Maritime Agencies & Services, Inc.,Vs. Court of Appeals

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Title of the Case

MARITIME AGENCIES & SERVICES, INC., petitioner, vs. COURT OF APPEALS, and UNION
INSURANCE SOCIETY OF CANTON, LTD., respondents.
Doctrine (Syllabus)
It is a well-settled principle that the agent shall be liable for the act or omission of the principal only if the latter is
undisclosed.
Facts
• Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company the
motor vessel named "Hongkong Island" for the shipment of 8073.35 MT (gross) bagged urea
from Novorossisk, Odessa, USSR, to the Philippines, the parties signing for this purpose a Uniform General
Charter.
• Of the total shipment, 5,400.04 MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04
to be discharged in Manila and the remaining 2,000 MT in Cebu. The goods were insured by the consignee
with the Union Insurance Society of Canton, Ltd. for P6,779,214.00 against all risks.
• Maritime Agencies & Services, Inc. was appointed as the charterer's agent and Macondray Company, Inc.
as the owner's agent.
• The vessel arrived in Manila on October 3, 1979, and unloaded part of the consignee's goods, then proceeded
to Cebu on October 19, 1979, to discharge the rest of the cargo.
• On October 31, 1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the
amount of P87,163.54, representing C & F value of the 1,383 shortlanded bags. The consignee filed another
formal claim, this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value
of 574 bags of net unrecovered spillage
• These claims having been rejected, the consignee then went to Union, which on demand paid the total indemnity
of P113,123.86 pursuant to the insurance contract. As subrogee of the consignee, Union then filed on
a complaint for reimbursement of this amount, with legal interest and attorney's fees,
against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs
Brokerage. On April 20, 1981, the complaint was amended to drop Viva and implead Macondray Company,
Inc. as a new defendant.
• RTC: holding the defendants liable as follows:
(a) defendants Hongkong Island Co., Ltd., and its local agent Macondray & Co., Inc. to pay the plaintiff the sum
of P87,163.54 plus 12% interest
(b) defendant Maritime Agencies & Services, Inc., to pay the plaintiff the sum of P36,030.23, plus 12%
• CA: AFFIRMED AND MODIFIED

• MARITIME’S CONTENTION: In G.R. No. 77638, pleads non-liability on the ground that it was only
the charterer's agent and should not answer for whatever responsibility might have attached to the
principal. It also argues that the respondent court erred in applying Articles 1734 and 1735 of the Civil
Code in determining the charterer's liability.
Issue W/N MARITIME SHOULD BE LIABLE
Ruling There are three general categories of charters, to wit, the demise or "bareboat charter," the time charter
and the voyage charter.
A demise involves the transfer of full possession and control of the vessel for the period covered by
the contract, the charterer obtaining the right to use the vessel and carry whatever cargo it chooses,
while manning and supplying the ship as well.
A time charter is a contract to use a vessel for a particular period of time, the charterer obtaining the
right to direct the movements of the vessel during the chartering period, although the owner retains
possession and control.
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A voyage charter is a contract for the hire of a vessel for one or a series of voyages usually for the
purpose of transporting goods for the charterer. The voyage charter is a contract
of affreightment and is considered a private carriage.
Tested by those definitions, the agreement entered into in the cases at bar should be considered. This
brings us to the basic question of who, in this kind of charter, shall be liable for the cargo.
A voyage charter being a private carriage, the parties may freely contract respecting liability for
damage to the goods and other matters. The basic principle is that "the responsibility for cargo loss
falls on the one who agreed to perform the duty involved" in accordance with the terms of most voyage
charters.
This is true in the present cases where the charterer was responsible for loading, stowage and
discharging at the ports visited, while the owner was responsible for the care of the cargo during
the voyage.
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. Such policy has no force where the public at large is not involved, as in the case
of a ship totally chartered for the use of a single party.
Nevertheless, this cannot benefit Hongkong, because there was no showing in that case that the vessel
was at fault. In the cases at bar, the trial court found that 1,383 bags were shortlanded, which could
only mean that they were damaged or lost on board the vessel before unloading of the shipment. It is
not denied that the entire cargo shipped by the charterer in Odessa was covered by a clean bill of
lading. As the bags were in good order when received in the vessel, the presumption is that they were
damaged or lost during the voyage as a result of their negligent or improper stowage. For this the ship
owner should be held liable.
But we do agree that the period for filing the claim is one year, in accordance with the Carriage of
Goods by Sea Act.
The one-year period in the cases at bar should commence on October 20, 1979, when the last item was
delivered to the consignee. Union's complaint was filed against Hongkong on September 19, 1980, but
tardily against Macondray on April 20, 1981. The consequence is that the action is considered
prescribed as far as Macondray is concerned but not against its principal, which is what matters
anyway.
As regards the goods damaged or lost during unloading, the charterer is liable therefor, having
assumed this activity under the charter party "free of expense to the vessel." The difficulty is that
Transcontinental has not been impleaded in these cases and so is beyond our jurisdiction. The
liability imposable upon it cannot be borne by Maritime which, as a mere agent, is not
answerable for injury caused by its principal. It is a well-settled principle that the agent shall
be liable for the act or omission of the principal only if the latter is undisclosed.
Union seeks to hold Maritime liable as ship agent on the basis of the ruling of this Court in the case of
Switzerland General Insurance Co., Ltd. v. Ramirez. However, we do not find that that case is
applicable.
In that case, the charterer represented itself on the face of the bill of lading as the carrier. The vessel
owner and the charterer did not stipulate in the Charter party on their separate respective liabilities for
the cargo. The loss/damage to the cargo was sustained while it was still on board or under the custody
of the vessel. As the charterer was itself the carrier, it was made liable for the acts of the ship captain
who was responsible for the cargo while under the custody of the vessel.
As for the charterer's agent, the evidence showed that it represented the vessel when it took charge of
the unloading of the cargo and issued cargo receipts (or tally sheets) in its own name. Claims against
the vessel for the losses/damages sustained by that cargo were also received and processed by it. As
a result, the charterer's agent was also considered a ship agent and so was held to be solidarily liable
with its principal.
The facts in the cases at bar are different. The charterer did not represent itself as a carrier and indeed
assumed responsibility only for the unloading of the cargo, i.e., after the goods were already outside
the custody of the vessel. In supervising the unloading of the cargo and issuing Daily Operations
Report and Statement of Facts indicating and describing the day-to-day discharge of the cargo,
Maritime acted in representation of the charterer and not of the vessel. It thus cannot be
considered a ship agent. As a mere charterer's agent, it cannot be held solidarily liable with
Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Notably,
Transcontinental was disclosed as the charterer's principal and there is no question that
Maritime acted within the scope of its authority.
Dispositive
Portion WHEREFORE, the decision of the respondent court is SET ASIDE and that of the trial court is
REINSTATED as above modified. The parties shall bear their respective costs.
SO ORDERED.
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Title of the Case

• CA: AFFIRMED AND MODIFIED

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