Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-28028 November 25, 1927

JUAN SMAEL ! CO., "NC., plaintiff-appellee, vs. GA#"NO #ARRETTO ! CO., LT$., ET AL., %e&e'%(')*. AN$RES +. L"MGENGCO ('% ,"CENTE JA,"ER, appellants. Gibbs and McDonough for appellants. Felipe Ysmael and Grey & Encarnacion for appellee. STATEMENT In this action plaintiff, a do estic co!po!ation, see"s to !ecove! f!o the defendants P#,#$%.#& the alle'ed value of fou! cases of e!chandise (hich it delive!ed to the stea ship Andres on )ctobe! *&, +#**, at Manila to be shipped to Su!i'ao, but (hich (e!e neve! delive!ed to Salo on Sha!uff, the consi'nee, o! !etu!ned to the plaintiff. The o!i'inal co plaint (as a ended to include ,abino Ba!!etto and P. E. Soon as e be!s of the li ited pa!tne!ship of ,abino Ba!!etto - Co pan., /i ited. In thei! a ended ans(e!s defendants a"e a specific denial of all of the ate!ial alle'ations of the co plaint, and as special defense alle'e that the fou! cases of e!chandise in 0uestion (e!e neve! delive!ed to the , and that unde! the p!ovisions of pa!a'!aph the p!ovisions of pa!a'!aph 1 of the p!inted conditions appea!in' on the bac" of the bill of ladin', plaintiff2s !i'ht of action is ba!!ed fo! the !eason that it (as not b!ou'ht (ithin si3t. da.s f!o the ti e the cause of action acc!ued. The defendant Soon did not ans(e! the co plaint, and the defendants fu!the! alle'ed4 I. That unde! and b. vi!tue of p!ovision +* of the bill of ladin' !efe!!ed to in plaintiff2s a ended co plaint, the defendants a!e not liable in e3cess of th!ee hund!ed pesos 5P6%%7 fo! an. pac"a'e of sil" unless the value and contents of such pac"a'es a!e co!!ectl. decla!ed in the bill of ladin' at the ti e of ship ent, etc. The evidence (as ta"en upon such issues, and the lo(e! cou!t !ende!ed 8ud' ent fo! the plaintiff fo! the full a ount of its clai , f!o (hich the defendants And!es 9. /i 'en'co and :icente ;avie! appeal and assi'n the follo(in' e!!o!s4 I. The lo(e! cou!t e!!ed in findin' that one hund!ed si3t.-fou! cases of 'oods (e!e delive!ed to and loaded on the stea ship Andres. II. The lo(e! cou!t e!!ed in holdin' that appellee (as not bound b. the te! s of the bills of ladin' of cove!in' the ship ents. III. The t!ial cou!t e!!ed in failin' to ta"e into conside!ation appellants2 special defense based on clause +* of the bills of ladin'. I:. The lo(e! cou!t e!!ed in !ende!in' 8ud' ent a'ainst appellants in the su of P#,#$%.#&.

JO+NS, J.: The onl. 0uestion involved in the fi!st assi'n ent of e!!o! is one of fact upon (hich in its decision the t!ial cou!t said4 <ith !e'a!d to the fi!st 0uestion, plaintiff2s testi on., to'ethe! (ith the anifest 5E3hibit =7, si'ned b. >,. Ba!!etto, A'ents,> fo! And!es 9e!as /i 'en'co cove!in' the ship ent of the e!chandise in 0uestion, (he!ein +?& cases of e!chandise appea! as belon'in' to the plaintiff co!po!ation and the bills of ladin', E3hibits I, ; and @, si'ned b. the second office!, Cla!o ,alle!os fo! the ship ent of the +?& cases, and E3hibits 9, (hich is a t!iplicate cop. of the bill of ladin' No. ?*, on (hich the fi!st office! of the stea e! Andres, A!ancisco Masin'son', ade a note that a on' the e!chandise discha!'ed in Su!i'ao (e!e the fou! cases in 0uestion, clea!l. sho(s that the defendants !eceived f!o the plaintiff co!po!ation +?$ cases of e!chandise, and delive!ed at Su!i'ao onl. +?% cases of such e!chandise, and that defendants failed to delive! the said fou! cases in Su!i'ao (hen plaintiff2s !ep!esentative too" delive!. of the ca!'o at that po!t, and that the o!i'inal fi'u!e >+> and the (o!d >bulto> appea!in' on the bac" of E3hibit + (e!e chan'ed b. ,alle!os to !ead >&> and >bultos.> The said ,alle!os ad itted as a (itness that he had E3hibit + in his possession f!o Manila until the ca!'o (as !ecounted in Su!i'ao in the p!esence of the fi!st office!, A!ancisco Masin'son', Salo on Sha!uff, the bodeguero and hi self 5,alle!os7.
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The testi on. of Cla!o ,alle!os to the effect that, acco!din' to the tallies ade b. hi on the bac" of E3hibit + du!in' the cou!se of loadin', onl. +?% cases (e!e loaded, on boa!d the stea e! Andres stands unco!!obo!ated, and it is not suppo!ted b. the tallies the selves, as these tallies 'ive a total of +?+ cases. M!. ,alle!os, testified that he had sho(n the annotation on the bac" of E3hibit + !eadin' B& bultos en duda de enos2 to Sala on Sha!uff, and that Salo on Sha!uff 'ave his confo! it. to the sho!ta'e, and that on this occasion, a on' othe!s, (e!e p!esent the fi!st office! A!ancisco Masin'son', and the bodeguero in Su!i'ao. Cpon this point, besides the testi on. of Salo on Sha!uff, (ho denied e phaticall. the asse!tion of ,alle!os 8ust entioned, (e have the note ade and si'ned b. the fi!st office! on the face of E3hibit 9 that all the e!chandise the!ein (as discha!'ed in Su!i'ao. The said Masin'son' ce!tainl. (ould not have ade such annotation afte! the delive!. in Su!i'ao, if Salo on Sha!uff had in fact a'!eed to the sho!ta'e as testified b. ,alle!os, especiall. (hen (e conside!ed that the fou! cases, the value of (hich is clai ed b. plaintiff, (e!e included in said E3hibit 9, and the fact that said Cla!o ,alle!os, in an affidavit si'ned b. hi befo!e the Nota!. Public Ae!nando :iola (ith !e'a!d to the lost of the fou! cases, did not ention the confo! it. of Salo on Sha!uff to the said annotation of >& bultos en duda de enos.> The defendants, (ithout sho(in' an. le'al !eason the!efo!, did not p!esent as (itnesses the fi!st office!, A!ancisco Masin'son', and the hel s an of the stea e! Andres and the bodeguero in Su!i'ao to co!!obo!ate the testi on. of Cla!o ,alle!os. The!e is a ple evidence to suppo!t that findin'. In fact it is sustained b. a p!eponde!ance of the evidence. The second assi'n ent of e!!o! upon (hich appellants !el. is founded upon pa!a'!aph 1 of the bill of ladin', (hich is as follo(s4 All clai s fo! sho!ta'e o! da a'e ust be ade at the ti e of delive!. to consi'nee o! his a'ent, if the pac"a'es o! containe!s sho( e3te!io! si'ns of da a'eD othe!(ise to be ade in

(!itin' to the ca!!ie! (ithin t(ent.-fou! hou!s f!o the ti e of delive!.. Clai s fo! nondelive!. o! ship ent ust be p!esented in (!itin' to the ca!!ie! (ithin thi!t. da.s f!o the date of acc!ual. Suits based upon clai s a!isin' f!o sho!ta'e, da a'e, o! nondelive!. of ship ent shall be instituted (ithin si3t. da.s f!o date of acc!ual of the !i'ht of action. Aailu!e to a"e clai s o! to institute 8udicial p!oceedin's as he!ein p!ovided shall constitute a (aive! of the clai o! !i'ht of action. The 'oods in 0uestion (e!e shipped f!o Manila on )ctobe! *&, +#**, to be delive!ed to Salo on Sha!uff in Su!i'ao, Plaintiff2s o!i'inal co plaint (as filed on Ap!il +1, +#*6, o! a little less than si3 onths afte! the ship ent (as ade. Appellants cite and !el. upon section &%& C, Co!pus ;u!is, vol. +%, pp. 6$6-6$$, (hich is as follo(s4 Contractual imitations As to !ime For "ringing #uit. E +. $n General. E In the absence of an. e3p!ess statuto!. p!ohibition, acco!din' to the '!eat (ei'ht of autho!it., it is co petent fo! the pa!ties to a cont!act of ship ent to a'!ee on a li itation of ti e sho!te! than the statuto!. li itation, (ithin (hich action fo! b!each of the cont!act shall be b!ou'ht, and such a li itation (ill be enfo!ced if !easonable, althou'h the!e is so e autho!it. to the cont!a!.. Neve!theless to be effective such li itation ust be !easonableD and it has been said that the onl. li itations as to the validit. of such cont!act a!e that the. ust be !easonable, and that the!e ust be p!o pt action on the pa!t of the ca!!ie! in den.in' its liabilit., to the end that the shippe! a. be dul. app!ised of the fact that suit (ill be necessa!.. Stipulations of this cha!acte! a!e not opposed to public polic., and do not ope!ate as a !est!iction on the co on-la( liabilit. of the ca!!ie!. Also Rulin' Case /a(, volu e $, pp. 1#F-1##, (hich !eads4 *&?. #tipulations imiting !ime for "ringing #uit. E Si ila! in cha!acte! to the stipulations 8ust conside!ed p!esc!ibin' a ce!tain ti e (ithin (hich notice of loss ust be 'iven a!e the p!ovisions f!e0uentl. et (ith in bills of ladin' (hich !e0ui!e that an. action to !ecove! fo! loss o! da a'e to the a!ticle shipped should be be'un (ithin a specified pe!iod. The pa!ties a., if the. see fit, fi3 b. a'!ee ent a sho!te! ti e fo! the b!in'in' of suit on the cont!act than that p!ovided b. the statute of li itations, and if the pe!iod the!ein li ited is !easonable, suit ust b!ou'ht (ithin that ti e o! the shippe!2s !i'ht of action (ill be ba!!ed. Such a p!ovision is p!ohibited b. no !ule of la( no! b. an. conside!ation of public polic.. No! is it all affected b. the e3istence (ithin the 8u!isdiction of a statuto!. o! constitutional p!ohibition a'ainst ca!!ie!s li itin' o! !est!ictin' thei! co on la( liabilit., since it is held that such a stipulation does not in an. (a. defeat the co plete vestitu!e of the !i'ht to !ecove!, but e!el. !e0ui!es the asse!tion of that !i'ht b. action at an ea!lie! pe!iod than (ould be necessa!. to defeat it th!ou'h the ope!ation of the o!dina!. statute of li itations. But the li itation ust be !easonable, and if the pe!iod of ti e specified is such that unde! the facts of the pa!ticula! case the shippe! could not (ith !easonable dili'ence be enabled to b!in' suit befo!e it e3pi!ed, the atte pted li itation is void. Thus, a p!ovision that suit ust be b!ou'ht (ithin thi!t. da.s afte! the loss o! da a'e occu!!ed has been held un!easonable (he!e it appea!ed that the t!ansit i'ht !easonabl. consu e the (hole of that ti e. A pe!iod of fo!t. da.s has on the othe! hand been held to be a !easonable li itation. Cpon that 0uestion the t!ial cou!t said4 Assu in', ho(eve!, that the above 0uoted conditions ca e to the "no(led'e of the plaintiff, the Sup!e e cou!t of the Philippine Islands, has held that such stipulations in the bill of ladin' a!e not !easonable, and the!efo!e, do not ba! an action.

And it also said4 ,!antin', (ithout decidin', that said conditions appea!in' on the bac" of the o!i'inals i'ht have le'al effect, the cou!t is of the opinion that in vie( of the fact that said conditions a!e not p!inted on the t!iplicate copies (hich (e!e delive!ed to the plaintiff, such conditions a!e not bindin' upon the plaintiff. It appea!s that the plaintiff ade its clai of loss (ithin seven da.s afte! !eceipt of info! ation that +?% cases onl. (e!e delive!ed. Its second clai (as ade on =ece be! *#, +#**, in (hich it said that, if the clai (as not paid befo!e ;anua!. 6, +#*6, it (ould be placed in the hands of atto!ne.s fo! collection. )n ;anua!. 6, +#*6, ,abino Ba!!etto - Co pan. advised the plaintiff that it (ould not pa. the clai , and on Ap!il seventeenth plaintiff filed its co plaint. In the case of A'uinaldo vs. =aGa 5,. R. No. *&#?+7, + in (hich the p!inted conditions on the bill of ladin' (e!e identical (ith those in the instant case, the action (as not co enced fo! o!e than .ea! afte! the delive!. of the 'oods b. the plaintiff and the !eceipt of the bill of ladin', and it (as the!e held that4 <e a!e of the opinion that, havin' !e'a!d to the situation involved in this ship ent, and the slo(ness of co unication bet(een Manila and Catbalo'an, the cont!actual li itation stated in this bill of ladin' (ith !espect to the ti e fo! p!esentation of the (!itten clai (as insufficient. The sa e conside!ations a!e necessa!il. decisive (ith !espect to the ti e !e0ui!ed fo! the institution of 8udicial action. It !esults that the stipulations !elied upon b. the defendant-appellee constitute no obstacle to the aintenance of the p!esent action. All thin's conside!ed, (e a!e clea!l. of the opinion that the action (as b!ou'ht (ith a >!easonable ti e> as those (o!ds a!e specified and defined in the autho!ities cited. It is t!ue that both the plaintiff and the defendants a!e !esidents of the Cit. of Manila, but it is also t!ue that Su!i'ao (he!e the 'oods in 0uestion (e!e to be delive!ed is one of the ost distant places f!o Manila in the Philippine Islands. In the ve!. natu!e of thin's, plaintiff (ould not (ant to co ence its action until such ti e as it had ade a full and ca!eful investi'ation of all of the ate!ial facts and even the la( of the case, so as to dete! ine (hethe! o! not defendants (e!e liable fo! its loss. In its thi!d assi'n ent of e!!o!, appellants !el. on clause +* of the bill of ladin', (hich is as follo(s4 It is e3p!essl. unde!stood that ca!!ie! shall not be liable fo! loss o! da a'e f!o an. cause o! fo! an. !eason to an a ount e3ceedin' th!ee hund!ed pesos 5P6%%7 Philippine cu!!enc. fo! an. sin'le pac"a'e of sil" o! othe! valuable ca!'o, no! fo! an a ount e3ceedin' one hund!ed pesos 5P+%%7 Philippine cu!!enc. fo! an. sin'le pac"a'e of othe! ca!'o, unless the value and contents of such pac"a'es a!e co!!ectl. decla!ed in this bill of ladin' at the ti e of ship ent and f!ei'ht paid in acco!d (ith the actual easu!e ent o! (ei'ht of the ca!'o shipped. That condition is p!inted on the bac" of the bill of ladin'. In disposin' of that 0uestion, the lo(e! cou!t points out that the conditions in 0uestion >a!e not p!inted on the t!iplicate copies (hich (e!e delive!ed to the plaintiff,> and that b. !eason the!eof the. >a!e not bindin' upon the plaintiff.> The clause in 0uestion p!ovides that the ca!!ie! shall not be liable fo! loss o! da a'e f!o an. cause o! fo! an. !eason to an a ount in e3cess of P6%% >fo! an. sin'le pac"a'e of sil" o! othe! valuable ca!'o.>

The ship in 0uestion (as a co on ca!!ie! and, as such, ust have been ope!ated as a public utilit.. It is a atte! of co on "no(led'e that la!'e 0uantities of sil" a!e i po!ted in the Philippine Islands, and that afte! bein' i po!ted, the. a!e sold b. the e!chants in Manila and othe! la!'e seapo!ts, and then shipped to diffe!ent points and places in the Islands. 9ence, the!e is nothin' unusual about the ship ent of sil". In t!uth and in fact, it is a atte! of usual and o!dina!. business. The!e (as no f!aud o! conceal ent in the ship ent in 0uestion. Clause +* above 0uoted places a li it of P6%% >fo! an. sin'le pac"a'e of sil".> The evidence sho(s that +?$ >cases> (e!e shipped, and that the value of each case (as ve!. nea! P*,&%%. In this situation, the li it of defendants2 liabilit. fo! each case of sil" >fo! loss o! da a'e f!o an. cause o! fo! an. !eason> (ould put it in the po(e! of the defendants to have ta"en the (hole ca!'o of +?$ cases of sil" at a valuation of P6%% fo! each case, o! less than one-ei'ht of its actual value. If that !ule of la( should be sustained, no sil" (ould eve! be shipped f!o one island to anothe! in the Philippines. Such a li itation of value is unconscionable and void as a'ainst public polic.. Co!pus ;u!is, volu e +%, p. +&$, sa.s4 PAR. +#$. ?. %easonable of imitation. E The validit. of stipulations li itin' the ca!!ie!s liabilit. is to be dete! ined b. thei! !easonableness and thei! confo! it. to the sound public polic., in acco!dance (ith (hich the obli'ations of the ca!!ie! to the public a!e settled. It cannot la(full. stipulate fo! e3e ption f!o liabilit., unless such e3e ption is 8ust and !easonable, and unless the cont!act is f!eel. and fai!l. ade. No cont!actual li itation is !easonable (hich is subve!sive of public polic.. PAR. +#&. 1. &hat imitations of iability 'ermissible. E a. (egligence E 5+7 %ule in America E 5a7 $n Absence of )rganic or #tatutory 'ro*isions %egulating #ub+ect E aa. Ma+ority %ule. E In the absence of statute, it is settled b. the (ei'ht of autho!it. in the Cnited States, that (hateve! li itations a'ainst its co on-la( liabilit. a!e pe! issible to a ca!!ie!, it cannot li it its liabilit. fo! in8u!. to o! loss of 'oods shipped, (he!e such in8u!. o! loss is caused b. its o(n ne'li'ence. This is the co on-la( doct!ine and it a"es no diffe!ence that the!e is no statuto!. p!ohibition a'ainst cont!acts of this cha!acte!. PAR. +#?. bb. Considerations on &hich %ule "ased. E The !ule, it is said, !ests on conside!ations of public polic.. The unde!ta"in' is to ca!!. the 'oods, and to !elieve the shippe! f!o all liabilit. fo! loss o! da a'e a!isin' f!o ne'li'ence in pe!fo! in' its cont!act is to i'no!e the cont!act itself. The natu!al effect of a li itation of liabilit. a'ainst ne'li'ence is to induce (ant of ca!e on the pa!t of the ca!!ie! in the pe!fo! ance of its dut.. The shippe! and the co on ca!!ie! a!e not on e0ual te! sD the shippe! ust send his f!ei'ht b. the co on ca!!ie!, o! not at allD he is the!efo!e enti!el. at the e!c. of the ca!!ie!, unless p!otected b. the hi'he! po(e! of the la( a'ainst bein' fo!ced into cont!acts li itin' the ca!!ie!2s liabilit.. Such cont!acts a!e (antin' in the ele ent of volunta!. assent. PAR. +#1. cc. Application and E,tent of %ule E 5aa7 (egligence of #er*ants. E The !ule p!ohibitin' li itation of liabilit. fo! ne'li'ence is often stated as a p!ohibition of an. cont!act !elievin' the ca!!ie! f!o loss o! da a'e caused b. its o(n ne'li'ence o! isfeasance, o! that of its se!vantsD and it has been specificall. decided in an. cases that no cont!act li itation (ill !elieve the ca!!ie! f!o !esponsibilit. fo! the ne'li'ence, uns"illfulness, o! ca!elessness of its e plo.ees. Based upon the findin's of fact of the t!ial cou!t (hich a!e sustained b. the evidence, the plaintiff delive!ed to the defendants +?$ cases of sil" consi'ned and to be delive!ed b. the defendants to

Salo on Sha!uff in Su!i'ao. Aou! of such cases (e!e neve! delive!ed, and the evidence sho(s that thei! value is the alle'ed in the co plaint. The!e is no e!it in the appeal. The 8ud' ent of the lo(e! cou!t is affi! ed, (ith costs.

A*ance-a. C./.. #treet. Malcolm. 0illamor. )strand and 0illa1%eal. //.. concur. -oo)'o)e*
+

P!o ul'ated Ma!ch +, +#*1, not !epo!ted.