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AMERICAN HOME ASSURANCE v. CA

FACTS:

American Home Assurance Co. and National Marine Corporation are both foreign corporations licensed to do business in the Philippines. On June 19, 1988, National Marine Corporation shipped 5,000 bales of bleached kraft pulp from Taiwan to Manila on board the vessel "SS Kaunlaran". The shipment was consigned to Mayleen Paper, Inc. and insured by American Home Assurance Co. Upon delivery, it was discovered that 122 bales had been damaged or lost. Mayleen Paper, Inc. sought indemnification from National Marine Corporation, but their demand was not met. Since the shipment was insured by American Home Assurance Co., Mayleen Paper, Inc. sought recovery from them and was paid the adjusted amount of damages. In response, American Home Assurance Co. filed a complaint against National Marine Corporation to recover the amount paid and attorney's fees. National Marine Corporation filed a motion to dismiss, arguing that American Home Assurance Co. had no cause of action under Article 848 of the Code of Commerce. The trial court agreed with National Marine Corporation's argument and dismissed the complaint.

ISSUES:

  1. Whether or not the loss suffered by the cargo is a "particular average" as defined under the Code of Commerce.

  2. Whether or not the provisions of Article 848 of the Code of Commerce bar the petitioner from suing for recovery.

RULING:

  1. The loss suffered by the cargo is considered a "particular average" under the Code of Commerce since it is a loss happening to the cargo that is not shared by contributing among all parties but must be borne by the owner of the cargo to which it occurs.

  2. The provisions of Article 848 of the Code of Commerce do not bar the petitioner from suing for recovery since said provisions only apply to claims for average and not to claims for damages due to the negligence of the common carrier, which are governed by the provisions of the Civil Code on Common Carriers.

PRINCIPLES:

  • "Particular average" refers to a loss happening to the ship, freight, or cargo that is not shared by contributing among all parties, but must be borne by the owner of the subject to which it occurs.

  • "General average" refers to a contribution by the several interests engaged in the maritime venture to make good the loss of one of them for the voluntary sacrifice of a part of the ship or cargo to save the residue of the property and the lives of those on board, or for extraordinary expenses necessarily incurred for the common benefit and safety of all.

  • Claims for damages due to the negligence of the common carrier are governed by the provisions of the Civil Code on Common Carriers and not by the provisions of the Code of Commerce on averages.