G.R. No.

L-6517 November 29, 1954

E. E. ELSER, INC., and ATLANTIC MUTUAL INSURANCE COMPANY, vs.
COURT OF APPEALS, INTERNATIONAL HARVESTER COMPANY OF THE
PHILIPPINES and ISTHMIAN STEAMSHIP COMPANY

Facts:

In December 1945, the goods specified in the Bill of Lading were

shipped on the 'S.S. Sea Hydra,' of Isthmian Steamship Company, from
New York to Manila, and were received by the consignee 'Udharam
Bazar and Co.', except one case of vanishing cream valued at P159.78.
The goods were insured against damage or loss by the 'Atlantic Mutual
Insurance Co. `Udharam Bazar and Co.' Inc., who denied having
received the goods for custody, and the 'International Harvester Co. of
the Philippines,' as agent for the shipping company, who answer that
the goods were landed and delivered to the Customs authorities.
Finally, 'Udaharam Bazar and Co.' claimed for indemnity of the loss
from the insurer, 'Atlantic Mutual Insurance Co.', and was paid by the
latter's agent 'E. E. Elser Inc.' the amount involved, that is, P159.78.

Herein petitioner filed a claim against the herein private

respondent who contented that all the items in the bill of lading were
landed and delivered to the Customs authorities. Court of Appeals held
that petitioners have already lost their right to press their claim
against respondent because of their failure to serve notice thereof
upon the carrier within 30 days after receipt of the notice of loss or
damage as required by clause 18 of the bill of lading which was issued
concerning the shipment of the merchandise which had allegedly
disappeared. Petitioners contend that this finding is erroneous in the
light of the provisions of the Carriage of Goods by Sea Act of 1936,
which apply to this case, the same having been made an integral part
of the covenants agreed upon in the bill of lading. And the pertinent
provisions of the Carriage of the Goods by Sea Act of 1936 are:

6. Unless notice of loss or damage and the general nature of

such loss or damage be given in writing to the carrier of his agent
at the port of discharge or at the time of the removal of the
goods into the custody of the person entitled to delivery thereof
under the contract of carriage, such removal shall be prima facie
evidence of the delivery by the carrier of the goods as described
in the bill of lading. If the loss or damage is not apparent, the
notice must be given within three days of the delivery. xxx
xxx xxx

In any event the carrier and the ship shall be discharged

from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date
when the goods should have been delivered: PROVIDED, That if a
notice of loss or damage, either apparent or concealed, is not
given as provided for in this section, that fact shall not affect
or prejudice the right of the shipper to bring suit within one year
 after the delivery of the goods or the date when the goods should
have been delivered.

But respondents contend that while the United States Carriage of

Goods by Sea Act of 1936 was accepted and adopted by our
government by virtue of Commonwealth Act No. 65, however, said Act
does not have any application to the present case because the
shipment in question was made in December, 1945, and arrived in
Manila in February, 1946 and at that time the Philippines was still a
territory or possession of the United States and, therefore it may be
said that the trade then between the Philippines and the United States
was not a "foreign trade". In other words, it is contended that the
Carriage of Goods by Sea Act as adopted by our government is only
applicable "to all contracts for the carriage of goods by sea to and
from Philippine ports in foreign trade," and, therefore, it does not apply
to the shipment in question.

However, the Supreme court was of the opinion that the Carriage
of Goods by Sea Act of 1936 may have application to the present case
it appearing that the parties have expressly agreed to make and
incorporate the provisions of said Act as integral part of their contract
of carriage. This is an exception to the rule regarding the applicability
of said Act.

Issue:

Whether or not the provisions of COGSA yields to the stipulations

of the bill of lading, it being the law between the parties.

Ruling:

Granting arguendo that the Philippines was a territory or

possession of the United States for the purposes of said Act and that
the trade between the Philippines and the United States before the
advent of independence was not foreign trade or can only be
considered in a domestic sense, still we are of the opinion that the
Carriage of Goods by Sea Act of 1936 may have application to the
present case it appearing that the parties have expressly agreed to
make and incorporate the provisions of said Act as integral part of
their contract of carriage. This is an exception to the rule regarding
the applicability of said Act. This is expressly recognized by section 13
of said Act which contains the following proviso:

Nothing in this Act shall be held to apply to contracts for

carriage of gods by sea between any port of the United States or
its possessions, and any other port of the United States or its
possessions: Provided, however, That any bill of lading or similar
document of title which evidence of a contract for the carriage of
goods by sea between such ports, containing an express
statement that it shall be subject to the provisions of this Act,
 shall be subjected hereto as fully as if subject hereto by the
express provisions of this Act.

Having reached the foregoing conclusion, it would appear clear

that action of petitioners has not yet lapsed or prescribed, as
erroneously held by the Court of Appeals, it appearing that the present
action was brought within one year after the delivery of the shipment
in question..
As regards the contention of respondents that petitioners have the
burden of showing that the loss complained of did not take place under
after the goods left the possession or custody of the carrier because
they failed to give notice of their loss or damage as required by law,
which failures gives rise to the presumption that the goods were
delivered in the bill of lading, suffice it to state that, according to the
Court of Appeals, the required notice was given by the petitioners to
the carrier or its agent on April 25, 1946. That notice is sufficient to
overcome the above presumption within the meaning of the law.

Wherefore the decision appealed from is reversed. Respondents,

other than the Court of Appeals, are hereby sentenced to pay to the
petitioners the sum of P159.78, with legal interest thereon from the
date of the filing of the complaint, plus the costs of action.

G.R. No. L-6393 January 31, 1955

A. MAGSAYSAY INC. vs ANASTACIO AGAN

Facts:
The petitioner is the owner of SS San Antonio. The respondent is
among those shippers who hire the former as carrier for general cargo.
The vessel reached Aparri on the 10th of October 1949 and after a
day's stopover in that port, weighed anchor to proceed to Basco. But
while still in port, it ran aground at the mouth of the Cagayan river,
and, attempts to refloat it under its own power having failed, plaintiff
have it refloated by the Luzon Stevedoring Co. at an agreed
compensation. Once afloat the vessel returned to Manila to refuel and
then proceeded to Basco, the port of destination. There the cargoes
were delivered to their respective owners or consignees, who, with the
exception of defendant, made a deposit or signed a bond to answer for
their contribution to the average.
On the theory that the expenses incurred in floating the vessel
constitute general average to which both ship and cargo should
contribute, plaintiff brought the present action in the Court of First
Instance of Manila to make defendant pay his contribution, which, as
determined by the average adjuster, amounts to P841.40. Defendant, in
his answer, denies liability to his amount, alleging, among other things,
that the stranding of the vessel was due to the fault, negligence and
lack of skill of its master, that the expenses incurred in putting it
afloat did not constitute general average, and that the liquidation of
the average was not made in accordance with law. After trial, the
lower court found for plaintiff and rendered judgment against the
defendant for the amount of the claim, with legal interests. From this
judgment defendant had appealed directly to this Court.

Issue:
Whether or not the event that transpired on October 10, 1949
constitutes events which falls within the ambit Maritime Averages.

Ruling:
The law on averages is contained in the Code of Commerce.
Under that law, averages are classified into simple or particular and
general or gross. Generally speaking, simple or particular averages
include all expenses and damages caused to the vessel or cargo which
have not inured to the common benefit (Art. 809), and are, therefore, to
be borne only by the owner of the property gave rise to same (Art. 810);
while general or gross averages include "all the damages and
expenses which are deliberately caused in order to save the vessel, its
cargo, or both at the same time, from a real and known risk" (Art. 811).
Being for the common benefit, gross averages are to be borne by the
owners of the articles saved (Art. 812).
In classifying averages into simple o particular and general or
gross and defining each class, the Code (Art. 809 and 811) at the same
time enumerates certain specific cases as coming specially under one
or the other denomination. Going over the specific cases enumerated
we find that, while the expenses incurred in putting plaintiff's vessel
afloat may well come under number 2 of article 809-which refers to
expenses suffered by the vessel "by reason of an accident of the sea
of the force majuere" — and should therefore be classified as
particular average, the said expenses do not fit into any of the specific
cases of general average enumerated in article 811. No. 6 of this
article does mention "expenses caused in order to float a vessel," but
it specifically refers to "a vessel intentionally stranded for the purpose
of saving it" and would have no application where, as in the present
case, the stranding was not intentional.
Let us now see whether the expenses here in question could
come within the legal concept of the general average. Tolentino, in his
commentaries on the Code of Commerce, gives the following
requisites for general average:
First, there must be a common danger. This means, that both the
ship and the cargo, after has been loaded, are subject to the
same danger, whether during the voyage, or in the port of loading
or unloading; that the danger arises from the accidents of the
sea, dispositions of the authority, or faults of men, provided that
the circumstances producing the peril should be ascertained and
 imminent or may rationally be said to be certain and imminent.
This last requirement exclude measures undertaken against a
distant peril.
Second, that for the common safety part of the vessel or of the
cargo or both is sacrificed deliberately.
Third, that from the expenses or damages caused follows the
successful saving of the vessel and cargo.
Fourth, that the expenses or damages should have been incurred
or inflicted after taking proper legal steps and authority.

With respect to the first requisite, the evidence does not disclose
that the expenses sought to be recovered from defendant were
incurred to save vessel and cargo from a common danger. The vessel
ran aground in fine weather inside the port at the mouth of a river, a
place described as "very shallow". It would thus appear that vessel
and cargo were at the time in no imminent danger or a danger which
might "rationally be sought to be certain and imminent." It is, of
course, conceivable that, if left indefinitely at the mercy of the
elements, they would run the risk of being destroyed. But as stated at
the above quotation, "this last requirement excludes measures
undertaken against a distant peril." It is the deliverance from an
immediate, impending peril, by a common sacrifice, that constitutes
the essence of general average. In the present case there is no proof
that the vessel had to be put afloat to save it from imminent danger.
What does appear from the testimony of plaintiff's manager is that the
vessel had to be salvaged in order to enable it "to proceed to its port
of destination." But as was said in the case just cited it is the safety of
the property, and not of the voyage, which constitutes the true
foundation of the general average.
As to the second requisite, we need only repeat that the
expenses in question were not incurred for the common safety of
vessel and cargo, since they, or at least the cargo, were not in
imminent peril. The cargo could, without need of expensive salvage
operation, have been unloaded by the owners if they had been required
to do so.
With respect to the third requisite, the salvage operation, it is
true, was a success. But as the sacrifice was for the benefit of the
vessel — to enable it to proceed to destination — and not for the
purpose of saving the cargo, the cargo owners are not in law bound to
contribute to the expenses.
The final requisite has not been proved, for it does not appear
that the expenses here in question were incurred after following the
procedure laid down in article 813 et seq.
In conclusion we found that plaintiff not made out a case for
general average, with the result that its claim for contribution against
the defendant cannot be granted.
 Wherefore, the decision appealed from is reversed and plaintiff's
complaint ordered dismissed with costs