Lu Do v Binamira | Bautista Angelo (1957)

FACTS: Delta Photo Supply Company of New York shipped on board the M/S

FERNSIDE at New York, 6 cases of photographic supplies consigned to the order of Binamira.

Both parties agreed to limit the responsibility of the carrier for the loss or damage before the goods are actually delivered. One of the agreements is that the responsibility of the Carrier in any capacity shall altogether cease and the goods shall be considered to be delivered and at their own risk and expense in every respect when taken into the custody of customs or other authorities

The 6 cases were discharged from the ship by Cebu Stevedoring Company, which is hired by the carrier

During the discharge, the cargo was checked both by Cebu Stevedoring as well as by Visayan Cebu Terminal Company, arrastre operator appointed by the Bureau of Customs. Both checkers separated the good order cargo from the bad ones and it was noted that the 6 cases were in good order and condition

All the unloaded cargo were received by Visayan 3 days later, Binamira took the deliveries and he discovered that

some films and supplies were missing. This fact was confirmed by the marine surveyor and so Binamira sued the carrier

TC: ruled in favor Binamira CA: AFFIRMED and said that the presumption of negligence and

liability of the carrier attach until the goods are delivered actually or constructively, to the consignee, or to the person who has a right to receive them. And the delivery to the customs authorities is not the delivery contemplated by law

ISSUE: WoN the carrier is responsible for the loss considering that the same occurred after the shipment was discharged from the ship and placed in the possession and custody of the customs authorities

DECISION: NO As a rule, provisions under 1734-36 APPLY ONLY WHEN the loss,

destruction or deterioration takes place while the goods are in the possession of the carrier, AND NOT after the carrier has lost control of them

In this case, it can be said that the carrier had lost control of the goods because of a BoC regulation and it is unfair that it be made responsible for what may happen during the interregnum.

AS SUCH, while delivery to the BoC is not the delivery contemplated under the law, the parties may however agree to limit the liability of the carrier considering that the goods have still to go through the inspection of the BoC before they are actually turned over to the consignee

This kind of stipulation is valid and is not contrary to morals or public policy that may justify their nullification.

THEREFORE, the carrier is not responsible for the loss since it happened after the shipment had been delivered to BoC

Samar Mining Co., Inc. vs. Nordeutscher Lloyd

FACTS Samar Mining Co., Inc. imported 1 crate of Optima welded wedge wire

sieves through a vessel owned by Nordeutscher Lloyd Upon its arrival in Manila, the importation was unloaded and delivered in

good order and condition to the bonded warehouse of AMCYL But the goods were never delivered nor received by the consignee at the

port of destination – Davao. A claim was filed by Samar Mining but the same wasn’t paid so this suit was

brought AMCYL was brought in as 3rd party defendant TC ruled in favor of Samar Mining Nordeutscher Lloyd says it’s not liable because they have discharged the

goods in full and good condition unto AMCYL’s custody at the port of discharge from ship- Manila. Pursuant to the stipulation in Sec. 11 of the Bill of Lading, their responsibility to the cargo had ceased

ISSUE: WoN Nordeutscher Lloyd is not liable pursuant to the stipulation in the bill of lading? YES. The stipulations in the Bill of Lading are valid between the parties insofar as they exempt the carrier from liability for loss/damage to the goods while the same are not in the latter’s actual custody.

HELDBill of Lading No. 18 sets forth that 1 crate of Optima welded wedge wire sieves was received by the Nordeutscher Lloyd at the port of loading (Germany) while the freight was prepaid up to the port of destination or the port of discharge of goods (Davao). The carrier undertook to transport the goods only up to the point of discharge from ship (Manila). After, the goods were transhipped by the carrier to the port of destination or port of discharge of goods.

In discharging the goods from the ship at the port of Manila and delivering the same to AMCYL, appellants acted in full accord with the contractual stipulations in Bill of Lading No. 18. The delivery of the goods to AMCYL was part of appellants’ duty to tranship the goods from Manila to their port of destination – Davao.

The extent of appellant carrier’s responsibility/liability in the transhipment of the goods can be seen under Sec. 1, par 3 of Bill of Lading No. 181 and Sec. 112. Phoenix Assurance v. US Lines has upheld

1 The carrier shall not be liable in any capacity for any delay, loss or damage … after the goods leave the ship’s tackle to be discharged, transhipped or forwarded…2 This carrier, in making arrangements for any transhipping or forwarding vessels… shall be considered solely the forwarding agent of the shipper and w/o any responsibility

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the validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to the goods when the same are not in its actual custody. The above stipulations are not contrary to law, morals, good customs, public order or public policy.

Art. 1738 CC doesn’t apply in this case. It contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting transhipment to their port of destination and were stored in the warehouse of a 3rd party when last seen.

Art. 1736 CC applies in this case. Under this article, the carrier may be relieved of the responsibility for loss/damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who has a right to receive them. There is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given to remove the goods. In this case, there was actual delivery to the consignee thru its duly authorized agent, the carrier.

Two undertakings are provided for in the Bill of Lading. (1) FOR THE TRANSPORT OF GOODS from Germany to Manila (2) THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with Nordeutscher Lloyd acting as agent of the consignee. When the subject goods are discharged in Manila, its personality changes from that of carrier to an agent of the consignee. Thus, the character of Nordeutscher’s possession also changes, from possession in its own name as carrier into possession in the name of consignee as the latter’s agent. Thus, there was an actual delivery of the goods from Nordeutscher as carrier to the same as consignee. Upon such delivery, Nordeutscher ceases to be responsible for any loss/damage to the goods.

Even as agent of the consignee, Nordeutscher can’t be held responsible for the value of the missing goods. Nordeutscher had commenced performance but it was aborted by circumstances beyond its control. An agent who carries out the orders and instructions of the principal w/o being guilty of negligence, deceit or fraud cannot be held responsible for the failure of the principal to accomplish the object of the agency. In this case, there was no proof of negligence, deceit, or fraud committed by Nordeutscher.

Home Insurance Company V. American Steamship Agencies | Bengzon, J. (1968)

RATIO DECIDENDIAs a private carrier, a stipulation exempting the owner from

whatsoever…

liability for the negligence of its agent is not against public policy, and is deemed valid.

FACTS Consorcio Pesquero del Peru of South America shipped freight at 21, 740

jute bags of Peruvian fish meal. The cargo was consigned to San Miguel Brewery and insured by Home Insurance Company.

It arrived in Manila on March 7 and was discharged into the lighters of Luzon Stevedoring Company. o When the cargo was delivered to San Miguel there was shortages

amounting to PHP 12,033.85. o Home Insurance paid San Miguel.

Home Insurance, as subrogee, then sued Luzon Stevedoring Company and American Steamship Agencies.

American Steamship denied liability on the ground. o It contended that under the provisions of the Charter party, the

charterer, not the shipowner, was responsible for any loss or damage to the cargo.

o It also claimed to have exercised due diligence in the stowing of the goods.

ISSUE/HELDWoN the stipulation in the charter party of the owner’s non-liability is valid so as to absolve the American Steamship Agencies from liability for loss – YES RATIO A perusal of the charter party shows that while the possession and control

of the ship were not entirely transferred to the charterer, the vessel was chartered to its full and complete capacity.

The charter party is one of affreightment over the whole vessel rather than a demise. o As such, the liability of the ship owner for acts or negligence of its

captain and crew, would remain in the absence of stipulation. The charter party provides that the owner is liable for loss or damage to the

goods caused by personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy. o Said paragraph, however, exempts the owner of the vessel from

any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed by the owner on board.

A common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a private carrier. o As a private carrier, a stipulation exempting the owner from liability

for the negligence of its agent is not against public policy, and is deemed valid.

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o The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier.

The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent would be void only if the strict public policy governing common carriers is applied.o Such policy has no force where the public at large is not

involved.

Valenzuela Hardwood and Industrial Supply, Inc. vs. Court of Appeals | Panganiban (1997)

FACTS Respondent Seven Brothers Shipping Corp. (Seven Brothers) agreed

to ship certain round logs of petitioner, Valenzuela Hardwood and Industrial Supply, Inc. (Valenzuela), from Isabela to Manila.

Valenzuela insured the logs with South Sea Surety and Insurance Co. (South Sea).

The vessel sank resulting in the loss of Valenzuela’s insured logs. Valenzuela demanded payment from South Sea but the latter

denied liability under the policy claiming that the policy had already been cancelled because the premium and documentary stamps were not paid.

Valenzuela also filed a formal claim with Seven Brothers but the latter denied the claim because it contends that, under the charter party, the shipowner would have no liability.

Thus, Valenzuela commenced a suit against both. The trial court ruled in favor of Valenzuela. On appeal, the CA sustained the liability of South Sea but dismissed

the complaint as to Seven Brothers. Hence, Valenzuela and South Sea filed separate petitions for

review; but the Court already denied South Sea’s petition holding that there had been payment of the premium of the policy.

ISSUES/HELDIs the stipulation in the charter party exempting Seven Brothers from liability valid? – YES.

RATIONALE It is undisputed that Seven Brothers had acted a private carrier in

transporting Valenzuela’s logs. In contracts of private carriage, the parties may validly stipulate

that responsibility for the cargo rests solely on the charterer,

exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain, which is exactly what the parties did in this case3.

The parties in contracts of private carriage may freely stipulate their duties and obligations, which perforce would bind them, because such contracts do not involve the general public.

Thus, Art. 1745 and other Civil Code provisions on common carriers may not be applied unless expressly stipulated by the parties in their charter party; these stringent provisions protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier.

Furthermore, compared to the general public, a charterer in a contract of private carriage can and usually does enter into a free and voluntary agreement.

As has been held in the case of Home Insurance, a stipulation exempting the owner, as a private carrier, from liability for the negligence of its agent is not against public policy is deemed valid.

Eastern & Australian Steamship Co., Ltd. vs. Great American Insurance Co.

FACTS Jackson and Spring Ltd. shipped 1 case of impellers for warman pump on

board a vessel owned and operated by Eastern & Australian thru its agent Zuellig, Inc. from Sydney to Manila

The shipment was insured with Great American Insurance against all risks When the vessel arrived in Manila, it failed to discharge the shipment Demand was made but there was still no delivery For the loss of shipment, Great American Insurance was compelled to pay

the consignee and thus, it filed a complaint against Eastern & Australian and Zuellig

Eastern & Australian and Zuellig allege that their liability for the loss of the shipment is only limited to L100 Sterling or P1,544 as stipulated in the Bill of Lading

LC, pursuant to Sec. 4(5) of the Carriage of Goods by Sea Act4 ruled that the agreement for a maximum liability of only L100 Sterling contained in the Bill of Lading was void as it was contrary to law. Thus, petitioners are liable.

ISSUE: WoN the agreement limiting the liability to L100 Sterling or P1,544 as stipulated in the Bill of Lading is valid? YES

HELD:

3 The charter party between the Valenzuela and Seven Brother stipulated that the “(o)wners shall not be responsible for loss, split, shortlanding, breakages and any kind of damages to the cargo.”4 the carrier and shipper may, in the absence of a declaration in the Bill of Lading of the value of the goods shipped, fix a maximum liability of the shipper for the cargo lost or damaged but such maximum shall bot be less than $500/package.

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There is no inconsistency between Sec, 4(5) of the Carriage of Goods by Sea Act and Clause 17 of the Bill of Lading. Both allow the payment beyond the respective limit imposed therein, provided that the value of the goods have been declared in the Bill of Lading.

The 2nd par. of Sec. 4(5) of the Carriage of Goods by Sea Act prescribing the maximum amount shall not be less than $500 refers to a situation where there is an agreement other than set forth in the Bill of Lading providing for a maximum higher than $500/package. In this case, there had been no agreement between the parties fo Clause 17 of the Bill of Lading shall prevail.

The condition in Clause 17 of the Bill of Lading shouldn’t be read in light of the 2nd par. of Sec. 4(5) of the Carriage of Goods by Sea Act. By providing that $500 is the maximum liability, the law does not disallow an agreement for liability at a lesser amount.

Art. 1749 CC5 expressly allows that limitation of the carrier’s liability.

Northern Motors v. Prince Line: The Court ruled a similar provision in a bill of lading limiting the carrier’s liability to a specific amount as valid and binding unless the shipper expressly declares a higher value and pays the corresponding rate.

EDGAR COKALIONG SHIPPING LINES, INC. VS UCPB

Facts:- Nestor Angelia and Zosimo Mercado both delivered to petitioner

cargo, valued on its face 6,500 and 14,000 pesos respectively- The Bills of Lading contain the stipulation “that in case of claim

for loss or for damage to the shipped merchandise or property, the liability of the common carrier shall not exceed the value of the goods appearing in the Bill of Lading”

- Nestor was both the shipper and consignee of the cargo- Feliciana Legaspi insured the cargo of the 2 bills of lading for the

amount of 50, 000 and 100,000 pesos “against all risks”- Fire ensured in the engine room and destroyed the entire vessel

and all the cargo therin- Feliciana filed a claim for the value of the cargo, it was approved for

the amount of 49,500 and 99,000 pesos for both bills of lading- Respondent filed a complaint in the RTC for the collection of

148,500 pesos, the total principal amount it paid to Feliciana Legaspi

- Petitioners argued that after settling his claim, Nestor Angelia executed the Release and Quitclaim hence it was absolved of any liability for the loss of the cargo and even if it was, its liability

5 A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

should not exceed the value of the cargo as stated in the Bills of Lading

- CA held that petitioner “is not bound by the valuation of the cargo under the Bills of Lading, nor is the value of the cargo under said Bills of Lading conclusive on the respondent—the goods were insured with the respondent for the total amount of 150,000 pesos, which amount may be considered as the face value of the goods

Issue: Amount of liability of petitioner: WON it is that which was stated in the Bills of Lading, or the extent of the amount paid by the insurance company

Held: That which is stated in the Bills of Lading

Ratio:- A stipulation that limits liability is valid as long as it is not against public

policy- A stipulation in the Bill of Lading limiting the common carrier’s liability for

loss or destruction of a cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law [1749, 1750]

- The present stipulation is not against public policy, it is just and reasonable; the shippers/consignees may recover the full value of the goods by the simple expedient of declaring the true value of the shipment in the bill of lading

- In fact, they even committed fraud in deliberately undervaluing the goods- Purpose of the limiting stipulation is to protect the common carrier—to

notify it of the amount it may be liable for and be able to take appropriate measures to cover or protect itself i.e. getting insurance

- For assuming a higher risk, the insurance company was paid the correct higher premium while the petitioner was paid a fee lower for transporting the goods that had been deliberately undervalued

- Between the two of them, the insurer should bear the loss in excess of the value declared in the bill of lading, this is a just and equitable solution

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