National Development Company vs. Court of Appeals.

G.R. No. L-49407/L-49469, August 19, 1988.

FACTS:

National Development Company (NDC) appointed Maritime Company of the Phils. (MCP) as its agent to manage and operate the vessel, “Doña Nati,” for and its behalf and account.

The vessel Doña Nati figured in a collision at Ise Bay, Japan with a Japanese vessel ‘SS Yasushima Maru’. As a result of which 550 bales of cargo of American raw cotton were lost and/or destroyed. 

Development Insurance Surety Corporation (DISC), insurer, paid to the holder of the negotiable bills of lading. It then filed an action of recovery of the said amount against NDC and MCP.

NDC contends that 

1. the Carriage of Goods by Sea Act should apply and not the Civil Code or the Code of Commerce. Under Section 4 (2) of said Act, the carrier is not responsible for the loss or damage resulting from the “act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship.” Since both pilots of the colliding vessels were at fault and negligent, NDC would have been relieved of liability. 
2. Code of Commerce should apply only to domestic trade and not to foreign trade

The CFI of Manila rendered a decision ordering MCP and NDC to pay jointly and solidarily to DISC. 

ISSUE: 

Which law shall govern loss or destruction of goods due to collision of vessels outside Philippine waters, and the extent of liability

HELD:

The laws of the Philippines will apply in case at bar and it is immaterial whether the collision actually occurred in foreign waters.

(1) In the case of Court of Eastern Shipping Lines Inc. v. IAC, 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 special laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code.

In the case at bar, it has been established that the goods in question are transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by the negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

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

The contention of NDC is wrong. Under Section 1 of COGSA, 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.

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