DOCTRINE:

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.
FACTS:
In accordance with a memorandum agreement entered into between defendants NDC and MCP on
September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean going vessels
including one with the name 'Dona Nati' appointed defendant MCP as its agent to manage and operate
said vessel for and in its behalf and account.
On February 28, 1964 the E. Philipp Corporation of New York loaded on board the vessel "Dona Nati" at
San Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order of Manila
Banking Corporation, Manila and the People's Bank and Trust Company acting for and in behalf of the
Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation. Also loaded on the
same vessel at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of
Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum
foil.
En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay,
Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which 550 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 General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed and
deemed lost.
The damaged and lost cargoes was worth P344,977.86 which amount, the plaintiff as insurer, paid to the
Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed. Also considered
totally lost were the aforesaid shipment of Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila
Banking Corporation, Manila, acting for Guilcon, Manila, The total loss was P19,938.00 which the plaintiff
as insurer paid to Guilcon as holder of the duly endorsed bill of lading. Thus, the plaintiff had paid as
insurer the total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost
or damaged cargoes. Hence, plaintiff filed this complaint to recover said amount from the defendantsNDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel.
ISSUE:
W/N the Philippine law are applicable to the case. (Yes)
In such case, in what manner must they be applied. (Primarily NCC. Secondarily CoC, other laws)
HELD:
This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC where it was
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.
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.

Under Article 1733 of the Civil Code, common carriers from the nature of 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 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.
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.
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.
Significantly, 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 (Y'eung Sheng Exchange and
Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).
There is, therefore, no room for NDC's interpretation that the Code of Commerce should apply only to
domestic trade and not to foreign trade. 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.