90 - NDC v.
CA (1988)
Topic: COGSA Application
Facts:
1. The NDC and the Maritime Company of the Philippines (MCP) entered into a Memorandum of
Agreement (MOA). NDC appointed MCP as its agent with respect to the management and
operation of the vessel “Dona Nati.”
2. The E. Philipp Corp of New York loaded onboard the vessel some bales of cotton. In the same
vessel, some cargo containing cartons of sulfur lauryl sulfate and aluminum foil were loaded.
3. En route to Manila, the vessel collided with a Japanese vessel in Ise Bay, Japan. This resulted in
loss/destruction of 550 bales of cotton, damaged 535 bales were landed and sold on the authority of
the General Average Surveyor, and 15 bales were deemed lost.
4. The amount corresponding to the value of the loss was paid by the insurer Development Insurance
and Surety Corporation.
5. The insurer filed a complaint to recover said amount from the defendants NDC and MCP as owner
and ship agent of the vessel.
6. RTC and CA ordered NDC and MCP to pay the Insurer.
7. NDC argues 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. 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." Thus, NDC insists that
based on the findings of the trial court that both pilots of the colliding vessels were at fault and
negligent, NDC would have been relieved of liability under the Carriage of Goods by Sea Act.
Issue: W/N the Carriage of Goods by Sea Act governs the loss or destruction of goods due to collision of
vessels outside Philippine waters, the extent of the liability as well as the rules of prescription provided
thereunder.
Held/Ratio: The Carriage of Goods by Sea Act does not govern in the case at bar.
1. The Court in Eastern Shipping Lines Inc. v. IAC 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.
a. 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 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.
2. It appears, however, 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.
3. 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.
Robert Beltejar
