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 wasnt paid so this suit was
brought

AMCYL was brought in as 3rd party defendant

TC ruled in favor of Samar Mining

Nordeutscher Lloyd says its not liable because they have discharged the
goods in full and good condition unto AMCYLs 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 latters actual custody.

HELD
Bill 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 carriers responsibility/liability in the
transhipment of the goods can be seen under Sec. 1, par 3 of Bill of

Page 1 of 4

Lading No. 181 and Sec. 112. Phoenix Assurance v. US Lines has
upheld 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 doesnt 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 Nordeutschers possession also changes, from
possession in its own name as carrier into possession in the
name of consignee as the latters 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 cant 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.

The carrier shall not be liable in any capacity for any delay, loss or damage
after the goods leave the ships 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 whatsoever

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

(1968)
RATIO DECIDENDI
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.
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/HELD
WoN the stipulation in the charter party of the owners 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.
Page 2 of 4

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.
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 Valenzuelas 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 Seas petition holding that there
had been payment of the premium of the policy.
ISSUES/HELD
Is 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 Valenzuelas 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 Act 4 ruled that the
agreement for a maximum liability of only L100 Sterling contained in the Bill
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.

Page 3 of 4

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:

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 shouldnt 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 carriers

liability.

Northern Motors v. Prince Line: The Court ruled a similar provision in

a bill of lading limiting the carriers 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 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 respondentthe 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 carriers 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 carrierto
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

A stipulation that the common carriers 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.

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