National Development Company v. Court of Appeals
REITERATIONFacts
The Antecedents: The National Development Company (NDC) appointed the Maritime Company of the Philippines (MCP) as its agent to manage and operate the vessel 'Dona Nati'. On February 28, 1964, cargo was loaded onto the 'Dona Nati' in San Francisco, California, and Tokyo, Japan, consigned to various entities in Manila. En route to Manila, the 'Dona Nati' collided with a Japanese vessel, 'SS Yasushima Maru', in Ise Bay, Japan. As a result, 550 bales of American raw cotton were lost or damaged, and a shipment of sodium lauryl sulfate and aluminum foil was also lost. The plaintiff, Development Insurance & Surety Corporation (DISC), as insurer, paid P364,915.86 to the consignees or their successors-in-interest for the lost or damaged cargoes. DISC filed a complaint to recover this amount from NDC (owner) and MCP (ship agent). Procedural History: The trial court (Court of First Instance of Manila) ordered NDC and MCP to pay DISC jointly and severally P364,915.86 plus legal interest and attorney's fees. It also ordered NDC to reimburse MCP for any amount MCP paid to DISC. MCP appealed, and NDC also appealed after its motion to set aside the decision was denied. The Court of Appeals affirmed the trial court's decision in toto. NDC and MCP then filed separate appeals by certiorari to the Supreme Court. The Petition: NDC argued that the Carriage of Goods by Sea Act should apply, exempting it from liability due to the fault of both pilots. MCP argued it had no cause of action against it, the action had prescribed, and the collision was solely the fault of the 'SS Yasushima Maru'. Both also contested the amount of damages awarded.
Issue(s)
Whether Philippine law or the Carriage of Goods by Sea Act governs the liability for loss of cargo due to a collision outside Philippine waters. Whether the carrier is liable for damages arising from a collision caused by the fault or negligence of both vessels. Whether the Maritime Company of the Philippines, as ship agent, is solidarily liable with the National Development Company, as shipowner. Whether the insurer has a valid cause of action against the defendants. Whether the action has prescribed. Whether the liability of the carrier can be limited to P200.00 per bale or package. Whether the law on averages applies to the loss of cargo.
Ruling
The Supreme Court denied the petitions for lack of merit and affirmed the decision of the Court of Appeals. It held that Philippine laws govern the liability of carriers for cargoes transported to the Philippines, regardless of where the collision occurred. Both the owner and the ship agent are solidarily liable for damages arising from the collision, and their liability cannot be limited by stipulations in the bill of lading if caused by their negligence. The action was found not to have prescribed.
Ratio Decidendi
On the governing law for loss of cargo due to collision: The Court reiterated the principle that the law of the country to which the goods are to be transported governs the liability of the common carrier. Applying Article 1753 of the Civil Code, for cargoes transported from Japan and California to the Philippines, Philippine laws apply. The Carriage of Goods by Sea Act is merely suppletory to the Civil Code. Therefore, it was immaterial that the collision occurred in Ise Bay, Japan. The Court also clarified that while the Carriage of Goods by Sea Act applies to foreign trade, it does not repeal or limit the application of the Code of Commerce, especially concerning matters not specifically regulated by the former, such as collision of vessels. On liability for collision imputable to both vessels: The Court applied Article 827 of the Code of Commerce, which states that if a collision is imputable to both vessels, each shall suffer its own damages, and both shall be solidarily responsible for the losses and damages suffered by their cargoes. This provision clearly imposes joint and several liability on the owners of both vessels for cargo damage, irrespective of the degree of fault, as long as the collision is imputable to the personnel of both ships. The Court emphasized that under the Code of Commerce, the shipowner or carrier is not exempt from liability for damages arising from collision due to the fault or negligence of the captain, as the captain is considered the representative of the owner. On the liability of the ship agent (MCP): The Court found that the Memorandum Agreement between NDC and MCP appointed MCP as agent, a term broad enough to include the concept of a ship agent in maritime law. MCP was conferred powers akin to those of the vessel owner, including contracting in NDC's name. Citing established jurisprudence, the Court affirmed that both the owner and the agent (naviero) of the offending vessel are liable for damages done, and they are civilly responsible for the acts of the captain. Therefore, MCP could not escape liability as it was more than a mere manager but acted as a ship agent with significant authority. On the cause of action and subrogation: MCP contended that DISC had no cause of action as it did not prove its subrogers' ownership or interest in the cargo. The Court found this contention without merit, noting that the records showed Riverside Mills Corporation and Guilcon, Manila, were holders of duly endorsed bills of lading and were the actual consignees. DISC, as the insurer, paid the total amount for the loss or damage to these consignees. Consequently, DISC, having paid the insured amount, was subrogated to the rights of the consignees and had a valid cause of action to recover from the defendants. On prescription of action: MCP argued that the action had prescribed. The Court, however, found that the bills of lading allowed for trans-shipment, meaning the scheduled arrival date was tentative. The actual arrival dates of the cargo, had it not been lost or damaged, would have been later than the filing of the complaint. Therefore, the complaint filed on April 22, 1965, was within the one-year period from the date the lost or damaged cargo 'should have been delivered' under Section 3(6) of the Carriage of Goods by Sea Act, which was applied suppletorily. On limitation of liability: MCP's contention that liability should be limited to P200.00 per bale as stated in the bill of lading was rejected. The Court held that common carriers cannot limit their liability for loss or injury caused by their own negligence. On averages: Since the collision was caused by the negligence of the captains, and the cargo was not jettisoned to save the vessel or other cargo, the law on averages (Articles 806-818, Code of Commerce) was correctly not applied.
Main Doctrine
In cases of collision of vessels outside Philippine waters involving cargoes transported to the Philippines, Philippine laws, specifically the Civil Code and the Code of Commerce, govern the liability of the carrier. If the collision is imputable to both vessels, each shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes.