G.R. No. L-49407 and L-49469. August 19, 1988.
NATIONAL DEVELOPMENT COMPANY and MARITIME COMPANY OF THE PHILIPPINES, petitioners-appellants, vs. THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY CORPORATION, respondents-appellees.

FACTS

Development Insurance and Surety Corporation (DISC), as insurer, paid Riverside Mills Corporation and Guilcon for cargo lost or damaged due to a collision involving the vessel ‘Dona Nati’. The cargo was shipped under bills of lading issued by the Maritime Company of the Philippines (MCP). The National Development Company (NDC) owned the vessel, and MCP operated it as NDC’s agent under a management agreement. DISC, having subrogated to the rights of the consignees, filed a complaint against NDC and MCP to recover the amount paid. The trial court rendered a joint and several judgment against both defendants, also ordering NDC to reimburse MCP for any amounts paid to DISC. The Court of Appeals affirmed this decision.
During proceedings, NDC was declared in default for failure to comply with discovery orders. MCP raised defenses including lack of cause of action, prescription of the claim, and that its liability should be limited per the bills of lading. It also argued that the law on general average should apply and that negligence lay solely with the colliding vessel.

ISSUE

The primary issues were: (1) whether the action had prescribed; (2) whether MCP’s liability could be limited per the bills of lading; and (3) whether the law on general average applied.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals. On prescription, the Court held the one-year period under the Carriage of Goods by Sea Act runs from the date the goods “should have been delivered.” The bills of lading allowed trans-shipment, making the original arrival date tentative. Due to the collision, the salvaged cargo arrived months later. The complaint, filed within one year of these later dates, was timely. On liability limitation, the Court ruled a common carrier cannot limit its liability for loss caused by its own negligence. The factual findings, affirmed by the lower courts, established that the pilots of both colliding vessels were at fault for maintaining excessive speed in thick fog. Thus, MCP, as the operator, could not invoke the package limitation. Finally, the law on general average was inapplicable as the loss resulted from the collision and negligence, not from a voluntary jettison of cargo to save the maritime venture. The default judgment against NDC was also upheld due to its failure to comply with procedural orders.