These were three consolidated petitions for review on certiorari assailing the decision of the Court of Appeals (CA), which affirmed with modification the decision of the regional trial Court ordering Westwind Shipping Corp (Westwind) and Asian Terminals Inc (ATI) to pay, jointly and severally, Philam Insurance Co Inc (Philam) the sum of PHP 633,957.15. On 15 April 1995, Nichimen Corp shipped 219 packages containing 120 units of brand new Nissan pickup trucks to Universal Motors Corp (Universal Motors) on the S/S Calayan Iris from Japan to Manila. The shipment, which had a declared value of USD 81,368 or PHP 29,400,000, was insured with Philam against all risks. On discharge, a number of the packages were found to be in bad order.

Philam, as the subrogee of Universal Motors, filed a complaint for damages against Westwind, ATI, and RF Revilla Customs Brokerage Inc before the regional trial Court. The Court rendered judgment in favour of Philam and ordered Westwind and ATI to pay Philam, jointly and severally, the sum of PHP 633,957.15 with interest. On appeal, the CA affirmed with modification the ruling of the regional trial Court. The CA directed Westwind and ATI to pay Philam, jointly and severally, the amount of PHP 190,684.48 with interest. The petitioner appealed to the Supreme Court.

Held: The Court affirms the decision of the CA, with modification of the interest rate on the damages awarded.

Philam's right of action has not prescribed. The Carriage of Goods by Sea Act (COGSA), or Public Act No 521 of the 74th US Congress, was accepted to be made applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by virtue of Commonwealth Act (CA) No 65. The prescriptive period for filing an action for the loss or damage of the goods under the COGSA is found in s 3(6). The S/S Calayan Iris arrived at the port of Manila on 20 April 1995, and the cargoes were discharged to the custody of ATI the next day. The goods were then withdrawn from the warehouse on 11 May 1995, and the last of the packages was delivered to Universal Motors on 17 May 1995. Prior to this, the latter filed a request for bad order survey on 12 May 1995. Yet, it was not until 4 August 1995 that Universal Motors filed a formal claim for damages against Westwind.

Even so, this Court has held in Insurance Co of North America v Asian Terminals Inc, GR No 180784, 666 SCRA 226 (CMI1494) that a request for, and the result of, a bad order examination, done within the period for furnishing notice of loss or damage to the carrier or its agent, serves the purpose of a claim. A claim is required to be filed within the period to afford the carrier or depositary reasonable opportunity and facilities to check the validity of the claims while facts are still fresh in the minds of the persons who took part in the transaction and documents are still available. Here, Universal Motors filed a request for bad order survey on 12 May 1995, even before all the packages could be unloaded to its warehouse.

Moreover, s 3(6) of COGSA clearly states that failure to comply with the notice requirement does not affect or prejudice the right of the shipper to bring suit within one year after delivery of the goods. Philam, as the subrogee of Universal Motors, filed the complaint for damages on 18 January 1996, just eight months after all the packages were delivered into its possession. Philam's action against Westwind and ATI was seasonably filed.

Section 2 of COGSA provides that under every contract of carriage of goods by the sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3(2) then states that among the carrier's responsibilities are to properly load, handle, stow, carry, keep, care for and discharge the goods carried.

It is settled in maritime law jurisprudence that cargoes, while being unloaded, generally remain under the custody of the carrier. The damage survey report of the survey conducted by Phil Navtech Services Inc reveals that the damage was caused by ATI stevedores due to overtightening of a cable sling hold during discharge from the vessel's hatch to the pier. Since the damage to the cargo was incurred during the discharge of the shipment and while under the supervision of the carrier, the latter is liable for the damage caused to the cargo.

This is not to say, however, that ATI is without liability for the damaged cargo. The functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession. Handling cargo is mainly the arrastre operator's principal work, so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody. [An arrastre is defined by the Philippine Ports Authority as a 'person/entity who/which performs portside cargo handling operations, e.g. receiving, handling, custody, security and delivery of cargo passing over piers, quays or wharves, transit sheds/warehouses and open storages within the jurisdictional area of responsibility of the authorized contractor/operator'.]