6, 1975 *** well within the one-year prescriptive period in Sec. 3(6) of the Carriage of Goods by Sea Act.' equates tolling with indefinite suspension. It is clearly fallacious and merits no consideration." — This is the Court's rejection of the theory that a tolled period remains suspended until the creditor chooses to sue; it is the canonical statement distinguishing tolling from indefinite suspension.

• The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs. American President Lines, Inc., G.R. No. L-11081, April 30, 1958; 103 Phil. 1125 — Controlling precedent. The Court held that the question had already received a definitive answer adverse to Dole's position in this case, and quoted its ruling at length to the effect that Article 1155 of the new Civil Code cannot be applied to a case governed by the Carriage of Goods by Sea Act because it would extend the one-year prescriptive period fixed by law.
• Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953 — Cited within the Yek Tong Lin opinion reproduced in the decision; held that in a case governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be made to apply. It supplied the antecedent authority on which the exclusion of Article 1155 rested.

• Section 3, paragraph 6, Carriage of Goods by Sea Act (U.S. Public Act No. 521) — Provides that the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered, and that the failure to give notice of loss or damage shall not affect or prejudice the right of the shipper to bring suit within that one-year period. Dole conceded that its action was subject to this period, and the provision supplied the limitation that barred the complaint.
• Article 1155, Civil Code — Provides that the prescription of actions is interrupted by the making of an extrajudicial written demand by the creditor. Dole invoked it on the theory that its May 4, 1972 claim tolled the COGSA period; the Court held it inapplicable because its application would extend the one-year period fixed in the special law.
• Article 18, Civil Code — Makes the provisions of the Civil Code suppletory of deficiencies in the Code of Commerce and special laws in matters governed by the latter. Dole relied on it to supply the alleged deficiency in COGSA regarding tolling; the reliance was rejected.
• Article 1176, Civil Code — Provides that the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws in all matters not regulated by the Civil Code. Dole advanced it in support of the same suppletory argument, which the Court declined to sustain.
• Commonwealth Act No. 65 (approved October 22, 1936) — Made U.S. Public Act No. 521, the Carriage of Goods by Sea Act, applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade, thereby giving the one-year limitation its statutory force in this jurisdiction.

Yap (Chairman), Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.