EE ELSER VS CA

FACTS:In 1945, goods except a case of vanishing cream were shipped on the 'S.S. Sea Hydra,' of
Isthmian Steamship Company, from New York to Manila, and were received by the consignee
'Udharam Bazar and Co.' As the goods were insured against damage or loss by the 'Atlantic
Mutual Insurance Co.'Udaharam Bazar and Co.' now claimed for indemnity of the loss from the
said insurer, 'and was subsequently paid by the latter's agent 'E. E. Elser Inc.' the amount involved,
that is, P159.78..
RTC as affirmed by the Court of Appeals held that petitioners have already lost their right to press
their claim against respondent because of their failure to serve notice thereof upon the carrier
within 30 days after receipt of the notice of loss or damage as required by clause 18 of the bill of
lading which was issued concerning the shipment of the merchandise which had allegedly
disappeared.
In this respect, the court said that, "appellant unwittingly admitted that they were late in claiming
the indemnity for the loss of the case of the vanishing cream as their written claim was made on
April 25, 1946, or more than 30 days after they had been fully aware of said loss," and because of
this failure, the Court said the action of petitioners should, and must, fall. Petitioners now contend
that this finding is erroneous in the light of the provisions of the Carriage of Goods by Sea Act of
1936, which apply to this case, the same having been made an integral part of the covenants
agreed upon in the bill of lading.
ISSUE: Which of these two provisions should prevail? Is it that contained in clause 18 of the bill
of lading, or that appearing in the Carriage of Goods by Sea Act?.
HELD: The clause 18 of the bill of lading must of necessity yields to the provisions of the
Carriage of Goods by Sea Act in view of the proviso contained in the same Act which says: "any
clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from
liability for loss or damage to or in connection with the goods . . . or lessening such liability
otherwise than as provided in this Act, shall be null and void and of no effect." (section 3.) This
means that a carrier cannot limit its liability in a manner contrary to what is provided for in said
act. and so clause 18 of the bill of lading must of necessity be null and void.
Ancillary issue: But respondents contend that while the United States Carriage of Goods by Sea
Act of 1936 was accepted and adopted by our government by virtue of Commonwealth Act No.
65, however, said Act does not have any application to the present case because the shipment in
question was made in December, 1945, and arrived in Manila in February, 1946 and at that time
the Philippines was still a territory or possession of the United States and, therefore it may be said
that the trade then between the Philippines and the United States was not a "foreign trade".
SC: Granting arguendo that the Philippines was a territory or possession of the United States for
the purposes of said Act and that the trade between the Philippines and the United States before
the advent of independence was not foreign trade or can only be considered in a domestic sense,
still we are of the opinion that the Carriage of Goods by Sea Act of 1936 may have application to
the present case it appearing that the parties have expressly agreed to make and incorporate the
provisions of said Act as integral part of their contract of carriage. This is an exception to the rule

regarding the applicability of said Act. This is expressly recognized by section 13 of said Act
which contains the following proviso:
Nothing in this Act shall be held to apply to contracts for carriage of gods by sea between any port
of the United States or its possessions, and any other port of the United States or its possessions:
Provided, however, That any bill of lading or similar document of title which evidence of a
contract for the carriage of goods by sea between such ports, containing an express statement that
it shall be subject to the provisions of this Act, shall be subjected hereto as fully as if subject
hereto by the express provisions of this Act.
In sum, having reached the foregoing conclusion, it would appear clear that action of petitioners
has not yet lapsed or prescribed, as erroneously held by the Court of Appeals, it appearing that the
present action was brought within one year after the delivery of the shipment in question..