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EVERETT STEAMSHIP CORPORATION v. CA

FACTS:

The petitioner, Everett Steamship Corporation, filed a petition for review seeking to reverse the decision of the Court of Appeals. Private respondent, Hernandez Trading Co., Inc., imported three crates of bus spare parts from Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from Nagoya, Japan to Manila on board a vessel owned by petitioner. Upon arrival at the port of Manila, it was discovered that one crate was missing. Petitioner admitted the loss but offered to pay only a fraction of the value of the lost cargo. Private respondent rejected the offer and filed a suit for collection against petitioner. The trial court ruled in favor of private respondent and ordered petitioner to pay the full value of the lost cargo. On appeal, the Court of Appeals affirmed the trial court's findings. Petitioner argues that the Court of Appeals erred in ruling that the consent of the consignee is necessary to make the terms and conditions of the bill of lading binding. Petitioner also disputes the applicability of the carrier's limited liability and the full recovery of the alleged value of the lost cargo by private respondent.

ISSUES:

  1. Whether or not the stipulation limiting the common carrier's liability for loss is reasonable and just.

  2. Whether or not the bill of lading in question is a contract of adhesion.

  3. Whether or not the shipper, Maruman Trading, can be considered ignorant of the stipulations in the bill of lading.

  4. Whether the consignee, who is not a signatory to the bill of lading, is bound by the stipulations therein.

  5. Whether the carrier should be liable for the full value of the lost cargo.

RULING:

  1. The stipulation limiting the common carrier's liability for loss is reasonable and just. The bill of lading provides the shipper with the option to declare a higher valuation if the value of the cargo exceeds the limited liability of the carrier. In this case, since the shipper did not declare a higher valuation, it cannot blame the carrier for not complying with the stipulations.

  2. The bill of lading is a contract of adhesion. Contracts of adhesion impose a ready-made form of contract on one party, and such contracts are considered valid and binding. The shipper is free to reject the contract if they do not agree with its terms. However, in this case, the shipper adhered to the contract by not declaring a higher valuation, thereby giving their consent to its provisions.

  3. The shipper, Maruman Trading, cannot be considered ignorant of the stipulations in the bill of lading. They are extensively engaged in the trading business and should know the terms and conditions of their business transactions, including the shipment of goods. The shipper should have been vigilant and declared a higher valuation if necessary.

  4. The consignee can still be bound by the contract of carriage even if they are not a signatory to the bill of lading. This is based on the principle that the consignee can recover from the carrier or shipper for loss or damage to goods being transported under the bill of lading, even if the document was drawn up only by the consignor and the carrier without the intervention of the consignee. The consignee becomes a party to the contract when they demand fulfillment of a stipulation in the bill of lading.

  5. The liability of the carrier for the loss of the cargo is limited to the amount stated in Clause 18 of the bill of lading, which is One Hundred Thousand (Y100,000.00) Yen. The carrier cannot be held liable for the full value of the lost cargo because the shipper did not comply with the requirements in the bill of lading to declare a higher valuation of the goods.

PRINCIPLES:

  • Stipulations limiting a common carrier's liability for loss must be reasonable and just under the circumstances, and must be freely and fairly agreed upon.

  • Contracts of adhesion, wherein one party imposes a ready-made form of contract on the other, are valid and binding, and the party adhering to the contract is considered to have given their consent.

  • Courts must exercise greater vigilance when dealing with contracts of adhesion in order to protect the weaker party from deceptive schemes. The courts must scrutinize the contract and be vigilant for the protection of the disadvantaged party.

  • The consignee can be bound by the stipulations in a bill of lading even if they are not a signatory, as long as they demand fulfillment of a stipulation.

  • Stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation are valid and enforceable, unless the shipper declares a higher value.

  • The liability of the carrier for the loss of cargo is limited to the amount stated in the bill of lading, unless the shipper declares a higher valuation in compliance with the bill of lading's requirements.