Ace Navigation Co. Inc., petitioner v.

FGU Insurance Corporation and

Pioneer Insurance and Surety Corporation, respondents

Facts:

Cardia Limited shipped on board the vessel M/V Pakarti Tiga at Shanghai
Port, China, 8260 metric tons (or 165,200 bags) of Grey Portland Cement to be
discharged at the Port of Manila and delivered to its consignee, Heindrich
Trading Corp. The subject shipment was insured with respondents FGU
Insurance Corp. and Pioneer Insurance and Surety Corp. against all risks for the
amount of Php 18,048,421.00. Regency Express Lines S.A., chartered by Sky
International, Inc. having entered into a contract with Shinwa Kaiun Kaisha Ltd.
to which the subject vessel was chartered by the owner Pakarti Tata, was the
one which directly dealt with Heindrich and accordingly issued Clean Bill of
Lading No. SM-1.

The vessel arrived at the Port of Manila and the shipment was discharged. Upon
inspection by Heindrich and Ace Navigation Co. Inc, agent of Cardia Limited, it
was found that out of the 165,200 bags of cement, 43,905 bags were in bad
order and condition. The respondents, unable to collect the sustained damages
from Cardia Limited and Regency Express Lines S.A., each paid Heindrich
separately totaling to Php 711,727.34 and became sub rated to all the rights
and causes of action accruing to Heindrich. Respondents filed a complaint for
damages. Ace Navigation Co. Inc. claimed it was not a real party-in-interest
from whom the respondents can demand compensation. The respondents
maintain that Ace Navigation Co. Inc is a ship agent and not a mere agent of
Cardia, as found by both the CA and the RTC.

Issue:

Whether or not Ace Navigation Co. Inc. be held liable for damages sought by
FGU Insurance Corporation and Pioneer Insurance and Surety Corporation.

Decision:

Article 586 of the Code of Commerce provides that the ship owner and the
ship agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip and provision the vessel,
provided the creditor proves the amount claimed was invested therein. By ship
agent is understood the person entrusted with the provisioning of a vessel, or
who represents her in the port in which she may be found. Due to the above
provision, the Court disagreed with respondents contention. Thus, Ace
Navigation Co. Inc. cannot be held liable for damages sought by the
respondents.