G.R. No. 171591. June 25, 2012.* and Pioneer Insurance and Surety Corp.

the sum of
ACE NAVIGATION CO., INC., petitioner, vs. FGU P213,518.20 plus interest at the rate of six per centum (6%)
INSURANCE CORPORATION and PIONEER INSURANCE from the filing of the complaint until paid.
AND SURETY CORPORATION, respondents. The Facts
Mercantile Law; Bill of Lading; A bill of lading is defined as “an instrument On July 19, 1990, Cardia Limited (CARDIA) shipped on
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 board the vessel M/V Pakarti Tiga at Shanghai Port China,
agreeing or directing that the freight to be delivered to the order or assigns of a 8,260 metric tons or 165,200 bags of Grey Portland Cement
specified person at a specified place.”—A bill of lading is defined as “an to be discharged at the Port of Manila and delivered to its
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 consignee, Heindrich Trading Corp. (HEINDRICH). The
carriage, and agreeing or directing that the freight to be delivered to the order or subject shipment was insured with respondents, FGU
assigns of a specified person at a specified place.” It operates both as a receipt and Insurance Corp. (FGU) and Pioneer Insurance and Surety
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, Corp. (PIONEER), against all risks under Marine Open
quality, and value. As a contract, it names the contracting parties, which include Policy No. 062890275 for the amount of P18,048,421.00.3
the consignee, fixes the route, destination, and freight rates or charges, and The subject vessel is owned by P.T. Pakarti Tata
stipulates the rights and obligations assumed by the parties. As such, it shall only
be binding upon the parties who make them, their assigns and heirs. (PAKARTI) which it chartered to Shinwa Kaiun Kaisha Ltd.
Civil Law; Agency; An agent is not personally liable to the party with whom (SHINWA).4 Representing itself as owner of the vessel,
he contracts, unless he expressly binds himself or exceeds the limits of his authority _______________
without giving such party sufficient notice of his powers.—Article 1868 of the Civil 1 Rollo (G.R. No. 171591), pp. 25-34.
Code states: “ART. 1868. By the contract of agency, a person binds himself to 2 Id., at pp. 36-37.
3 Id., at p. 26.
render some service or to do something in representation or on behalf of another,
4 Id., at p. 30.
with the consent or authority of the latter.” Corollarily, Article 1897 of the same
350
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 350 SUPREME COURT REPORTS ANNOTATED
without giving such party sufficient notice of his powers. Ace Navigation Co., Inc. vs. FGU Insurance Corporation
_______________
* THIRD DIVISION. SHINWA entered into a charter party contract with Sky
349 International, Inc. (SKY), an agent of Kee Yeh Maritime Co.
VOL. 674, JUNE 25, 2012 349 (KEE YEH),5 which further chartered it to Regency Express
Ace Navigation Co., Inc. vs. FGU Insurance Corporation Lines S.A. (REGENCY). Thus, it was REGENCY that
PETITION for review on certiorari of the decision and directly dealt with consignee HEINDRICH, and accordingly,
resolution of the Court of Appeals. issued Clean Bill of Lading No. SM-1.6
The facts are stated in the opinion of the Court. On July 23, 1990, the vessel arrived at the Port of Manila
Nolasco & Associates Law Offices for petitioner. and the shipment was discharged. However, upon inspection
Astorga & Repol Law Offices for respondents. of HEINDRICH and petitioner Ace Navigation Co., Inc.
PERLAS-BERNABE, J.: (ACENAV), agent of CARDIA, it was found that out of the
This is an appeal under Rule 45 of the Rules of Court 165,200 bags of cement, 43,905 bags were in bad order and
seeking to reverse the June 22, 2004 Decision1 and February condition. Unable to collect the sustained damages in the
17, 2006 Resolution2 of the Court of Appeals (CA) ordering amount of P1,423,454.60 from the shipper, CARDIA, and the
petitioner Ace Navigation Co., Inc., jointly and severally with charterer, REGENCY, the respondents, as co-insurers of the
Cardia Limited, to pay respondents FGU Insurance Corp. cargo, each paid the consignee, HEINDRICH, the amounts of
P427,036.40 and P284,690.94, respectively,7 and subsequently dismissed on joint motion by the respondents
consequently became subrogated to all the rights and causes and COMMERCIAL.12
of action accruing to HEINDRICH. Proceedings Before the RTC and the CA
Thus, on August 8, 1991, respondents filed a complaint for In its November 26, 2001 Decision,13 the RTC dismissed
damages against the following defendants: “REGENCY the complaint, the fallo of which reads:
EXPRESS LINES, S.A./ UNKNOWN CHARTERER OF THE “WHEREFORE, premises considered, plaintiffs’ complaint is DISMISSED.
Defendants’ counter-claim against the plaintiffs are likewise dismissed, it
VESSEL ‘PAKARTI TIGA’/ UNKNOWN OWNER and/or appearing that plaintiff[s] did not act in evident bad faith in filing the present
DEMIFE (sic) CHARTERER OF THE VESSEL ‘PAKARTI complaint against them.
TIGA’, SKY INTERNATIONAL, INC. and/or ACE Defendant Pakarti and Shinwa’'s cross-claims against their co-defendants are
likewise dismissed for lack of sufficient evidence.
NAVIGATION COMPANY, INC.”8 which was docketed as No costs.
Civil Case No. 90-2016. SO ORDERED.”
In their answer with counterclaim and cross-claim, _______________
10 Id., at p. 26.
PAKARTI and SHINWA alleged that the suits against them 11 Supra note 9.
cannot prosper because they were not named as parties in 12 Id.
13 Rollo (G.R. No. 171591), pp. 38-42.
the bill of lading.9 352
_______________
5 Id., at p. 29. 352 SUPREME COURT REPORTS ANNOTATED
6 Supra note 3. Ace Navigation Co., Inc. vs. FGU Insurance Corporation
7 Id.
8 Supra note 5. Dissatisfied, the respondents appealed to the CA which, in
9 Rollo (G.R. No. 171591), p. 27. its assailed June 22, 2004 Decision,14 found PAKARTI,
351
SHINWA, KEE YEH and its agent, SKY, solidarity liable for
VOL. 674, JUNE 25, 2012 351
70% of the respondents’ claim, with the remaining 30% to be
Ace Navigation Co., Inc. vs. FGU Insurance Corporation
shouldered solidarity by CARDIA and its agent, ACENAV,
Similarly, ACENAV claimed that, not being privy to the thus:
bill of lading, it was not a real party-in-interest from whom “WHEREFORE, premises considered, the Decision dated November 26, 2001
the respondents can demand compensation. It further denied is hereby MODIFIED in the sense that:
a) defendant-appellees P.T. Pakarti Tata, Shinwa Kaiun Kaisha, Ltd., Kee
being the local ship agent of the vessel or REGENCY and Yeh Maritime Co., Ltd. and the latter’s agent Sky International, Inc. are hereby
claimed to be the agent of the shipper, CARDIA.10 declared jointly and severally liable, and are DIRECTED to pay FGU Insurance
For its part, SKY denied having acted as agent of the 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
charterer, KEE YEH, which chartered the vessel from Corp. the sum of One Hundred Ninety-Nine Thousand Two Hundred Eighty-
SHINWA, which originally chartered the vessel from Three and 66/100 (P199,283.66) Pesos representing Seventy (70%) per centum of
PAKARTI. SKY also averred that it cannot be sued as an their respective claims as actual damages plus interest at the rate of six (6%) per
centum from the date of the filing of the complaint; and
agent without impleading its alleged principal, KEE YEH.11 b) defendant Cardia Ltd. and defendant-appellee Ace Navigation Co., Inc.
On September 30, 1991, HEINDRICH filed a similar are DECLARED jointly and severally liable and are hereby DIRECTED to pay
complaint against the same parties and Commercial Union FGU Insurance Corporation One Hundred Twenty-Eight Thousand One Hundred
Ten and 92/100 (P128,110.92) Pesos and Pioneer Insurance and Surety Corp.
Assurance Co. (COMMERCIAL), docketed as Civil Case No. Eighty-Five Thousand Four Hundred Seven and 28/100 (P85,407.28) Pesos
91-2415, which was later consolidated with Civil Case No. representing thirty (30%) per centum of their respective claims as actual
91-2016. However, the suit against COMMERCIAL was
damages, plus interest at the rate of six (6%) per centum from the date of the was made on August 18, 2006. Likewise, on November 29,
filing of the complaint.
SO ORDERED.” 2007, PAKARTI and SHINWA moved18 for the withdrawal of
Finding that the parties entered into a time charter party, their petitions for lack of interest, which the Court granted in
not a demise or bareboat charter where the owner completely its January 21, 2008 Resolution.19 The corresponding entry of
and exclusively relinquishes possession, command and judgment20against them was made on March 17, 2008.
_______________
navigation to the charterer, the CA held PAKARTI, 15 Id., at p. 55.
SHINWA, KEE YEH and its agent, SKY, solidarity liable for 16 Rollo (G.R. No. 171614), p. 9.
17 Id., at pp. 35-36.
70% of the 18 Rollo (G.R. No. 171663), pp. 349-354.
_______________ 19 Id., at pp. 355-356.
14 Id., at pp. 25-34. 20 Id., at pp. 357-358.
353 354
VOL. 674, JUNE 25, 2012 353 354 SUPREME COURT REPORTS ANNOTATED
Ace Navigation Co., Inc. vs. FGU Insurance Corporation Ace Navigation Co., Inc. vs. FGU Insurance Corporation
damages sustained by the cargo. This solidarity liability was Thus, only the petition of ACENAV remained for the
borne by their failure to prove that they exercised Court’s resolution, with the lone issue of whether or not it
extraordinary diligence in the vigilance over the bags of may be held liable to the respondents for 30% of their claim.
cement entrusted to them for transport. On the other hand, Maintaining that it was not a party to the bill of lading,
the CA passed on the remaining 30% of the amount claimed ACENAV asserts that it cannot be held liable for the
to the shipper, CARDIA, and its agent, ACENAV, upon a damages sought to be collected by the respondents. It also
finding that the damage was partly due to the cargo's inferior alleged that since its principal, CARDIA, was not impleaded
packing. as a party-defendant/respondent in the instant suit, no
With respect to REGENCY, the CA affirmed the findings liability can therefore attach to it as a mere agent. Moreover,
of the RTC that it did not acquire jurisdiction over its person there is dearth of evidence showing that it was responsible
for defective service of summons. for the supposed defective packing of the goods upon which
PAKARTI’s, SHTNWA’s, SKY’s and ACENAV’s respective the award was based.
motions for reconsideration were subsequently denied in the The Court’s Ruling
CA’s assailed February 17, 2006 Resolution. A bill of lading is defined as “an instrument in writing,
Issues Before the Court signed by a carrier or his agent, describing the freight so as
PAKARTI, SHINWA, SKY and ACENAV filed separate to identify it, stating the name of the consignor, the terms of
petitions for review on certiorari before the Court, docketed the contract for carriage, and agreeing or directing that the
as G.R. Nos. 171591, 171614, and 171663, which were freight to be delivered to the order or assigns of a specified
ordered consolidated in the Court’s Resolution dated July 31, person at a specified place.”21 It operates both as a receipt
2006.15 and as a contract. As a receipt, it recites the date and place of
On April 21, 2006, SKY manifested16 that it will no longer shipment, describes the goods as to quantity, weight,
pursue its petition in G.R. No. 171614 and has preferred to dimensions, identification marks and condition, quality, and
await the resolution in G.R. No. 171663 filed by PAKARTI value. As a contract, it names the contracting parties, which
and SHINWA. Accordingly, an entry of judgment17 against it include the consignee, fixes the route, destination, and
freight rates or charges, and stipulates the rights and cargo when they were unloaded from the vessel. Hence, no
obligations assumed by the parties.22 As such, it shall only be reversible error was committed by the courts a quo in holding
binding upon the parties who make them, their assigns and that ACENAV was not a ship agent within the meaning and
heirs.23 con-
_______________ _______________
21 Martin, Commentaries and Jurisprudence on the Philippine Commercial Laws, 1989 24 Rollo (G.R. No. 171591), pp. 64-69.
Revised Ed., Vol. 3, p. 91. 25 Id., at p. 33.
22 Iron Bulk Shipping Phil., Co., Ltd. v. Remington Industrial Sales Corp., G.R. No. 26 Id., at p. 42.
136960, December 8, 2003, 417 SCRA 229, 234-235. 356
23 Art. 1311, Civil Code.
356 SUPREME COURT REPORTS ANNOTATED
355
VOL. 674, JUNE 25, 2012 355 Ace Navigation Co., Inc. vs. FGU Insurance Corporation
Ace Navigation Co., Inc. vs. FGU Insurance Corporation text of Article 586 of the Code of Commerce, but a mere
In this case, the original parties to the bill of lading are: agent of CARDIA, the shipper.
(a) the shipper CARDIA; (b) the carrier PAKARTI; and (c) On this score, Article 1868 of the Civil Code states:
“ART. 1868. By the contract of agency, a person binds himself to render
the consignee HEINDRICH. However, by virtue of their some service or to do something in representation or on behalf of another, with
relationship with PAKARTI under separate charter the consent or authority of the latter.”
arrangements, SHINWA, KEE YEH and its agent SKY Corollarily, Article 1897 of the same Code provides that an
likewise became parties to the bill of lading. In the same agent is not personally liable to the party with whom he
vein, ACENAV, as admitted agent of CARDIA, also became a contracts, unless he expressly binds himself or exceeds the
party to the said contract of carriage. limits of his authority without giving such party sufficient
The respondents, however, maintain24 that ACENAV is notice of his powers.
a ship agent and not a mere agent of CARDIA, as found by Both exceptions do not obtain in this case. Records are
both the CA25 and the RTC.26 bereft of any showing that ACENAV exceeded its authority
The Court disagrees. in the discharge of its duties as a mere agent of CARDIA.
Article 586 of the Code of Commerce provides: Neither was it alleged, much less proved, that ACENAV’s
“ART. 586. The shipowner and the ship agent shall be civilly liable for the limited obligation as agent of the shipper, CARDIA, was not
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
known to HEINDRICH.
was invested therein. Furthermore, since CARDIA was not impleaded as a party
By ship agent is understood the person entrusted with the provisioning of a in the instant suit, the liability attributed upon it by the
vessel, or who represents her in the port in which she may be found.” (Emphasis
supplied)
CA27 on the basis of its finding that the damage sustained by
Records show that the obligation of ACENAV was limited the cargo was due to improper packing cannot be borne by
to informing the consignee HEINDRICH of the arrival of the ACENAV. As mere agent, ACENAV cannot be made
vessel in order for the latter to immediately take possession responsible or held accountable for the damage supposedly
of the goods. No evidence was offered to establish that caused by its principal.28
ACENAV had a hand in the provisioning of the vessel or that Accordingly, the Court finds that the CA erred in ordering
it represented the carrier, its charterers, or the vessel at any ACENAV jointly and severally liable with CARDIA to pay
time during the unloading of the goods. Clearly, ACENAV’s 30% of the respondents’ claim.
participation was simply to assume responsibility over the
 WHEREFORE, the assailed Decision and Resolution of
the Court of Appeals are hereby REVERSED. The complaint
_______________
27 Id., at p. 33.
28 Maritime Agencies & Services, Inc. v. Court of Appeals, G.R. Nos. 77638 and 77674,
July 12, 1990, 187 SCRA 346, 355.
357
VOL. 674, JUNE 25, 2012 357
Ace Navigation Co., Inc. vs. FGU Insurance Corporation
against petitioner Ace Navigation Co., Inc. is hereby
DISMISSED.
SO ORDERED.
Peralta** (Acting Chairperson), Abad, Villarama,
Jr.,*** and Reyes,**** JJ., concur.
Judgment and resolution reversed, complaint against Ace
Navigation Co., Inc. dismissed.
Notes.—The presumption that the bill of lading, which
petitioner relies upon to support its claim for restitution,
constitutes prima facie evidence of the goods therein
described was correctly deemed by the appellate court to
have been rebutted in light of abundant evidence casting
doubts on its veracity. (Malayan Insurance Co., Inc. vs.
Jardine Davies Transport Services, Inc., 600 SCRA 706
[2009])
A bill of lading is a written acknowledgement of the
receipt of goods and an agreement to transport and to deliver
them at a specified place to a person named or on his or her
order. It operates both as a receipt and as a contract.
(Unsworth Transport International [Phils.], Inc. vs. Court of
Appeals, 625 SCRA 357 [2010])