NEW ZEALAND INSURANCE CO., LTD., PLAINTIFF AND APPELLANT, VS. ADRIANO CHOA JOY, ETC., DEFENDANT AND APPELLEE.

This is an action for the recovery of the sum of P5,196.20 with legal
interest thereon from the date of the filing of the complaint.

On May 20, 1950, the ship “Jupiter“, on her voyage No. 149, received
on board at Carangian, Samar, in good order and condition, 107 bundles of first
class loose weight hemp weighing 8,273 kilos, of 130.80 piculs, valued at
P6,736.20, from Lee Teh & Co., Inc., for transportation and delivery to
Manila, under a bill of lading issued by the carrier to the shipper. The ship
was owned by Adriano Choa” Joy, doing business under the name of South Sea
Shipping Line, while the cargo was shipped by the branch office of Lee Teh &
Co., Inc. at Carangian, Samar, for transportation and delivery to its main
office at Manila.

The cargo failed to arrive in Manila because the vessel ran aground while
entering the Laoang Bay, Samar, on May 20, 1950, due to the negligence of its
captain, Jose Molina, who, in the investigation conducted by the Marine Board of
Inquiry, was found negligent of his duties and was suspended from office for a
period of three months. Of the cargo, only 7,590 kilos, or 120 piculs of hemp,
were saved and because of their damaged condition, they were sold for the sum of
P2,040, the consignor having spent P500 for their salvage, thereby causing Lee
Teh & Co., Inc. losses in the sum of P5,196.20.

The cargo was insured by the New Zealand Insurance Co., Ltd., and because of
the damage caused to said cargo while in transit, the losses were paid by said
company to the shipper. The carrier having refused to reimburse these damages
despite demands made to that effect, the insurance company, as subrogee of the
shipper instituted the present action before the Court of First Instance of
Manila.

After the parties had presented their evidence, the, court found that, while
the shipper has suffered damages because of the inability of the carrier to
transport the cargo as agreed upon, however, the liability of the carrier did
not attach because of the failure of the shipper or of the consignee to file its
claim for damages within 24 hours from receipt of the cargo as required by law.
Consequently, the court dismissed the case, with costs against the plaintiff.
Plaintiff brought this case on appeal directly to this Court.

Appellant poses in this appeal the following issue: “Whether Lee Teh &
Co., Inc. of Manila, as consignee, or Lee Teh & Co., Inc., of Catarman,
Samar, as consignor, should have filed its claim for damages to the cargo with
the shipping company, herein defendant, within twenty four hours from the date
the said cargo was salvaged by the consignor, in accordance with Article 366 of
the Code of Commerce for this action to prosper, or that neither the said
consignee nor the said consignor was under the obligation to file the said claim
within the said period, as they are not bound by the provisions of Article 366
of the Code of Commerce.”

Article 366 of the Code of Commerce, which was applied by the court,
provides:

“Within twenty-four hours following the receipt of the merchandise, the claim
against the carrier for damage or average which may be found therein upon
opening the packages, may be made, provided that the indications of the damage
or average which gives rise to the claim cannot be ascertained from the outside
part of such packages, in which case the claim shall be admitted only at the
time of receipt.

“After the periods mentioned have elapsed, or the transportation charges have
been paid, no claim shall be admitted against the carrier with regard to the
condition in which the goods transported were delivered.”

It would appear from the above that in order that the condition therein
provided may be demanded there should be a consignment of goods, through a
common carrier, by a consignor in one place to a consignee in another place. And
said article provides that the claim for damages must be made “within
twenty-four hours following the receipt of the merchandise” by the consignee
from the carrier. In other words, there must be delivery of the merchandise by
the carrier to the consignee at the place of destination. In the instant case,
the consignor is the branch office of Lee Teh & Co., Inc. at Catarman,
Samar, which placed the cargo on board the ship Jupiter, and the consignee, its
main office at Manila. The lower court found that the cargo never reached
Manila, its destination, nor was1 it ever delivered to the consignee, the office
of the shipper in Manila, because the ship ran aground upon entering Laoang Bay,
Samar on the same day of the shipment. Such being the case, it follows that the
aforesaid article 366 does not have application because the cargo was never
received by the consignee. Moreover, under the bill of lading issued by the
carrier (Exhibit C), it was the tetter’s undertaking to bring the cargo to its
destination—Manila,—and deliver it to consignee, which undertaking was never
complied with. The carrier, therefore, breached its contract, and, as such, it
forefeited its right to invoke in its favor the conditions required by article
366.

One case parallel to the present is Roldan vs. Lim Ponzo & Co.,
37 Phil, 285. In that case, plaintiff sought to recover damages for failure of
defendant to transport 2,244 packages of sugar from plaintiff’s
hacienda to Iloilo. It was proven that the cargo did not reach its
destination because the lorcha carrying it was wrecked in the river
Jalaud through the negligence and lack of skill of the master of ithe
lorcha. And of the total cargo of 2,244 packages of sugar, only 1,022
were saved in damaged condition through the efforts made by the shipper. Because
plaintiff failed to comply with the requirement of article 366 of the Code of
Commerce, the lower court found for defendant and dismissed the case. But this
Court held that said article “is limited to cases of claims for damages to goods
actually received by the consignee; it has no application in cases wherein the
goods entrusted to the carrier are not delivered to the consignee by the carrier
in pursuance of the terms of the carriage contract.” Elaborating on this point,
this Court commented:

“Article 366 of the Commercial Code is limited to cases of claims for damages
to goods actually turned over by the carrier and received by the consignee,
whether those damages be apparent from an examination of the packages in which
the goods are delivered, or of such character that the nature and extent of the
damage is not apparent until the packages are opened and the contents examined.
Clearly it has no application in cases wherein the goods entrusted to the
carrier are not delivered by the carrier to the consignee. In such cases there
can be no question of & claim for damages suffered by the goods while in
transport, since the claim for damages arises exclusively out of the failure to
make delivery.” * * *

“We are of opinion, however, that the necessity for making the claim in
accordance with that article did not arise if, as it is alleged, these 1,022
packages, of sugar were recovered from the wreck by the plaintiff, himself^ in
an effort, by his own activities, to save his property from total loss. The
measures to be taken under the terms of Article 367 of the Code when the parties
are unable to arrive at an amicable settlement of claims for damages set up in
accordance with Article 866, quite clearly indicate that the necessity for the
presentation of claims under this article arises only in those cases wherein the
carrier makes delivery and the consignee receives the goods in pursuance of the
terms of the contract.”

It is true that in the instant case there is some disagreement as to whether
the salvage of the portion of the cargo that was saved was due to the efforts of
the carrier itself or to the combined efforts of the latter and the shipper as a
result of which the salvaged cargo was placed in possession of the shipper who
sold it and deducted its proceeds from the liability of the carrier. But this
discrepancy, in our opinion, would seem to be immaterial because the law as well
as the contract contemplates delivery of the cargo to the consignee at its port
of destination in order that the benefit of the law may be availed of. The
liability of the carrier must be determined in the light of the carriage
contract, and since that contract calls for reciprocal obligations, the carrier
cannot demand fulfillment of its part from the shipper or consignee unless it
first complies with its own obligation. (Article 1100, old Civil Code.) The fact
that the consignor is but the branch office of the company that shipped the
goods, and the consignee is the main office at Manila, is of no moment, because
the duties of each party under the law are different. Moreover, even if the
consignor and the consignee be considered as one and the same party, still the
carrier cannot disclaim responsibility under its contract for the simple reason
that it failed to comply with its obligation to bring the cargo to its
destination. This breach alone justifies its liability under the carriage
contract.

Wherefore, the decision appealed from is hereby reversed, and another one
will be entered ordering the defendant to pay the plaintiff the sum of
P5,196.20, with legal interest thereon from the filing of the complaint, with
costs against appellee.

Bengzon, Acting C.J., Padilla, Montemayor, Jugo, Labrador,
Concepcion, and Reyes, J.B.L., JJ., concur.

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DISSENTING OPINION

REYES, A., J., dissenting:

I dissent. While there is dispute as to whether the cargo of hemp was salvage
through the efforts of the shipper or through those of the carrier, the lower
court found that what was saved of the hemp was actually received by the
shipper’s agent at Catarman, who, however, did not file a claim for damages
within 24 hours thereafter as provided in Article 366 of the Code of Commerce.
The appellant contends that this article did not apply because “there was no
delivery of goods by the carrier to the consignee.” Upholding the contention,
the majority opinion holds that the article has application only when the goods
transported are delivered to the consignee at the port of destination but not
otherwise, this on the theory that where the carrier breaches his contract by
failing to take the goods to their destination he forfeits his right to invoke
the article. To this I cannot agree.

The Article reads:

“Art. 366. Within the twenty-four hours following the receipt of the
merchandise, the claim against the carrier for damages or average which may be
found therein upon opening of the packages, may foe made, provided that the
indications of the damage ox average which gives rise to the claim cannot be
ascertained from the outside part of such packages in which case the claim shall
be admitted only at the time of receipt.

“After the periods mentioned have elapsed, or the transportation charges have
been paid, no claim shall be admitted against the carrier with regard to the
condition in which the goods transported were delivered.”

Nowhere in this article is it said or even hinted that prompt claim with
regard to the condition in which the goods transported were delivered is
required only when the delivery is made to the consignee at destination. And on
principle I do not see why the article should not apply also where delivery is
made to the shipper or consignor whether at the port of destination or of
embarkation or at any other place where the cargo is discharged. Especially
would this be true in the present case where consignor and consignee are the
same person or entity and where damage to the cargo was nob necessarily to be
expected because the ship did not sink but merely ran aground, so that if any
such damages was in fact noted upon delivery the same should have been promptly
brought to the attention of the carrier.

The majority cites the case of Roldan vs. Lim Ponzo, 37 Phil, 255.
That case should be authority against rather than in favor of their conclusion.
For it is to be noted that in that case the claim was for 2,244 bay ones of
sugar of which 1,222 bayones did not reach destination because the
lorcha on which it was loaded was wrecked on the way, while the
remaining 1,022 bayones were saved in a more or less damage condition, and this
Court there held that as to the part of the sugar totally lost article 366 did
not apply, but that as to the 1,022 bayones of sugar that were saved, although
in a damaged condition, there was need for determining under what conditions the
same came into the possession of the plaintiff, because while there was
allegation that the said 1,022 bayones of sugar “were recovered from the wreck
by the plaintiff himself, in an effort, by his own activities, to save his
property from total loss”, the defendant had not had an opportunity to submit
his evidence to the court. This court, therefor, remanded the case to the court
below for a new trial in order to determine whether it was the carrier or the
sipper that salvaged th6 sugar. The reason for this is to be found in the
following excerpts from the decision:

“In so far as this action is founded on a claim for damages resulting from
the wetting of the 1,022 packages of sugar which were saved from the wreck, it
seems clear that if these 1,022 packages of sugar were delivered by the carrier
and received by the consignee under and in pursuance of the terms of the
contract, this claim for damages could be defeated by the plaintiff’s failure to
make claim therefor in accordance with the term of article 866 of the Code.

* * * * * * *

“Until the defendant has had an opportunity to submit his evidence it is
impossible to determine under what conditions these 1,022 packages of sugar came
into the possession of the plaintiff, or to determine whether his claims for
damages by the wetting of this sugar, if well founded in every other respect, is
or should be defeated by his failure to make claim for such damages in the
manner and from indicated in Article 366 of the Commercial
Code.”

If we really mean to follow the decision of this Court in that former case, I
think the proper thing to do is to first determine whether the hemp in this case
was salvaged by the carrier or by the shipper. But as that is a disputed
question of fact, the case should be certified to the Court of Appeals since it
does not involve a purely legal question.