11/9/2017 G.R. No.

L-16567

G.R.No.L16567March27,1961

DELGADOBROTHERS,INC.,petitioner,
vs.

HOMEINSURANCECOMPANYandTHECOURTOFAPPEALS,respondents.

LeocadiodeAsisandA.C.Cruzforpetitioner.
WilliamH.Quashaforrespondents.

BARRERA,J.:

ThisisanappealbycertioraritoreviewthedecisionoftheCourtofAppeals(inCAG.R.No.20441R),reversing
thejudgmentofdismissaloftheCourtofFirstInstanceofManila(inCivilCaseNo.29144)and,instead,ordering
petitionerdefendantDelgadoBrothers,Inc.topaytorespondentplaintiffHomeInsuranceCompany,thesumof
P1,436.86,plus6%perannuminterestfromthecommencementoftheactionuntilfullypaid.

On March 7, 1956, respondent Home Insurance Company filed with the Court of First Instance of Manila a
complaintagainstpetitionerDelgadoBrothers,Inc.allegingthatonFebruary17,1955,VictorBijou&Co.of14
East37thStreet,NewYork16,NewYork,U.S.A.,shippedatNewYorkforManilaaboardthevesselS.S.Leoville
and consigned to the Judy Philippines, Inc. of Manila, a shipment of 1 case Linen Handkerchiefs and 2 cases
cottonpiecegoods,forwhich,theNewYorkagentofsaidvessel,theBarberSteamshipLines,Inc.,issuedBillof
LadingNo.119thatsaidshipmentasinsuredwithhereinrespondentbytheshipperand/orconsigneethatsaid
vesselarrivedatthePortofManilaonMarch30,1955and,thereafter,saidshipmentwasunloadedcompleteand
in good order from said vessel by petitioner, but the latter delivered the same to the consignee with 1 case of
Linen Handkerchiefs in bad order, with a shortage of 503 yards of Linen Print Handkerchiefs, to the prejudice,
lossanddamageofshipperandorconsigneeinthesumofP1,287.20thattheshipperand/orconsigneefiledits
claimwithpetitionerforsaidlossinthesumof$713.08(P1,436.86)andsincerespondentdentpaidtheamount
to the shipper and\or consignee, the former was subrogated to the shipper's and/or consignee's rights and
interests that notwithstanding respondent's claim against petitioner, the latter failed and refused to pay the
shipperand/orconsigneeand/orrespondentthetotalclaimofP1,287.20andthatasitresultofpetitioner'sgross
andevidentbadfaithtopaytheclaimoftheshipperand/orconsigneeand/orrespondent,itwascompelledtofile
theCaseandwillincurattorney'sfeesinthesumofP478.95.Respondentprayedthatpetitionerpaytoitthesum
ofP1,287.20,withlegalinterestthereonfromthefilingofthecomplaintuntilfully,paidP149.66,thedifference
between P1,436.86 paid by respondent to the shipper and/or consignee and the said sum of P1,287.20 and
P478.95asattorney'sfees,pluscosts.

Tothiscomplaint,petitionerfileditsansweronMarch27,1956,allegingasspecialdefensethatsincenoclaim
whatsoeverwasfiledbyrespondentortheconsignee,ortheirrepresentativesagainstpetitionerwithinthe15day
periodfromthedateofthearrivalofthegoodsbeforetheycouldfileasuitinthecourtofproperjurisdictionwithin
1yearfromthedateofsaidarrivalatthePortofManila,petitioneriscompletelyrelievedandreleasedofanyand
allliabilityforlossordamageunderthelawandinaccordancewiththepertinentprovisionsofthemanagement
ContractwiththeBureauofCustoms,coveringtheoperationoftheArrastreServiceforthePortofManilaand
that petitioner in no way acts as an agent of the carrying vessel or of the importer or consignee. Petitioner,
therefore,prayedforthedismissalofrespondent'scomplaint.

On October 16, 1956, petitioner filed a motion to dismiss the complaint, on the ground that "the court has no
jurisdiction over the subject matter of the complaint", to which, respondent filed an opposition on October 19,
1956, alleging that since the case is an action in admiralty, it is within the original jurisdiction of the court. On
October20,1956,thecourtissuedanorderdenyingpetitioner'smotiontodismiss.

Thecasewas,thereafter,triedand,aftertrial,thecourt,onMarch6,1957,renderedadecisiondismissingthe
case and absolving petitioner from liability to respondent, not on the ground of lack of jurisdiction raised by
petitionerdefendant,butonthemeritsofthelatter'sspecialdefensesinvokedinitsanswer.

Not satisfied with said decision, respondent appealed to the Court of Appeals which court, on December 29,
1959,renderedasalreadyadvertedto,adecisionreversingthejudgmentoftheCourtofFirstInstanceofManila
andorderingpetitionertopaytorespondentthesumofP1,436.86,plus6%perannuminterestthereonfromthe
commencementoftheactionuntilfullypaid.Hence,thisappeal.

Petitioner,inthisinstance,claimsthattheCourtofAppeals(asdidtheCourtofFirstInstanceofManila)erredin
notdismissingrespondent'scomplaintonthespecificgroundthatit(CourtofFirstInstance)hadnojurisdiction
over the subject matter of the action, the same not being an admiralty case, and the amount sought to be
recoveredfallingwithintheexclusiveoriginaljurisdictionoftheMunicipalCourtofManila.

Appellant'scontentionismeritorious.InthecaseofMacondray&Company,Inc.v.DelgadoBrothers,Inc.(G.R.
No.L13116,prom.April28,1960),thefactsandissuesofwhichareidentical,mutatismutandis,tothecaseat
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bar,weheld:

Thecaseatbardoesnotdealwithanymaritimeorwiththeadministrationandapplicationofanymaritime
law.Ascustodianofthesixtyeight(68)cartonsofpaintsithadreceivedfromtheMSPleasantville,itwas
defendant'sduty,likethatofanyordinarydepositary,totakegoodcareofsaidgoodsandtoturnthesame
overtothepartyentitledtoitspossession,subjecttosuchqualificationsasmayhavevalidlybeenimposed
inthecontractbetweenthepartiesconcerned.Suchdutyonthepartofthedefendantwouldbethesameif
the final destination of the goods were Manila, not Iloilo, and the goods had not been imported from
anotherstate.Theonlyissuesraisedinthepleadingsare(1)whetherornotdefendanthadfullydischarged
itsobligationtodelivertheaforementionedsixtyeight(68)cartonsofpaintand(2)inthenegativecase,
the amount of indemnity due the plaintiff therefor.The determination of those questions does not require
theapplicationofanymaritimelawandcannotaffecteithernavigationormaritimecommerce.Theforeign
originofthegoodsisundertheattendingcircumstancesimmaterialtothelawapplicabletothiscase
or the rights of the parties herein, or the procedure for the settlement of their disputes. Indeed, it is well
settledthat

Incaseofcontroversyinvolvingbothmaritimeandnonmaritimesubjectmatter,wheretheprincipalmatter
involvedbelongstothejurisdictionofacourtofcommonlaworofequity,admiraltywillnottakecognizance
of incidental maritime matters connected therewith but will relegate the whole controversy to the
appropriatetribunal.(2C.J.S.66.).(Emphasissupplied.)

Respondent, however, submits that the abovequoted ruling is wrong and urges a reexamination of the issue,
arguing that petitioner's arrastre service is maritime in nature and, therefore, actions against petitioner arrastre
operatorproperlycomeunderthejurisdictionoftheCourtofFirstInstanceofManila.

Wehavecarefullyconsideredrespondent'sargumentbutfoundnothingtojustifyadeparturefromourconclusion
in the Macondray case, supra. Section 2 of the Management Contract entered into between petitioner an the
BureauofCustomsonOctober21,1950(effectiveJanuary1,1951),readsasfollows:

2.Duringtheperiodwhilethisagreementremainsinforceandeffect,theCONTRACTOR(hereinpetitioner
Delgado Brothers, Inc.) shall be, and the shall manager of the Arrastre Service at the Port of Manila,
subjectalways,however,tothetermsconditions,restrictions,subjections,supervisionsandprovisionsin
this agreement contained, with the exclusive right or privilege of receiving, handling, caring for, and
delivering all merchandise, imported and exported, upon or passing over, the Philippine Government
ownedwharvesandpiersinthePortofManilaasalso,therecordingorcheckingofallmerchandisewhich
maybedeliveredtothePortofManilaatshipside,exceptcoal,lumberandfirebricksinquantitycasecrude
oilandkeroseneandgasolineinlotsofovertenthousandcasesoritsequivalent,andwholecargoesofon
commoditywhenconsignedtooneconsigneeonlyashereafterprovided,andingeneraltofurnishlighting
andwaterservicesandotherincidentalservices,inordertoundertakesuchworkandwithfullpowertofix
thenumberandsalariesof,andtoappointanddismiss,allofficers,employeesandlaborerstemporaryand
permanent, which may be necessary, and to do all acts and things which said CONTRACTOR may
considerconclusivetotheinterestsoftheArrastreService.(Emphasissupplied.)

Underthisprovision,petitioner'sfunctionsasarrastreoperatorare(1)toreceive,handle,carefor,anddeliverall
merchandiseimportedandexported,uponorpassingoverGovernmentownedwharvesandpiersinthePortof
Manila,(2)aswellastorecordorcheekallmerchandisewhichmaybedeliveredtosaidportatshipside,andin
general, (3) to furnish light and water services and other incidental services in order to undertake its arrastre
service.Notethatthereisnothinginthosefunctionswhichrelatetothetradeandbusinessofnavigation(1Am.
Jur.564),nortotheuseoroperationofvessels(Id.at568).Bothastothenatureofthefunctionsandtheplace
oftheirperformance(uponwharvesandpiersshipside),petitioner'sservicesareclearlynotmaritime.Asweheld
intheMacondraycase,theyarenodifferentfromthoseofadepositaryorwarehouseman.Granting,arguendo,
that petitioner's arrastre service depends on, assists, or furthers maritime transportation (Id. at 565), it may be
deemed merely incidental to its aforementioned functions as arrastre operator and does not, thereby, make
petitioner'sarrastreservicemaritimeincharacter.

To give admiralty jurisdiction over a contract as maritime, such contract must relate to the trade and
businessoftheseaitmustbeessentiallyandfullymaritimeinitscharacteritmustprovideformaritime
services, maritime transactions, or maritime casualties. (The James T. Furber, 129 Fed. 808, cited in 66
L.R.A.212emphasissupplied.)Seealso2C.J.S.66,supra.

ThecaseofCebuArrastreServicev.CollectorofInternalRevenue(G.R.No.L7444,prom.May30,1956)cited
by respondent is irrelevant to the present case, considering that the functions of the Cebu Arrastre Service
involve the loading, and unloading of coastwise vessels calling at the port of Cebu and, are, therefore, of a
"stevedore", subject to the percentage tax under Section 191 of the Tax Code. Similarly, the case of American
Stevedores v. Porello (330 U.S. 446, 91 L. Ed. 1011) is inapplicable, involving as it does, stevedores or
longshoremen, not an arrastre operator. In the instant case, Delgado Brothers, Inc. has nothing to do with the
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loadingorunloadingofcargoestoandfromtheships.Itsoperationonanditsresponsibilityforthemerchandise
and goods begins from the time they are placed upon the wharves or piers or delivered along sides of ships.
Evansv.NewYork&PacificSteamshipCo.,Ltd.,etal.(145F.841)citedbyrespondentis,likewise,notinpoint.
Itshouldbenotedthatinsaidcase,theNewYork&PacificSteamshipCo.Ltd.(ownerofthesteamship"Capac"
and with whom appellant Evans has a contract evidenced by a bill of lading) and not the warehouseman or
depositaryBeardsErieBasinStores,wastheonesuedbysaidappellantEvansforrecoveryofthevalueof20
balesofrubberwhichsaidsteamshipfailedtodeliver.Hence,theDistrictCourtofNewYorkproperlyheldthatthe
contract with the steamship company was maritime in nature, over which it had jurisdiction to entertain and
decide.Undoubtedly,theCourtofFirstInstanceofManilahasjurisdictionincaseswheresuitisbroughtdirectly
againstthecarrierorshipowner.

Respondent cannot invoke the rule against multiplicity of suits, for the simple reason that said rule has to be
subservient to the superior requirement that the court must have jurisdiction. (See International Harvester
CompanyofthePhilippinesv.JudgeAragon,etal.,G.R.No.L2372,prom.August26,1949,84Phil.363.)

Withtheseconclusions,itisneedlesstodiscusstheotherpointsraisedinthebriefs.

WHEREFORE,thedecisionoftheCourtofAppealsappealedfromisherebyreversedandsetaside,andcase
dismissed,withcostsagainsttherespondent.Soordered.

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