Wallem Philippines Shipping, Inc. vs. S.R. Farms, Inc.

An amended complaint impleading a new defendant does not relate back to the date of the original complaint for purposes of the one‑year prescriptive period under the Carriage of Goods by Sea Act; thus, an action against a ship agent filed beyond one year from delivery of the goods is barred.

On March 25, 1992, Continental Enterprises, Ltd. loaded on board the vessel M/V “Hui Yang” at Bedi Bunder, India, a shipment of Indian Soya Bean Meal for transportation and delivery to Manila, with respondent S.R. Farms, Inc. as consignee. The vessel was owned by Conti‑Feed & Maritime Pvt. Ltd., and petitioner Wallem Philippines Shipping, Inc. acted as its ship agent. The shipment arrived at the Port of Manila on April 11, 1992, and was completely discharged into receiving barges by April 15, 1992. A shortage of 80.467 metric tons was discovered through a draft survey conducted at respondent’s instance. Respondent initially filed a complaint for damages against the vessel owner, an incorrect ship agent, the arrastre operator, and the customs broker. Petitioner Wallem was later impleaded as the correct ship agent in an amended complaint.

• The Shipment: On March 25, 1992, Continental Enterprises, Ltd. loaded on board M/V “Hui Yang” at Bedi Bunder, India, a shipment of Indian Soya Bean Meal weighing 1,100 metric tons, for carriage to Manila. Respondent S.R. Farms, Inc. was the consignee and notify party under Bill of Lading No. BEDI 4. The vessel was owned and operated by Conti‑Feed & Maritime Pvt. Ltd., and petitioner Wallem Philippines Shipping, Inc. was its ship agent. The subject cargo formed part of a larger bulk shipment of Indian Soya Bean Meal and India Rapeseed Meal destined for multiple consignees, including San Miguel Corporation and Vitarich Corporation.

• Discharge and Shortage: The vessel arrived at the Port of Manila on April 11, 1992, and berthed at Pier 7 South Harbor. Discharge into the receiving barges NorthFront‑333 and NorthFront‑444 was performed solely by Ocean Terminal Services, Inc. (OTSI) using its own manpower and equipment, without participation of the vessel’s crew, under good and fair weather conditions. Discharge was completed on April 15, 1992.

• Survey and Notice: At respondent’s instance, cargo surveyor Lorenzo Bituin of Erne Maritime and Allied Services, Co. Inc. conducted a draft survey of the barges. The survey indicated that only 1,019.53 metric tons were unloaded, resulting in a shortage of 80.467 metric tons compared to the bill of lading quantity. A Certificate of Discharge dated April 15, 1992 was issued, and the findings were embodied in a Report of Superintendence and a Barge Survey Report. Respondent did not give written notice of loss to petitioner or the carrier within three days of discharge.

• Filing of Suit: Respondent initially filed a complaint for damages on March 11, 1993, naming Conti‑Feed, RCS Shipping Agencies, Inc. (the supposed ship agent), OTSI, and Cargo Trade as defendants. Petitioner Wallem was impleaded for the first time in an Amended Complaint filed on June 7, 1993, after respondent discovered that Wallem, not RCS, was the actual ship agent. The Amended Complaint was filed one year, one month, and twenty‑three days after the cargo had been fully discharged on April 15, 1992.

• Prescription and Notice under COGSA: Petitioner maintained that respondent’s claim was already time‑barred under Section 3(6) of the Carriage of Goods by Sea Act. The one‑year prescriptive period began on April 15, 1992 when the cargo was fully discharged and expired on April 15, 1993. Because the Amended Complaint impleading petitioner was filed only on June 7, 1993, the action had prescribed. Petitioner further argued that respondent waived its right of action by failing to give written notice of loss within three days from discharge as required by the same provision.

• Inapplicability of the Presumption of Negligence: Petitioner argued that the Court of Appeals erred in applying the presumption of negligence under Article 1735 of the Civil Code because no loss, shortage, or short‑delivery actually occurred.

• Absence of Responsibility for Loading/Discharging: Assuming a shortage existed, petitioner contended it was not responsible for loading or discharging operations and could not be charged with negligence.

• Procedural Errors in CA’s Modification: Petitioner asserted that the Court of Appeals erred in granting respondent’s Motion for a More Definite Dispositive Portion because it was filed beyond the 15‑day period from receipt of the decision, and in inserting a specific monetary value for the alleged shortage in the absence of any factual finding on the exact amount.

• Timeliness of Action: Respondent argued that the suit for damages was filed on March 11, 1993, which was within one year from the vessel’s arrival at the Port of Manila on April 11, 1992, or from the completion of discharge on April 15, 1992. Thus, the action was brought before the expiration of the prescriptive period.

• Relation Back of Amendment: Respondent maintained that the Amended Complaint merely corrected the identity of the ship agent and should therefore relate back to the date of the original complaint, making the action against petitioner timely.

• Prescription: Whether the claim against petitioner Wallem Philippines Shipping, Inc. was barred by the one‑year prescriptive period under Section 3(6) of the Carriage of Goods by Sea Act, considering that the Amended Complaint impleading petitioner was filed more than one year after discharge of the cargo and whether the amendment related back to the date of the original complaint.

• Prescription: The action against petitioner had prescribed. The one‑year prescriptive period under Section 3(6) of the Carriage of Goods by Sea Act commenced on April 15, 1992, when the cargo was completely discharged from the vessel, and expired on April 15, 1993. While the original complaint was filed on March 11, 1993, petitioner was not impleaded therein. Petitioner was made a defendant only in the Amended Complaint filed on June 7, 1993, beyond the one‑year period. The settled rule is that the filing of an amended pleading does not retroact to the date of the original complaint; the statute of limitation continues to run until the amendment is filed. Although an amendment that merely supplements and amplifies facts originally alleged may relate back to the commencement of the action, this exception does not apply to a party impleaded for the first time in the amended complaint. The curative and retroactive effect of an amended complaint does not benefit a newly added defendant. Accordingly, the complaint against petitioner was dismissed.

• Prescriptive period under the Carriage of Goods by Sea Act — Under Section 3(6) of COGSA, the carrier and the ship are discharged from all liability for 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. Failure to give written notice of loss within three days of delivery does not prejudice the shipper’s right to sue within the one‑year period. The one‑year period is a strict limitation that extinguishes the remedy if not timely pursued.

• Non‑retroactivity of an amended complaint as to newly impleaded defendants — The filing of an amended pleading does not relate back to the date of the original complaint for purposes of the statute of limitations; the prescriptive period continues to run until the amendment is submitted. The exception that an amendment merely supplementing or amplifying facts originally alleged relates back to the commencement of the action does not apply to a defendant impleaded for the first time in the amended complaint. An action brought against a party added after the prescriptive period has lapsed is barred.

• “The settled rule is that the filing of an amended pleading does not retroact to the date of the filing of the original; hence, the statute of limitation runs until the submission of the amendment.”

• “It is true that, as an exception, this Court has held that an amendment which merely supplements and amplifies facts originally alleged in the complaint relates back to the date of the commencement of the action and is not barred by the statute of limitations which expired after the service of the original complaint. The exception, however, would not apply to the party impleaded for the first time in the amended complaint.”

• Section 3(6), COGSA: “In any event, 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….”

• Loadstar Shipping Co., Inc. v. Court of Appeals, 373 Phil. 976 (1999) — Applied suppletorily: the one‑year prescriptive period under COGSA was held to govern claims for loss of or damage to cargo during transit, even where the governing law is not exclusively COGSA.

• Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc., 432 Phil. 567 (2002) — Cited for the rule that failure to give notice of loss within three days does not bar recovery if suit is filed within one year.

• Aetna Insurance Co. v. Luzon Stevedoring Corporation, G.R. No. L‑25266, January 15, 1975, 62 SCRA 11 — Followed: an amended complaint impleading a new defendant after the prescriptive period had elapsed was dismissed on the ground of prescription; the amendment did not relate back.

• Seno v. Mangubat, G.R. No. L‑44339, December 2, 1987, 156 SCRA 113; Republic v. Sandiganbayan, G.R. Nos. 112708‑09, March 29, 1996, 255 SCRA 438 — Cited to support the rule that the relation‑back doctrine does not apply to a party impleaded for the first time in an amended complaint.

• Section 3(6), Carriage of Goods by Sea Act (COGSA) — Establishes the requirement that suit for loss or damage to cargo must be brought within one year after delivery or the date when the goods should have been delivered, and provides that failure to give notice of loss within three days does not affect the right to bring suit within the one‑year period. Applied as the governing prescriptive provision in the case.

Associate Justice Antonio T. Carpio (Chairperson), Associate Justice Antonio Eduardo B. Nachura, Associate Justice Roberto A. Abad, Associate Justice Jose Catral Mendoza.