1

RA 1937
Section 911. Vessels Eligible for Bay and River License. To be eligible for the bay and river license, a vessel
must be built in the Philippines, and the ownership of such vessel must be vested in: (a) citizens of the
Philippines; (b) domestic corporations or companies seventy-five per centum of whose corporate capital
belongs to citizens of the Philippines: Provided, That the present owners of vessels with bay and river
license under existing law who do not possess any of the requirements herein prescribed may
nevertheless continue operating such vessels as eligible for said bay and river license.
Section 912. Exemption of Certain Craft from Requirement of Bay and River License. No bay and river
license shall be required of any of the following classes of vessels:
a. Vessels of three tons net or less.
b. Yachts, launches and other craft used exclusively for pleasure and recreation.
c. Ship's boats and launches bearing the name and home port of the vessel plainly marked thereon.
d. Vessels owned by the Government of the Philippines.
The exemption of any vessel shall at once cease if it engages in the business of transporting cargo or
passengers, for hire.
ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the
means recognized by law. The acquisition of a vessel must appear in a written instrument, which shall not
produce any effect with respect to third persons if not inscribed in the registry of vessels.
The ownership of a vessel shall likewise be acquired by possession in good faith, continued for three years,
with a just title duly recorded. In the absence of any of these requisites, continuous possession for ten
years shall be necessary in order to acquire ownership.
A captain may not acquire by prescription the vessel of which he is in command.
Article 624 of the Code of Commerce imposes on a captain, in case he has been wrecked or the cargo of
his vessel damaged, the duty of making the corresponding protest before the proper authority at the first
port where the vessel touches, within the twenty four-hours following his arrival.

G.R. No. L-5203

April 18, 1956
STANDARD VACUUM OIL COMPANY, plaintiff-appellant,
vs.
LUZON STEVEDORING CO., INC., defendant-appellee.
Ross, Selph, Carrascoso and Janda and Martin B. Laurena for appellant.
Perkins, Ponce Enrile and Contreras for appellee.
BAUTISTA ANGELO, J.:
Plantiff entered into a contract with defendant to transport between the ports of Manila and
Nin Bay, Sangay, Iloilo, 2,916.44 barrels of bulk gasoline belonging to plaintiff. The gasoline
was delivered in accordance with the contract but defendant failed to transport it to its place
of destination and so plaintiff brought his action in the Court of First Instance of Manila to
recover the sum of P75,578.50 as damages.
Defendant, in its answer, pleaded that its failure to deliver the gasoline was due to fortuitous
event or caused by circumstances beyond its control and not to its fault or negligence or that
of any of its employees. The court, after receiving the evidence, rendered decision finding that
the disaster that had befallen the tugboat was the result of an avoidable accident and the loss
of the gasoline was due to a fortuitous even which was beyond the control of defendant and,
consequently, dismissed the case with costs against the plaintiff.
The facts as found by the trial court are: "that pursuant to an agreement had between the
parties, defendant's barge No. L-522 was laden with gasoline belonging to the plaintiff to be
transported from Manila to the Port of Iloilo; that early in the morning of February 2, 1947,
defendant's tugboat "Snapper" picked up the barge outside the breakwater; that the barge
was placed behind the tugboat, it being connected to the latter by a tow rope ten inches in
circumstances; that behind the barge, three other barges were likewise placed, one laden with
some cargo while the other two containing hardly any cargo at all; that the weather was good
when on that day the tugboat with its tow started on its voyage; that the weather remained
good on February 3, 1947, when it passed Santiago Point in Batangas; that at about 3:00
o'clock in the morning of February 4, 1947, the engine of the tugboat came to a dead stop;
that the engineer on board the tugboat found out that the trouble was due to a broken idler;
that a message was then sent to the defendant's radio station in Manila informing its official

2
of the engine trouble; that upon the receipt of the message the defendant called up several
shipping companies in Manila to find out if they had any vessels in the vicinity where the
"Snapper' had stalled but sais companies replied in the negative; that thereupon the
defendant redioed its tugboat Tamban' which was docked at Batangas, ordering it to proceed
to the place where the Snapper' was; that at about 6:00 o'clock in the same morning of
February 4, 1947, the master of the Snapper' attempted to cast anchor but the water areas
around Elefante Island were so deep that the anchor did not touch bottom; that in the
afternoon of the same day the weather become worse as the wind increased in intensity and
the waves were likewise increased in size and force; that due to the rough condition of the sea
the anchor chains of the Snapper' and the four barges broke one by one and as a consequence
thereof they were drifted and were finally dashed against the rocks a hole was opened in the
hull of the Snapper', which ultimately caused it to sink, while the barge No. L-522 was so badly
damaged that the gasoline it had on board leaked out; and that the Tamban arrived at the
place after the gasoline had already leaked out.
Defendant is a private stevedoring company engaged in transporting local products, including
gasoline in bulk and has a fleet of about 140 tugboats and about 90 per cent of its business is
devoted to transportation. Though it is engaged in a limited contract of carriage in the sense
that it chooses its customers and is not opened to the public, nevertheless, the continuity of
its operation in this kind of business have earned for it the level of a public utility. The
contract between the plaintiff and defendant comes therefore under the provisions of the
Code of Commerce. The pertinent law is article 361 which provides:
ART. 361. The merchandise shall be transported at the risk and venture of the shipper, if the
contrary was not expressly stipulated.
Therefore, all damages and impairment suffered by the goods during the transportation, by
reason of accident, force majeure, or by virtue of the nature or defect of the articles, shall be
for the account and risk of the shipper.
The proof of these accidents is incumbent on the carrier.
It therefore appears that whenever merchandise is transported on the sea by virtue of a
contract entered into between the shipper and the carrier, the merchandise is deemed
transported at the risk and venture of the shipper, if the contrary is not stipulated, and all
damages suffered by the merchandise during the transportation by reason of accident or force
majeure shall be for the account and risk of the shipper, but the proof of these accidents is
incumbent on the carrier. Implementing this provision, our Supreme Court has held that all a
shipper has to prove in connection with sea carriage is delivery of the merchandise in good
condition and its non-delivery at the place of destination in order that the burden of proof may
shift to the carrier to prove any of the accidents above adverted to. Thus, it was held that
"Shippers who are forced to ship goods on an ocean liner or any other ship have some legal
rights, and when goods are delivered on board a ship in good order and condition, and the
shipowner delivers them to the shipper in bad order and condition, it then devolves upon the
shipowner to both allege and prove that the goods were damaged by reason of some fact
which legally exempts him from liability" (Mirasol vs. Robert Dollar Co., 53 Phil., 129).
The issue to be determined is: Has defendant proven that its failure to deliver the gasoline to
its place of destination is due to accident or force majeure or to a cause beyond its control?
This would require an analysis of the facts and circumstances surrounding the transportation
of said gasoline.
It appears that the tugboat "Snapper" was acquired by defendant from the foreign Liquidation
Commission. It was a surplus property. It was a deep-sea tugboat that had been in the service
of the United States Armed Forces prior to its purchase by the Luzon Stevedoring Co. The
tugboat was put into operation without first submitting it to an overhaul in a dry-dock. It also
appears that this tugboat had previously made several trips and each time it had to obtain a
special permit from the Bureau of Customs because it had never been dry-dock and did not
have complete equipment to be able to obtain the permanent permit. The special permits that
were issued by said Bureau specifically state that they were issued "pending submission of
plans and load line certificate, including test and final inspection of equipment." It futher
appears that, when the tugboat was inspected by the Bureau of Customs on October 18, 1946,
it found it to be inadequately equipped and so the Bureau required defendant to provide it
with the requisite equipment but it was never able to complete it. The fact that the tugboat
was a surplus property, has not been dry-docked, and was not provided with the requisite
equipment to make it seaworthy, shows that defendant did not use reasonable diligence in
putting the tugboat in such a condition as would make its use safe for operation. It is true, as
defendant contends, that there were then no dry-dock facilities in the Philippines, but this

3
does not mean that they could not be obtained elsewhere. It being a surplus property, a drydock inspection was a must to put the tugboat in a sea going condition. It may also be true ,
as contended, that the deficiency in the equipment was due to the fact that no such
equipment was available at the time, but this did not justify defendant in putting such tugboat
in business even if unequipped merely to make a profit. Nor could the fact that the tugboat
was given a special permit by the Bureau of Customs to make the trip relieve defendant from
liability.
Where owner buys old tug, licensed coastwise, and equips it for ocean going, it is negligence
to send tug out without stability test, where history and performance with respect to
crankiness and tenderness are matters of official record. Sabine Towing Co. vs. Brennan,
C.C.A. Tex., 72 F 2d 490, certiorari denied 55 S. Ct. 141, 293 U.S. 632, 79 L. Ed. 717. (80 C.J. S.
803 Footnote).
There are other circumstances which show the lack of precaution and diligence taken by
defendant to make the travel of the tugboat safe. One is the failure to carry on board the
necessary spare parts. When the idler was broken, the engineer of the tugboat examined it for
the first time and it was only then that he found that there were no spare parts to use except
a worn out spare driving chain. And the necessity of carrying such spare parts was emphasized
by the very defendant's winess, Mr. Depree, who said that in vessels motored by diesel
engines it is necessary always to carry spare chains, ball bearings and chain drives. And this
was not done.
A tug engaged to tow a barge is liable for damage to the cargo of the barge caused by faulty
equipment of the tug. The Raleigh, D.C. Md. 50 F. Supp. 961. (80 C.J.S. Footnote.).
Another circumstance refers to the deficiency or incomplete in the man power of the tug boat.
According to law, a tugboat of the tonnage and powers of one like the "Snapper" is required to
have a complement composed of one first mate, one second mate, one third mate, one chief
engineer, one second engineer, and one third engineer, (section 1203, Revised Administrative
Code), but when the trip in question was undertaken, it was only manned by one master, who
was merely licensed as a bay, river and lake patron, one second mate, who was licensed as a
third mate, oner chief engineer who was licensed as third motor engineer, one assistant
engineer, who was licensed as a bay, river, and lake motor engineer, and one second assistant
engineer, who was unlicensed. The employment of this crew to perform functions beyond its
competence and qualifications is not onl;y risky but against the law and if a mishap is caused,
as in this case, one cannot but surmise that such incompetence has something to do with the
mishap. The fact that the tugboat had undertaken several trips before with practically the
same crew without any untoward consequence, cannot furnish any justification for continuing
in its employ a deficient or incompetent personnel contrary to law and the regulations of the
Bureau of Customs.
(1) Generally, seaworthiness is that strength, durability and engineering skill made a part of a
ship's construction and continued maintenance, together with a competent and sufficient
crew, which would withstand the vicissitudes and dangers of the elements which might
reasonably be expected or encountered during her voyage without loss or damage to her
particular cargo. The Cleveco, D.C. Ohio, 59 F. Supp. 71, 78, affirmed, C.C.A., 154 F. 2d 606.
(80 C.J.S. 997, Footnote.).
Let us now come to the eeforts exerted by defendant in extending help to the tugboat when it
was notified of the breakage of the idler. The evidence shows that the idler was broken at
about 3:00 o'clock in the morning of February 4, 1947. Within a few minutes, a massage was
sent to defendant by radio informing it of the engine trouble. The weather was good until
12:00 o'clock noon when the wind started to blow. According to defendant, since it received
the message, it called up different shipping lines in Manila asking them if they had any vessel
in the vicinity where the "Snapper" stalled but, unfortunately, none was available at the
time,and as its tug "Tamban" was then docked in Batangas, Batangas, which was nearest to
the place, it radioed said tug to go to the aid of the "Snapper". Accordingly, the tug "Tamban"
set sail from Batangas for the rescue only to return to secure a map of the vicinity where the
"Snapper" had stalled, which entailed a delay of two hours. In the meantime, the captain of
the "Snapper" attempted to cast anchor. The water areas off Elefante Island were deep and
the anchor would not touch bottom. Then the sea became rough and the waves increased in
size and force and notwithstanding the efforts of the crew to prevent the tug from drifting
away, the force of the wind and the violence of the waves dashed the tug and the barges
against the rocks. The tug developed a hole in her hull and sank. The barge carrying the
gasoline was so badly damaged that the gasoline leaked out. The tug "Tamban" was finally
able to locate the "Snapper" but it was too late.

4
The foregoing acts only serve to emphasize that the efforts made by defeandant fall short of
that diligence and precaution that are demanded by the situation to save the tugboat and the
barge it was towing from disaster for it appears that more than twenty-four hours had elapsed
befora the tug "Tamban" showed up to extend help. The delay was caused not so much
because of the lack of available ships in the vicinity where the "Snapper" stalled but because
defendant did not have in readiness any tugboat sufficient in tonnage and equipment to
attend to the rescue. The tug "Tamban" that was ordered to extend help was fully inadequate
for the purpose. It was a small vessel that was authorized to operate only within Manila Bay
and did not even have any map of the Visayan Islands. A public utility that is engaged in sea
transportation even for a limited service with a fleet of 140 tugboats should have a competent
tug to rush for towing or repairs in the event of untoward happening overseas. If defendant
had only such a tug ready for such an emergency, this disaster would not have happened.
Defendant could have avoided sending a poorly equipped tug whic, as it is to be expected,
failed to do job.
While the breaking of the idler may be due to an accident, or to something unexpected, the
cause of the disaster which resulted in the loss of the gasoline can only be attributed to the
negligence or lack of precaution to avert it on the part of defendant. Defendant had enough
time to effectuate the rescue if it had only a competent tug for the purpose because the
weather was good from 3:00 o'clock a.m. to 12:00 o'clock noon of February 4, 1947 and it was
only in the afternoon that the wind began to blow with some intensity, 1 but failed to do so
because of that shortcoming. The loss of the gasoline certainly cannot be said to be due to
force majeure or unforeseen event but to the failure of defendant to extend adequate and
proper help. Considering these circumstances, and those we have discussed elsewhere, we are
persuaded to conclude that defendant has failed to established that it is exempt from liability
under the law.
Wherefore, the decision appealed from is reversed. Defendant is hereby ordered to pay to
plaintiff the sum of P75,578.50, with legal interest from the date of the filing of the complaint,
with costs.

G.R. No. 171591

25 June 2012
ACE NAVIGATION CO., INC., petitioner,
vs.
FGU INSURANCE CORPORATION and PIONEER INSURANCE AND SURETY CORPORATION,
Respondents.
DECISION
PERLAS-BERNABE, J.:
This is an appeal under Rule 45 of the Rules of Court seeking to reverse the June 22, 2004 Decision 1 and
February 17, 2006 Resolution2 of the Court of Appeals (CA) ordering petitioner Ace Navigation Co., Inc.,
jointly and severally with Cardia Limited, to pay respondents FGU Insurance Corp. and Pioneer Insurance
and Surety Corp. the sum of P213,518.20 plus interest at the rate of six percentum (6%) from the filing of
the complaint until paid.
The Facts
On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port
China, 8,260 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. (HEINDRICH). The subject shipment was insured
with respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against
all risks under Marine Open Policy No. 062890275 for the amount of P18,048,421.00. 3
The subject vessel is owned by P.T. Pakarti Tata (PAKARTI) which it chartered to Shinwa Kaiun Kaisha Ltd.
(SHINWA). 4 Representing itself as owner of the vessel, SHINWA entered into a charter party contract with
Sky International, Inc. (SKY), an agent of Kee Yeh Maritime Co. (KEE YEH), 5 which further chartered it to

5
Regency Express Lines S.A. (REGENCY). Thus, it was REGENCY that directly dealt with consignee
HEINDRICH, and accordingly, issued Clean Bill of Lading No. SM-1. 6
On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However, upon
inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was found
that out of the 165,200 bags of cement, 43,905 bags were in bad order and condition. Unable to collect the
sustained damages in the amount of P1,423,454.60 from the shipper, CARDIA, and the charterer,
REGENCY, the respondents, as co-insurers of the cargo, each paid the consignee, HEINDRICH, the amounts
of P427,036.40 and P284,690.94, respectively, 7 and consequently became subrogated to all the rights and
causes of action accruing to HEINDRICH.
Thus, on August 8, 1991, respondents filed a complaint for damages against the following defendants:
"REGENCY EXPRESS LINES, S.A./ UNKNOWN CHARTERER OF THE VESSEL 'PAKARTI TIGA'/ UNKNOWN
OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL 'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or
ACE NAVIGATION COMPANY, INC." 8 which was docketed as Civil Case No. 90-2016.
In their answer with counterclaim and cross-claim, PAKARTI and SHINWA alleged that the suits against
them cannot prosper because they were not named as parties in the bill of lading. 9
Similarly, ACENAV claimed that, not being privy to the bill of lading, it was not a real party-in-interest from
whom the respondents can demand compensation. It further denied being the local ship agent of the
vessel or REGENCY and claimed to be the agent of the shipper, CARDIA. 10
For its part, SKY denied having acted as agent of the charterer, KEE YEH, which chartered the vessel from
SHINWA, which originally chartered the vessel from PAKARTI. SKY also averred that it cannot be sued as an
agent without impleading its alleged principal, KEE YEH. 11
On September 30, 1991, HEINDRICH filed a similar complaint against the same parties and Commercial
Union Assurance Co. (COMMERCIAL), docketed as Civil Case No. 91-2415, which was later consolidated
with Civil Case No. 91-2016. However, the suit against COMMERCIAL was subsequently dismissed on joint
motion by the respondents and COMMERCIAL. 12
Proceedings Before the RTC and the CA
In its November 26, 2001 Decision, 13 the RTC dismissed the complaint, the fallo of which reads:
WHEREFORE, premises considered, plaintiffs complaint is DISMISSED. Defendants counter-claim against
the plaintiffs are likewise dismissed, it appearing that plaintiff[s] did not act in evident bad faith in filing
the present complaint against them.
Defendant Pakarti and Shinwas cross-claims against their co-defendants are likewise dismissed for lack of
sufficient evidence.
No costs.
SO ORDERED.
Dissatisfied, the respondents appealed to the CA which, in its assailed June 22, 2004 Decision, 14 found
PAKARTI, SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the respondents' claim, with the
remaining 30% to be shouldered solidarily by CARDIA and its agent, ACENAV, thus:
WHEREFORE, premises considered, the Decision dated November 26, 2001 is hereby MODIFIED in the
sense that:
a) defendant-appellees P.T. Pakarti Tata, Shinwa Kaiun Kaisha, Ltd., Kee Yeh Maritime Co., Ltd. and the
latters agent Sky International, Inc. are hereby declared jointly and severally liable, and are DIRECTED to
pay FGU Insurance Corporation the amount of Two Hundred Ninety Eight Thousand Nine Hundred Twenty
Five and 45/100 (P298,925.45) Pesos and Pioneer Insurance and Surety Corp. the sum of One Hundred
Ninety Nine Thousand Two Hundred Eighty Three and 66/100 (P199,283.66) Pesos representing Seventy
(70%) percentum of their respective claims as actual damages plus interest at the rate of six (6%)
percentum from the date of the filing of the complaint; and
b) defendant Cardia Ltd. and defendant-appellee Ace Navigation Co., Inc. are DECLARED jointly and
severally liable and are hereby DIRECTED to pay FGU Insurance Corporation One Hundred Twenty Eight
Thousand One Hundred Ten and 92/100 (P128,110.92) Pesos and Pioneer Insurance and Surety Corp.
Eighty Five Thousand Four Hundred Seven and 28/100 (P85,407.28) Pesos representing thirty (30%)
percentum of their respective claims as actual damages, plus interest at the rate of six (6%) percentum
from the date of the filing of the complaint.
SO ORDERED.
Finding that the parties entered into a time charter party, not a demise or bareboat charter where the
owner completely and exclusively relinquishes possession, command and navigation to the charterer, the
CA held PAKARTI, SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the damages sustained
by the cargo. This solidarity liability was borne by their failure to prove that they exercised extraordinary
diligence in the vigilance over the bags of cement entrusted to them for transport. On the other hand, the
CA passed on the remaining 30% of the amount claimed to the shipper, CARDIA, and its agent, ACENAV,
upon a finding that the damage was partly due to the cargo's inferior packing.

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With respect to REGENCY, the CA affirmed the findings of the RTC that it did not acquire jurisdiction over
its person for defective service of summons.
PAKARTI's, SHINWA's, SKY's and ACENAV's respective motions for reconsideration were subsequently
denied in the CA's assailed February 17, 2006 Resolution.
Issues Before the Court
PAKARTI, SHINWA, SKY and ACENAV filed separate petitions for review on certiorari before the Court,
docketed as G.R. Nos. 171591, 171614, and 171663, which were ordered consolidated in the Courts
Resolution dated July 31, 2006. 15
On April 21, 2006, SKY manifested 16 that it will no longer pursue its petition in G.R. No. 171614 and has
preferred to await the resolution in G.R. No. 171663 filed by PAKARTI and SHINWA. Accordingly, an entry of
judgment 17 against it was made on August 18, 2006. Likewise, on November 29, 2007, PAKARTI and
SHINWA moved 18 for the withdrawal of their petitions for lack of interest, which the Court granted in its
January 21, 2008 Resolution. 19 The corresponding entry of judgment 20 against them was made on March
17, 2008.
Thus, only the petition of ACENAV remained for the Court's resolution, with the lone issue of whether or not
it may be held liable to the respondents for 30% of their claim.
Maintaining that it was not a party to the bill of lading, ACENAV asserts that it cannot be held liable for the
damages sought to be collected by the respondents. It also alleged that since its principal, CARDIA, was
not impleaded as a party-defendant/respondent in the instant suit, no liability can therefore attach to it as
a mere agent. Moreover, there is dearth of evidence showing that it was responsible for the supposed
defective packing of the goods upon which the award was based.
The Court's Ruling
A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent, describing the
freight so as to identify it, stating the name of the consignor, the terms of the contract for carriage, and
agreeing or directing that the freight to be delivered to the order or assigns of a specified person at a
specified place." 21
It operates both as a receipt and as a contract. As a receipt, it recites the date and place of shipment,
describes the goods as to quantity, weight, dimensions, identification marks and condition, quality, and
value. As a contract, it names the contracting parties, which include the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties.
22
As such, it shall only be binding upon the parties who make them, their assigns and heirs. 23
In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI;
and (c) the consignee HEINDRICH. However, by virtue of their relationship with PAKARTI under separate
charter arrangements, SHINWA, KEE YEH and its agent SKY likewise became parties to the bill of lading. In
the same vein, ACENAV, as admitted agent of CARDIA, also became a party to the said contract of
carriage.
The respondents, however, maintain 24 that ACENAV is a ship agent and not a mere agent of CARDIA, as
found by both the CA 25 and the RTC. 26
The Court disagrees.
Article 586 of the Code of Commerce provides:
ART. 586. The shipowner 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
that 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. (Emphasis supplied)
Records show that the obligation of ACENAV was limited to informing the consignee HEINDRICH of the
arrival of the vessel in order for the latter to immediately take possession of the goods. No evidence was
offered to establish that ACENAV had a hand in the provisioning of the vessel or that it represented the
carrier, its charterers, or the vessel at any time during the unloading of the goods. Clearly, ACENAV's
participation was simply to assume responsibility over the cargo when they were unloaded from the
vessel. Hence, no reversible error was committed by the courts a quo in holding that ACENAV was not a
ship agent within the meaning and context of Article 586 of the Code of Commerce, but a mere agent of
CARDIA, the shipper.
On this score, Article 1868 of the Civil Code states:
ART. 1868. By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.
Corollarily, Article 1897 of the same Code provides that an agent is not personally liable to the party with
whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving
such party sufficient notice of his powers.

7
Both exceptions do not obtain in this case. Records are bereft of any showing that ACENAV exceeded its
authority in the discharge of its duties as a mere agent of CARDIA. Neither was it alleged, much less
proved, that ACENAV's limited obligation as agent of the shipper, CARDIA, was not known to HEINDRICH.
Furthermore, since CARDIA was not impleaded as a party in the instant suit, the liability attributed upon it
by the CA 27 on the basis of its finding that the damage sustained by the cargo was due to improper
packing cannot be borne by ACENAV. As mere agent, ACENAV cannot be made responsible or held
accountable for the damage supposedly caused by its principal. 28
Accordingly, the Court finds that theCA erred in ordering ACENAV jointly and severally liable with CARDIA
to pay 30o/o of the respondents' claim.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are hereby REVERSED.1awp+
+i1 The complaint against petitioner Ace Navigation Co., Inc. is hereby DISMISSED.
SO ORDERED.