CASE DIGEST - Everett Shipping v CA; GR No. 122494 J. Martinez; 8 October 1998

 

LIMITED LIABILITY CLAUSE IN THE BILL OF LADING

Everett Shipping v CA; GR No. 122494

J. Martinez; 8 October 1998

DOCTRINES:

1.     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.

2.  Even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier, the consignee can still be bound by the contract.

FACTS:

Private respondent imported three crates of bus spare parts from its supplier, Maruman Trading Company, Ltd. The crates were shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. This was confirmed and admitted by petitioner in its letter of January 13, 1992 addressed to private respondent, which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty-Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-941.

However, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Private respondent rejected the offer and thereafter instituted a suit for collection against petitioner before the Regional Trial Court of Caloocan City.

The trial court rendered judgment in favor of private respondent. On appeal, the Court of Appeals deleted the award of attorney's fees but affirmed the trial court's findings with the additional observation that private respondent cannot be bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage. Hence, this instant case.

 

ISSUES:

1. Whether the limited liability clause in the bill of lading is valid?

2. Whether the private respondent, as consignee, who is not a signatory to the bill of lading is bound by the stipulations thereof.

 

RULING:

1.     Yes. The limited liability clause in the bill of lading is valid.  

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, particularly Articles 1749 and 1750 of the Civil Code which provide:

Art. 1749. 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.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon.

Such limited-liability clause has also been consistently upheld by this Court in a number of cases.

Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier's liability for loss must be "reasonable and just under the circumstances, and has been freely and fairly agreed upon."

Here, the court found that such stipulation is reasonable. Hence, valid.

2.     Yes. The private respondent is bound by the stipulations of the bill of lading.

We held that even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier, the consignee can still be bound by the contract.

When private respondent formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case against the latter based on the very same bill of lading, it (private respondent) accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. 

Thus, private respondent cannot now reject or disregard the carrier's limited liability stipulation in the bill of lading. In other words, private respondent is bound by the whole stipulations in the bill of lading and must respect the same.

The CA's Decision reversed and set aside.