National Development Company vs.

CA
G.R. No. L-49407; August 19, 1988

Maritime Company of the Philippines vs. CA

G.R. No. L-49469; August 19, 1988

Facts:
National Development Company (NDC) appointed Maritime Company of the Philippines (MCP) as its
agent to manage and operate the vessel named ‘Doña Nati ' for and in its behalf. E. Philipp
Corporation of New York loaded bales of American raw cotton on board the vessel. Also loaded on
the same vessel at Tokyo, Japan, were the cartons of sodium lauryl sulfate and cases of aluminum
foil of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation. En route
to Manila the vessel Doña Nati figured in a collision at Ise Bay, Japan with a Japanese vessel 'SS
Yasushima Maru' as a result of which bales of American raw cotton were lost and/or destroyed. Also
considered totally lost were the aforesaid shipment of Kyokuto, Boekui Kaisa Ltd. Development
Insurance & Surety Corporation (DISC) then paid to the consignees or their successors-in-interest the
amount of lost or damaged cargoes. Hence, DISC filed a complaint to recover the amount from NDC
and MCP as owner and ship agent respectively of SS Doña Nati. The trial court held that MCP and NDC
are jointly and solidarity liable to DISC. On appeal, NDC insists that it would have been relieved of
liability under the Carriage of Goods by Sea Act. As to the extent of liability, MCP insists that their
liability should be limited to P200.00 per package or per bale of raw cotton as stated in paragraph
17 of the bills of lading. Also the MCP argues that the law on averages should be applied in
determining their liability. However, the CA applied Article 287 of the Code of Commerce and affirm
the trial court’s decision.

Issues:
1. Whether or not the CA erred in applying Article 827 of the code of commerce instead of Section
4(2a) of Commonwealth Act No. 65, otherwise known as the carriage of goods by sea act, in
determining the liability for loss of cargoes.

2. Whether or not Maritime Company is solidarily liable with National Development Company for
loss of or damages to cargo resulting in the collision of SS Doña Nati said vessel with Yasushima
Maru.

Rulings:
1. No. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC
where it was held under similar circumstance "that the law of the country to which the goods
are to be transported governs the liability of the common carrier in case of their loss,
destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically laid
down that for cargoes transported from Japan to the Philippines, the liability of the carrier is
governed primarily by the Civil Code and in all matters not regulated by said Code, the rights
and obligations of common carrier shall be governed by the Code of commerce and by laws
(Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provision of the Civil Code.

It appears that collision falls among matters not specifically regulated by the Civil Code, so
that no reversible error can be found in respondent courses application to the case at bar of
Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision
of vessels. More specifically, Article 826 of the Code of Commerce provides that where
collision is imputable to the personnel of a vessel, the owner of the vessel at fault, shall
indemnify the losses and damages incurred after an expert appraisal. But more in point to the
instant case is Article 827 of the same Code, which provides that if the collision is imputable
to both vessels, each one shall suffer its own damages and both shall be solidarily responsible
for the losses and damages suffered by their cargoes.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839,
the shipowner or carrier, is not exempt from liability for damages arising from collision due
to the fault or negligence of the captain. Primary liability is imposed on the shipowner or
carrier in recognition of the universally accepted doctrine that the shipmaster or captain is
merely the representative of the owner who has the actual or constructive control over the
conduct of the voyage (Y'eung Sheng Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751
[1909]).
 There is, therefore, no room for NDC's interpretation that the Code of Commerce should apply
only to domestic trade and not to foreign trade. Aside from the fact that the Carriage of Goods
by Sea Act (Com. Act No. 65) does not specifically provide for the subject of collision, said Act
in no uncertain terms, restricts its application "to all contracts for the carriage of goods by
sea to and from Philippine ports in foreign trade." Under Section I thereof, it is explicitly
provided that "nothing in this Act shall be construed as repealing any existing provision of the
Code of Commerce which is now in force, or as limiting its application." By such incorporation,
it is obvious that said law not only recognizes the existence of the Code of Commerce, but
more importantly does not repeal nor limit its application.

2. Yes. MCP's contention is devoid of merit. The declared value of the goods was stated in the
bills of lading and corroborated no less by invoices offered as evidence ' during the trial.
Besides, common carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barrette
et al., (51 Phil. 90 [1927]) "cannot limit its liability for injury to a loss of goods where such
injury or loss was caused by its own negligence." Negligence of the captains of the colliding
vessel being the cause of the collision, and the cargoes not being jettisoned to save some of
the cargoes and the vessel, the trial court and the Court of Appeals acted correctly in not
applying the law on averages (Articles 806 to 818, Code of Commerce).

MCP's claim that the fault or negligence can only be attributed to the pilot of the vessel SS
Yasushima Maru and not to the Japanese Coast pilot navigating the vessel Doña Nati need not
be discussed lengthily as said claim is not only at variance with NDC's posture, but also contrary
to the factual findings of the trial court affirmed no less by the Court of Appeals, that both
pilots were at fault for not changing their excessive speed despite the thick fog obstructing
their visibility.