Title
Everett Steamship Corp. vs. Court of Appeals
Case
G.R. No. 122494
Decision Date
Oct 8, 1998
A carrier's liability for lost cargo is limited to Y100,000 as per the bill of lading, binding the consignee despite non-signatory status.
shipping company
liability
loss of cargo
A

Case Digest (G.R. No. 122494)

Facts:

  • Parties and Procedural History
    • Petitioner: Everett Steamship Corporation, owner of the vessel used to transport the cargo.
    • Respondents:
      • Hernandez Trading Co., Inc. (private respondent, consignee/importer of the goods)
      • The Court of Appeals, whose decision was later challenged by the petitioner.
    • Litigation History:
      • Hernandez Trading filed a suit in the Regional Trial Court of Caloocan City, Branch 126 (Civil Case No. C-15532) after its claim for reimbursement was rejected by the petitioner.
      • The trial court rendered judgment in favor of the respondent, awarding a full reimbursement for the lost cargo based on the claimed value.
      • On appeal, the Court of Appeals affirmed the trial court’s findings (with modifications such as the deletion of attorney’s fees), but the petitioner eventually elevated the case to the Supreme Court through a petition for review (G.R. No. 122494).
  • Shipment and Cargo Details
    • Cargo Description:
      • The shipment consisted of three crates of bus spare parts identified as MARCO C/No. 12, MARCO C/No. 13, and MARCO C/No. 14.
      • The crates were imported from Japan, supplied by Maruman Trading Company, Ltd.
    • Transportation Details:
      • The cargo was shipped from Nagoya, Japan to Manila aboard the vessel “ADELFAEVERETTE.”
      • The vessel was owned by Everett Orient Lines, the principal of the petitioner.
      • The shipment was covered under Bill of Lading No. NGO53MN.
    • Incident of Loss:
      • Upon arrival at the port of Manila, it was discovered that crate MARCO C/No. 14 was missing.
      • The petitioner confirmed the loss in its letter dated January 13, 1992.
      • A claim was made for the lost cargo amounting to Y1,552,500.00 based on the commercial Invoice No. MTM-941.
  • Contractual Terms and Limited Liability Clause
    • The bill of lading contained a limited liability clause (Clause 18) which:
      • Stipulated that, in the absence of a higher declared value, the carrier’s liability for loss or damage was limited to an amount of Y100,000.00 per package or customary freight unit.
      • Required the shipper to declare a higher value (in writing) and pay extra freight to avoid the limitation.
    • Dispute on Liability Agreement:
      • The petitioner argued it was not privy to the fine-printed stipulations or aware of the shipment’s full value as detailed in the commercial invoice.
      • The respondent insisted that, regardless of the printing size or non-signatory status, the limited liability clause was binding.
  • Trial Court and Appellate Rulings
    • Trial Court Decision (July 16, 1993):
      • Found petitioner liable for the full claimed value of Y1,552,500.00 plus additional costs and fees.
      • Emphasized that the petitioner had admitted the loss and could not overcome the presumption of negligence.
      • Addressed the argument regarding the small print of the limited liability clause, concluding that it did not negate liability per se, but left open the issue of fair agreement.
    • Court of Appeals Decision:
      • Deleted the award for attorney’s fees.
      • Held that the consignee (Hernandez Trading) could not be bound by the terms of the bill of lading because it was not part of the original contract between the shipper and the carrier.
      • Nonetheless, affirmed that the non-signatory consignee might still enforce the stipulation to recover the lost cargo’s value.
  • Supreme Court Resolution
    • The petitioner raised three main contentions:
      • That the consent of the consignee to the bill of lading’s terms was not necessary to bind them.
      • That the limited liability clause limiting the carrier’s liability to Y100,000.00 should apply.
      • That awarding the full cargo value was improper.
    • The Supreme Court extensively analyzed the validity and binding effect of the limited liability clause under Articles 1749 and 1750 of the Civil Code and relevant precedents.
    • Ultimately, the Supreme Court reversed and set aside the Court of Appeals’ decision, thereby enforcing the limited liability clause.

Issues:

  • Validity and Binding Effect of the Limited Liability Clause
    • Is the limited liability clause in the bill of lading, printed in fine print, valid and binding on the parties?
    • Does the clause satisfy the requirements of being “reasonable and just under the circumstances” as mandated by Article 1750 of the Civil Code?
  • Applicability of the Liability Limitation to a Non-Signing Consignee
    • Can the consignee, who is not a party to the original contract of carriage, be bound by the terms and conditions contained in the bill of lading?
    • Does the non-signatory status of the consignee exempt it from the limited liability stipulation?
  • Adequacy of the Shipper’s Role and Declaration of Value
    • Did the shipper, Maruman Trading, fulfill the contractual requirement to declare a higher value, thus opting out of the limited liability?
    • Is the commercial invoice alone sufficient evidence to override the expressed limitations in the bill of lading?
  • Presumption of Negligence and Its Overcoming
    • Has the petitioner provided sufficient evidence to overcome the presumption of negligence for the loss of the shipment?
    • Should the lost cargo’s full claimed value be recovered or limited according to the stipulated Y100,000.00?

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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