INTERNATIONAL HARVESTER COMPANY OF THE PHILIPPINES, PETITIONER AND APPELLEE, VS. CRISANTO ARAGON, JUDGE OF MUNICIPAL COURT OF MANILA, AND YARAS & COMPANY, FAR EAST, RESPONDENTS …

On July 9, 1947, the respondent-appellant, Yaras & Company,
Far East, filed a complaint in the Municipal Court of Manila (civil case No.
IV-262) against the Manila Terminal Co., Inc., and International Harvester
Company of the Philippines. The complaint alleges that the defendant Manila
Terminal Co., Inc., is in charge of the custody and delivery to the respective
ovmers of cargoes discharged at the Government piers in the City of Manila; that
the defendant International Harvester Company of the Philippines is the agent in
the Philippines of the vessel Belle of the Sea; that on September 27,
1946, the S/S Belle of the Sea took on board at Los Angeles, California,
U. S. A., goods for shipment to Manila, Philippines, and covered by Bill of
Lading No. 105; that the S/S Belle of the Sea arrived in Manila on
December 23, 1946, and discharged her cargo at the Government piers under the
supervision and custody of fthe defendant Manila Terminal Co., Inc.; that out of
the goods covered by Bill of Lading No. 105, one carton of assorted samples with
a stipulated value of P200 was not delivered to Yaras & Company; and said
merchandise was lost through the negligence either of the Manila Terminal Co.,
Inc., or of the International Harvester Company of the Philippines. The
complaint prayed for judgment either against defendant Manila Terminal Co.,
Inc., or the International Harvester Company of the Philippines for the amount
of P200, with legal interest from the date of the filing of the complaint.

Before the trial could be proceeded with, the International
harvester Company of the Philippines filed a motion to dismiss, on the ground
that the Municipal Court of Manila had no jurisdiction to try the case because
the action involves admiralty or maritime jurisdiction, which motion was
overruled by the municipal court on December 16, 1947. In due time, the
International Harvester Company of the Philippines filed in the Court of First
Instance of Manila a petition for prohibition (civil case No. 4328) against the
Hon. Crisanto Aragon, Judge of the Municipal Court of Manila, and Yaras &
Company, Far East, for the purpose of restraining said respondent judge from
proceeding with civil case No. IV-262 in so far as the International Harvester
Company of the Philippines was concerned, on the ground that admiralty or
maritime jurisdiction is involved. After trial, the Court of First Instance of
Manila rendered judgment in favor of the petitioner, International Harvester
Company, of the Philippines, ordering the respondent Judge of the Municipal
Court to desist from taking cognizance of civil case No. IV-262 as against the
International Harvester Company of the Philippines. From this judgment the
respondents have appealed.

From the facts alleged in the complaint filed in the Municipal
Court, it is clear that the International Harvester Company of the Philippines,
as agent in the Philippines of the vessel S/S Belle of the Sea, is
alternatively being held liable for the loss of the cargo in question through
its negligence. Inasmuch as it is expressly alleged that the cargo of the S/S
Belle of the Sea was discharged on December 23, 1946, at the Government
piers under the supervision and custody of the Manila Terminal Company, Inc.,
the International Harvester Company of the Philippines may be held liable only
on the assumption that the goods had been lost in transit or before being
discharged at the pier. In other words, the liability of the International
Harvester Company of the Philippines is predicated on the contract of carriage
by sea between the International Harvester Company of the Philippines and Yaras
& Company as evidenced by Bill of Lading No. 105, independently of the
liability of the Manila Terminal Co., Inc., as operator of an arrastre
service.

Admiralty has jurisdiction over all maritime contracts, in
whatever form, wherever they were executed or are,to be performed, but not over
non-maritlme contracts. (2 Corpus Juris Secundum, p. 84.) Whether or not a
contract is maritime depends not on the place where the contract is made and is
to be executed, making the locality the test, but on the subject-matter of the
contract, making the true criterion a maritime service or a maritime
transaction. (Id., p. 85.) Specifically, admiralty has jurisdiction of a
proceeding in rem or in personam for the breach of a contract of
affreightment, whether evidenced by a bill of lading or a charter party.
(Id., pp. 90-91.) And typical of a controversy over contracts of
affreightment is a suit of one party against the other for loss or damage to the
cargo. (1 American Jurisprudence, p. 567.) This is the very case now before us,
because the respondent Yaras & Company seeks to recover from the petitioner
International Harvester Company of the Philippines the value of a certain lost
cargo.

The contention of the respondent Yaras & Company that
admiralty jurisdiction is not involved herein because the contract in question
was made upon land and to be terminated upon land, merely reflects the English
rule which had long been rejected in the United States. It is now settled in the
latter country that “the jurisdiction of admiralty in matters of contract
depends upon the subject-matter, i. e., the nature and character of the
contract, and that the English rule which conceded jurisdiction (with few
exceptions) only to contracts made upon and to be performed upon navigable
waters, is inadmissible, the true criterion being that the contract has
reference to maritime service or maritime transaction.” (Benedict on Admiralty,
6th Ed., Vol. 1, p. 127.) We choose to adopt the sound American rule. Even in
England the English rule was not without protest. Lord Kenyon, in Menetone vs.
Gibbons, 3 Term, 269, had expressed the following criticism: “If the admiralty
has jurisdiction over the subject-matter, to say that it is necessary for the
parties to go upon the sea to execute the instrument borders upon
absurdity.”

The respondent Yaras & Company cannot invoke the rule
against multiplicity of suits, for the simple reason that said rule has to be
subservient to the superior requirement that the court must have jurisdiction.
In view of our conclusion that the cause of action of said respondent against
International Harvester Company of the Philippines involves admiralty over which
the courts of first instance have original jurisdiction (Par. 4, Sec. 56, Act
No. 136 of the Philippine Commission, as reproduced in Sec. 43 [d] of
Republic Act No. 296), and to which the jurisdiction of the justice of the peace
courts (including municipal courts) does not extend (sec. 68, Act No. 136 of the
Philippine Commission, as amended by Commonwealth Act No. 4090, reproduced in
par. 2, sec. 88, Republic Act No. 296), the respondent judge was properly
restrained from further proceeding with civil case No. IV-262.

We hold also that prohibition is the proper remedy, since the
respondent judge was taking cognizance of the case over which he had no
jurisdiction and his order overruling the motion to dismiss filed by the
petitioner-appellee is interlocutory and therefore not appealable. (Sec. 2 of
Rule 67, Rules of Court 2.) At any rate, the remedy of appeal available when the
case shall have been decided on the merits, is inadequate.

The appealed judgment is therefore affirmed, with costs against
the appellant Yaras & Company. So ordered.

Moran, C.J., Ozaeta, Feria, Bengzon, Padilla, Tuason,
Montemayor, and Reyes, JJ., concur.