[86] NATIONAL DEVELOPMENT CORP. v.

COURT OF APPEALS & DEVELOPMENT ● En route to Manila, the vessel Dofia Nati figured in a collision at Ise Bay,
INSURANCE & SURETY CORP. Japan with a Japanese vessel ‘SS Yasushima Maru’ as a result of which 550
G.R. No. L-49407| August 19, 1988 | Paras, J. bales of aforesaid cargo of American raw cotton were lost and/or destroyed,
of which 535 bales as damaged were landed and sold on the authority of the
TOPIC: Law Applicable General Average Surveyor for Y6,045,-500 and 15 bales were not landed and
deemed lost .
SUMMARY: A Philippine vessel figured in a collision with a Japanese vessel in ● The damaged and lost cargoes, worth P344,977.86, were paid by the insurer
Japanese waters. Damages were paid by Insurance & Surety Corp. It now seeks to to the Riverside Mills Corporation as holder of the negotiable bills of lading
recover for the amout it paid from NCD and MCP as owner of the Dofia Nati vessel. duly endorsed.
There is an issue as to which laws shall govern the collision. The Court held that it is ● Also considered totally lost were the aforesaid shipment of Kyokuto, Boekui
the PH laws that are applicable, and not the Carriage of Goods by the Sea Act. Kaisa Ltd., consigned to the order of Manila Banking Corporation, Manila,
acting for Guilcon, Manila. The total loss, worth P19,938.00, was paid by the
DOCTRINE: The law of the country to which the goods are to be transported governs insurer to Guilcon as holder of the duly endorsed bill of lading. Thus, the
the liability of the common carrier in case of their loss, destruction or deterioration. plaintiff had paid as insurer the total amount of P364,915.86 to the
(Article 1753, CC) consignees or their successors-in-interest, for the said lost or damaged
cargoes.
Thus, for cargoes transported from Japan to the Philippines, the liability of the carrier ● Hence, plaintiff filed this complaint to recover said amount from the NDC
is governed primarily by the Civil Code and in all matters not regulated by said Code, and MCP as owner and ship agent respectively, of the said ‘Dofia Nati’
the rights and obligations of common carrier shall be governed by the Code of vessel.
commerce and by laws (Article 1766, Civil Code). The Carriage of Goods by Sea Act, a
special law, is merely suppletory to the provision of the Civil Code. ISSUE w/ HOLDING & RATIO:
Which laws govern loss or destruction of goods due to collision of vessels outside
Hence, where it is established that Philippines waters - PH LAWS
● The main thrust of NDC's argument is to the effect that the Carriage of
Goods by Sea Act should apply to the case at bar and not the Civil Code or
the Code of Commerce.
FACTS: ○ Under Section 4 (2) of said Act, the carrier is not responsible for the
● NDC as the first preferred mortgagee of three ocean going vessels including loss or damage resulting from the "act, neglect or default of the
one with the name ‘Dofia Nati’ appointed MCP as its agent to manage and master, mariner, pilot or the servants of the carrier in the navigation
operate said vessel for and in its behalf and account. or in the management of the ship."
● Thus, the E. Philipp Corporation of New York loaded on board the vessel ● NDC insists that based on the findings of the trial court which were adopted
“Dona Nati” at San Francisco, California, a total of 1,200 bales of American by the Court of Appeals, both pilots of the colliding vessels were at fault and
raw cotton consigned to the order of Manila Banking Corporation, Manila negligent, NDC would have been relieved of liability under the Carriage of
and the People’s Bank and Trust Company acting for and in behalf of the Goods by Sea Act.
Pan Asiatic Commercial Company, Inc., who represents Riverside Mills ● HOWEVER, this issue has already been laid to rest by this Court in Eastern
Corporation. Also loaded on the same vessel at Tokyo, Japan, were the Shipping Lines Inc. v. IAC where it was held under similar circumstance “that
cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila the law of the country to which the goods are to be transported governs the
Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and liability of the common carrier in case of their loss, destruction or
10 cases of aluminum foil. deterioration” (Article 1753, Civil Code).
● Thus, for cargoes transported from Japan to the Philippines, the liability of ● Moreover, the Court held that both the owner and agent (Naviero) should be
the carrier is governed primarily by the Civil Code and in all matters not declared jointly and severally liable, since the obligation which is the subject
regulated by said Code, the rights and obligations of common carrier shall of the action had its origin in a tortious act and did not arise from contract.
be governed by the Code of commerce and by laws (Article 1766, Civil ● Consequently, the agent, even though he may not be the owner of the vessel,
Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely is liable to the shippers and owners of the cargo transported by it, for losses
suppletory to the provision of the Civil Code. and damages occasioned to such cargo, without prejudice, however, to his
● In the case at bar, it has been established that the goods in question are rights against the owner of the ship, to the extent of the value of the vessel,
transported from San Francisco, California and Tokyo, Japan to the its equipment, and the freight.
Philippines and that they were lost or due to a collision which was found to ● It is immaterial that the collision actually occurred in foreign waters, such as
have been caused by the negligence or fault of both captains of the colliding Ise Bay, Japan. It appears, however, that collision falls among matters not
vessels. Under the above ruling, it is evident that the laws of the Philippines specifically regulated by the Civil Code, so that no reversible error can be
will apply, and it is immaterial that the collision actually occurred in foreign found in respondent courses application to the case at bar of Articles 826 to
waters, such as Ise Bay, Japan. 839, Book Three of the Code of Commerce, which deal exclusively with
● Under Article 1733 of the Civil Code, common carriers from the nature of collision of vessels.
their business and for reasons of public policy are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of RULING: DENIED for lack of merit. Assailed decision is AFFIRMED.
the passengers transported by them according to all circumstances of each
case. Accordingly, under Article 1735 of the same Code, in all other than
those mentioned is Article 1734 thereof, the common carrier shall be
presumed to have been at fault or to have acted negigently, unless it proves
that it has observed the extraordinary diligence required by law.
○ 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.
● It is well settled that both the owner and agent of the offending vessel are
liable for the damage done where both are impleaded; that in case of
collision, both the owner and the agent are civilly responsible for the acts of
the captain; that while it is true that the liability of the naviero in the sense of
charterer or agent, is not expressly provided in Article 826 of the Code of
Commerce, it is clearly deducible from the general doctrine of jurisprudence
under the Civil Code but more specially as regards contractual obligations in
Article 586 of the Code of Commerce.