G.R. No. L-11515; July 29, 1918
INTERNATIONAL HARVESTER COMPANY IN RUSSIA, plaintiff-appellee, vs. HAMBURG-AMERICAN LINE, defendant-appellant.

FACTS:
In 1914, the plaintiff, an American corporation, delivered a consignment of agricultural machinery to the defendant carrier in Baltimore, Maryland, for shipment to Vladivostok, Russia, with freight prepaid. The bill of lading stipulated that the goods would be forwarded from Hamburg to Vladivostok at the ship’s expense. Upon arrival in Hamburg, the cargo was transferred to the defendant’s steamer, the Suevia. While en route, World War I broke out. As the Suevia was a German vessel, its master sought refuge in the neutral port of Manila, arriving on August 6, 1914. In January 1915, the plaintiff demanded that the defendant forward the cargo to Vladivostok. The defendant refused unless the plaintiff agreed to subject the cargo to general average contribution for the expenses of the Suevia’s stay in Manila. The plaintiff refused this condition and instead demanded delivery of the cargo in Manila. The defendant offered delivery only if the plaintiff deposited security for the alleged general average expenses. The plaintiff then filed an action for replevin in the Court of First Instance of Manila, obtained possession of the cargo via writ, and forwarded it to Vladivostok at its own expense. The trial court ruled in favor of the plaintiff, awarding it damages equivalent to the forwarding expenses. The defendant appealed.

ISSUE:
1. Whether the plaintiff’s cargo is liable for general average contribution for the expenses incurred due to the Suevia’s internment in Manila.
2. Whether the defendant is liable for the expenses incurred by the plaintiff in transshipping and forwarding the cargo to Vladivostok.

RULING:
1. No, the cargo is not liable for general average. The Court held that the master’s decision to seek refuge in Manila was made exclusively for the safety of the ship, a German vessel, due to the outbreak of war. There was no common danger to both the ship and the cargo, as the neutral cargo was not contraband and faced no risk of forfeiture. Therefore, the expenses did not constitute a general average act. This ruling is consistent with the York-Antwerp Rules and prior jurisprudence (Compagnie de Commerce et de Navigation D’Extreme Orient vs. Hamburg Amerika Packetfahrt Actien Gesselschaft).

2. Yes, the defendant is liable for the forwarding expenses. The Court ruled that while the outbreak of war between Germany and Russia absolved the defendant from its obligation to carry the cargo to Vladivostok on the Suevia, it did not absolve it from its contractual duty to forward the cargo to the destination at the ship’s expense, as stipulated in the bill of lading. The master, by refusing to discharge the cargo in Manila, effectively elected to retain it, leaving the defendant’s forwarding obligation unfulfilled. Furthermore, the freight had been prepaid for the entire voyage. Since the defendant voluntarily broke the voyage for its own protection, principles of equity required it to refund the unearned portion of the freight. The amount spent by the plaintiff to forward the cargo was deemed a reasonable approximation of this unearned freight. Clauses in the bill of lading stating that prepaid freight would not be returned were held inapplicable, as they contemplated loss of goods, not abandonment of the voyage.

The Court also rejected the defendant’s ancillary arguments: (a) a clause in the bill of lading requiring disputes to be decided in Hamburg under German law did not oust the Philippine court’s jurisdiction, especially since the defendant waived the benefit by generally answering without objecting to jurisdiction; and (b) the defendant failed to plead and prove the content of German law, thus giving rise to the presumption that it is the same as Philippine law.

The judgment of the trial court was affirmed.