RIZAL SURETY & INSURANCE COMPANY, PLAINTIFF AND APPELLANT, VS. MANILA RAILROAD COMPANY, ET AL., DEFENDANTS AND APPELLEES.

Rizal Surety and Insurance Company versus Manila Railroad Company

The Case

This is a civil action for recovery of the value of short-delivered cargo, brought by Rizal Surety and Insurance Company as insurer-subrogee against the Manila Railroad Company and the Manila Port Service, with the Delgado Shipping Agencies, Inc., agent of the carrying vessel, impleaded as an alternative defendant. The case matters because it fixes the rule on joinder of alternative causes of action arising from a single transaction, and settles which court — the municipal court or the Court of First Instance — has jurisdiction when one of the alternative causes of action falls exclusively within the latter's competence even though the amount demanded is below the inferior court's jurisdictional threshold.

Procedural History

The insurance company filed its complaint before the Court of First Instance of Manila, suing the shipping agent on one hand and the arrastre operator and the railroad company on the other as alternative defendants. The Manila Railroad Company and the Manila Port Service moved to dismiss on the ground of lack of jurisdiction, contending that the action is not one of admiralty and that the amount sought to be recovered does not exceed two thousand pesos, placing it within the exclusive jurisdiction of the municipal court. The trial court granted the motion, holding that since the action is based on the arrastre contract and the amount involved is less than five thousand pesos, it had no jurisdiction. The plaintiff interposed the present appeal to the Supreme Court.

Facts

On March 16, 1962, Cargill, Inc. shipped on board the vessel SS Euryalus and Euradamas at New Orleans, Louisiana, six thousand sacks of soybean meal weighing six hundred four thousand four hundred eighty-one pounds, consigned to Superior Feed Mills, Inc. in Manila. The shipment was insured with the Rizal Surety and Insurance Company.

Upon arrival, the shipment was unloaded and placed under the custody of the Manila Port Service, a subsidiary of the Manila Railroad Company. When the cargo was subsequently delivered to the consignee, one hundred six sacks were found short-weighed by seven thousand five hundred twenty-six pounds, and the insurer paid the consignee their value amounting to one thousand one hundred fifty-eight pesos and ninety-three centavos.

The insurance company filed a claim with both the vessel and the arrastre operator for reimbursement. Both refused, so on March 13, 1963 the insurer sued before the Court of First Instance of Manila, impleading the Delgado Shipping Agencies, Inc. as agent of the vessel on one hand, and the Manila Railroad Company and Manila Port Service on the other, as alternative defendants, seeking to recover the value of the short-delivered cargo with legal interest, attorney's fees, and costs.

Issues

• Whether or not the Court of First Instance may take cognizance of the case on the theory that both defendants are sued in the alternative, where the action against the shipping agent is one of admiralty falling within its jurisdiction while the action against the arrastre operator is based on the arrastre contract and, by reason of the amount involved, falls within the exclusive jurisdiction of the municipal court.

Applicable Provisions

Section 5 of Rule 2 of the Rules of Court, on joinder of causes of action, provides:

Section 5. Joinder of causes of action. Subject to rules regarding jurisdiction, venue and joinder of parties, a party may in one pleading state, in the alternative or otherwise, as many causes of action as he may have against an opposing party (a) if the said causes of action arise out of the same contract, or transaction or relation between the parties, or (b) if the causes of action are for demands for money, or are of the same nature and character.

In the cases falling under clause (a) of the preceding paragraph, the action shall be filed in the inferior court unless any of the causes joined falls within the jurisdiction of the Court of First Instance, in which case it shall be filed in the latter court.

In the cases falling under clause (b) the jurisdiction shall be determined by the aggregate amount of the demands, if for money, or by their nature and character, if otherwise.

This provision governs because the alternative causes of action arise from the same transaction, and it expressly allows filing in the Court of First Instance where any of the joined causes falls within that court's jurisdiction.

Ruling

The Court answered the issue in the affirmative. The cause of action against the alternative defendants arises out of the same transaction, namely the recovery of the value of the lost merchandise, and the nature of the loss could not be determined at the moment. The case falls squarely within Section 5 of Rule 2, which postulates that a party may state in one pleading, in the alternative, as many causes of action as he may have against an opposing party if they arise from the same transaction, with the particularity that the case may be filed in the Court of First Instance if any of the causes of action falls exclusively within its jurisdiction. Because of the uncertainty of the place where the disappearance of the shipment occurred, the plaintiff brought the case in the alternative before the Court of First Instance on the theory that the loss may have occurred while the shipment was in transit or while in the custody of the arrastre operator.

The Court found support in the International Harvester Company of the Philippines versus Aragon case, where the complaint was filed in the municipal court against both the shipping company and the terminal company as alternative defendants, and the Court held that the municipal court had no jurisdiction because the action was predicated on the contract of carriage by sea, which falls within the exclusive jurisdiction of the Court of First Instance. Reasoning by analogy, the Court held that the instant case likewise falls exclusively within the jurisdiction of the Court of First Instance of Manila, since the loss may have taken place during the voyage and hence involves a maritime case. The fact that the amount sought is less than the jurisdictional limit is of no moment, because the cause of action is indivisible, covering both ordinary and maritime contracts, and the jurisdictional limitation as to amount must yield to the greater jurisdiction of the court as to subject matter for reasons of expediency and convenience. The Court quoted with approval:

Constitutional and statutory provisions conferring jurisdiction on the inferior courts of demands below certain amounts do not forbid determination of said demands in the superior court where they are connected with larger claims or with a type of demand solely within the jurisdiction of the superior court.

Doctrine

A party may, in one pleading, state in the alternative as many causes of action as he may have against an opposing party if they arise out of the same contract, transaction, or relation. Where any of the joined causes of action falls within the jurisdiction of the Court of First Instance, the action shall be filed in that court, and the jurisdictional amount limitation of the inferior court must yield to the superior court's jurisdiction over the subject matter. The cause of action being indivisible, covering both ordinary and maritime contracts, the greater jurisdiction as to subject matter prevails for reasons of expediency and convenience.

Disposition

The order of dismissal appealed from was set aside, and the case was remanded to the lower court for further proceedings, without costs.

Remember This

When alternative causes of action arise from one transaction and any one of them falls within the Court of First Instance's jurisdiction, that court has jurisdiction regardless of the amount demanded. Examiners use this case to test joinder of causes of action under Section 5 of Rule 2 and the rule that the jurisdictional amount yields to jurisdiction over the subject matter.