EASTERN SHIPPING LINES, INC vs.

INTERMEDIATE APPELLATE COURT

Facts:

1) M/S ASIATICA, a Vessel operated by Eastern Shipping Lines was bound for Manila from
Japan. It loaded:
* 5,000 pieces of colorized lance pipes in 28 packages valued at P256,039.00 consigned to
Philippine Blooming Mills Co., Inc.,
*7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

2) Both were insured from marine risks with Development Insurance and Surety Corp.
*It also took 128 cartoons of garment fabrics and accessories in 2 containers consigned to
Mariveles Apparel Corp.

*2 Cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The shipments were insured with DOWA Fire and Marine Insurance Co. and Nisshin Fire and
marine Insurance Co. respectively.

3) En Route from Kobe, Japan to Manila, the vessel caught fire and sank losing all its shipment.
The insurance companies paid for the insurance of the above mentioned shipments. A case is
then instituted to redeem the insurance that they paid to the various companies against Eastern
Shipping Lines. They contend that Eastern should not be exempted from liability because it was
not able to exercise due diligence in preventing the occurrence of the fire as well as its
unseaworthiness.

4) Eastern Shipping invoked the Carriage of Goods by Sea Act as a defense wherein it is said to
be exempt from the said liability. The Fire was said to be one of the exempting circumstance
under the act. It also contended that it the fire occurred as a fortuitous event such as a natural
disaster or calamity which leads them to conclude that they should not be made liable.

Issue:
What Law Should be applied in case of breach in the said shipment
In case of conflict what law should be applied ( COGSA and New Civil Code)

Held:
It is the law of the country to which the goods are to be transported.

Article 1753. The law of the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction, or deterioration.

Furthermore, the issue of Conflict of Law is then settled by the Supreme Court. Wherein According
to COGSA (CARRIAGE OF GOODS BY SEA ACT) it is then provides for the exception on the
part of the common carrier in cases of fire while in the journey. On the contrary according New
Civil Code of the Philippines Article 1734, “Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is due to any of the following causes:
(1) flood, storm, earthquake, lightning or other natural disaster or calamity”.

It is then provided under Article 1766 that “In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of Commerce and by Special laws”
It is therefore be the New Civil Code that shall be applied before the said COGSA. The law of the
destination would then be applicable over the special laws such as the COGSA.
COGSA will only be applicable in cases where the matter is not regulated by the Code.