Myline Cordial

Eastern Shipping Lines vs. Intermediate Appellate Court and Development and Surety Corporation
G.R. No. L-69044. May 29, 1987

Eastern Shipping Lines vs. The Nisshin Fire and Marine Insurance Co., and Dowa Fire and Marine Insurance Co., Ltd.
No. 71478. May 29, 1987

150 SCRA 463

FACTS: En route from Kobe, Japan to Manila, M/S Asiatica, the vessel owned by petitioner carrier, Eastern Shipping Lines caught fire and sank, resulting in the total loss of ship and cargo. The crew did not know what caused the fire. When they noticed the smoke, there was already a big fire which might have started twenty-four (24) hours before they became aware of it. The respective respondent Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

See details below:

G.R. No. L-69044
Insurer 1 – Development Insurance and Surety Corporation
Cargo and Consignee 1a – 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc.
Cargo and Consignee 1b – 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

G.R. No. 71478
Insurer 2 – Nisshin Fire & Marine Insurance Co
Cargo and Consignee 2 – 128 cartons of garment fabrics and accessories, in two (2) containers, consigned to Mariveles Apparel Corporation

Insurer 3 – Dowa Fire & Marine Insurance Co., Ltd.
Cargo and Consignee 3 – Two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

ISSUES:
1. Which law is applicable, the Civil Code provisions on Common Carriers or the Carriage of Goods by Sea Act?
2. Who has the burden of proof to show negligence of the carrier? It is petitioner-carrier’s contention that in accordance with COGSA, when loss of fire is established, burden of proof on negligence shifts to the shipper.
3. Will loss caused by fire exempt the carrier from liability?

4. What is the extent of carrier’s liability?

RULING:
1. 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. As the cargoes were transported from Japan to the Philippines, the liability of petitioner-carrier is governed primarily by the Civil Code. However, in all matters not regulated by the Civil Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code.

2. In accordance with the New Civil Code, the burden of proving that it has exercised the extraordinary diligence required by law, after finding that transported good were lost caused by fire falls upon the carrier.

3. No. Fire may not be considered a natural disaster or calamity like those enumerated in Article 1734 as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity.

If fire were to be considered a “natural disaster” within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 that the “natural disater” must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster.

4. Since there was actual fault on the part of the carrier, it is liable for the loss. Article 1749 allows the limitation of liability. Although the Code expressly permits a stipulation limiting the liability of a carrier it does not of itself limit the liability to a fixed amount per package. Thus, the COGSA which is suppletory to the provisions of the Civil Code, supplements by establishing a statutory provision limiting the carrier’s liability in the absence of a declaration of a higher value of goods, which should not exceed US$500 per package.

NOTES:

Carriage Of Goods By Sea Act (COGSA)
APPLICATION

As a general rule, COGSA only applies to foreign trade. But it may also apply to domestic trade when there is a paramount clause in the contract.

PARAMOUNT CLAUSE – It is a clause which attracts the application of another law to govern the rights and obligations of the parties. Hence, the parties can stipulate that the COGSA will apply to the contract of carriage and not the Civil Code or Code of Commerce.

HIERARCHY OF LAWS

A. If the COMMON carrier is coming to the Philippines:

1st: Civil Code
2nd: COGSA (in foreign trade)
3rd: Code of Commerce

B. If the PRIVATE carrier is coming to the Philippines:

1st: COGSA
2nd: Code of Commerce
3rd: Civil Code (excluding rules on common carriers)

C. If the private or common carrier is from the Philippines to a foreign country:

Full Text: Eastern Shipping Lines vs. IAC G.R. No. L-69044. May 29, 1987