St. Paul Fire & Marine Insurance Co. vs. Macondray & Co. Inc.

(What is to be paid; Art. 1233)

FACTS
On June, 1960, Winthrop Products, Inc. of New York, New York, USA shipped 218 cartons and drums
of drugs and medicines consigned to Winthrop-Steams, Inc., Manila, aboard SS Tai Ping, owned and
operated by Wilhelm Wilhelmsen.
Barber Steamship Lines Inc. issued Bill of Lading 34 (a document issued by a carrier which details
a shipment of merchandise and gives title of that shipment to a specified party.) in the name of
Winthrop Producs Inc. as shipper with arrival notice to Manila to consignee Winthrop-Steams
Inc. Manila. The shipment was insured by shipper against loss and/or damage with St. Paul Fire&
Marine Insurance Company under its insurance Special Policy.
Two months after, SS Tai Ping arrived at the Port of Manila and discharged shipment into the custody
of Manila Port Service, the arrastre contractor. Shipment was complete and in good order except of 1
drum and several cartons which were in bad condition. Winthrop-Steams, Inc. Manila upon failing
to receive the whole shipment and as several cartons were in bad condition, they filed a claim in the
amount of P1,109.67 representing the CIF1 (Cost, Insurance, and Freight) value of the damaged drum
and cartons of medicine to Macondray & Co. Inc., and Barber Steamship Lines Inc. and Manila Port
Service. However, both refused to pay.
Winthrop-Steams Inc. also filed its claim with insurer St. Paul Fire & Marine Insurance Co. and
insurance company on the basis of the value of lost and damaged goods in the total amount of
$1,134.46. As subrogee2 of the rights of Winthrop-Steams Inc, St. Paul Fire & Marine Insurance Co.
instituted an action for recovery of $1,134.46 plus costs against Macondray & CO., INC., BARBER
Steamship Lines, Inc.,Manila Port Service and/or Manila Railroad Company.
Manila Port Service and Manila Railroad Company: (no, you cannot collect from us) resisted action
contending that the whole cargo was delivered to consignee Winthrop Steams Inc. Manila in the same
condition in which it received from carrying vessel and that their liability is limited to the invoice
value goods of not more than P500 per package pursuant to Management Contract.
Macondray & Co, Inc., Barber Steamship Lines Inc., and Wilhelm Wilhelmsen contested as well the
claim alleging that:
-their liability for shipment ceased upon the discharge of package from ship's tackle
-are also not agents of the vessel (together with Manila Port Service)
-218 packages were discharged from SS Tai Ping into the custody of Manila Port Service as operator
and if any damage was sustained while it was under SS Tai Ping, damage was caused by the
insufficiency of packing, force majeure and/or perils of the sea
-offers to settle the claim of Winthrop-Steams Inc.by paying the CIF value of 27 lbs. Caramel, 4.13 kls
methyl salicylate and 12 pcs pharmaceutical vials only in good faith
Winthrop-Steams Inc however rejected the offer.
1 requires the seller to arrange and pay for delivery of the goods to a port or place of import in the country of destination
of the buyer.
2 The insurance company that assumes the legal right to collect the claim of an injured claimant (the subrogor) against the
third party that caused the injury, in return for paying the other's expenses in advance.

Lower Court: rendered judgment ordering:

Macondray & Co, Barber Steamship Lines, Inc and Wilhelm Wilhelmsen to pay WinthropSteams Inc jointly and severally the sum of P300 with legal interest from filing of complaint
until fully paid
Manila Railroad and Manila Port Service to pay Winthrop-Steams Inc jointly and severally
P809.67 with legal interest plus costs.
Winthrop-Steams Inc filed a motion of reconsideration contending that it also should recover $1,
134.46 (value of the lost and damaged goods) but lower court denied.
Hence present petition. (You can stop until here for the facts tho)
St. Paul Fire & Marine Insurance Company argues:
-it should also recover from Macondray & Co, Barber Steamship Lines Inc., Manila Port Service, and
Manila Railroad $1,134.46 because they paid in full amount to Winthrop-Steams Inc
Macondray & Co., et.al, countered:
-liability is limited to CIF (Cost, Insurance, Freight) value of the goods pursuant to the contract of sea
carriage in the Bill of Lading
-Winthrop-Steams Inc.'s claim was only for P1,109.67
-they are not insurers of goods and should not be made to pay the insured value
-exchange rate should be based on rate on the delivery of goods and not at the time lower court
rendered its decision.
ISSUE/S
1. Whether in case of loss or damage, liability of the carrier is limited to the CIF value of goods
that were lost or damaged
2. Whether insurer (St. Paul Fire & Marine Insurance Company) who paid claim in dollars to
Winthrop-Steams Inc should be reimbursed in peso equivalent on date of discharge or on date
of decision
HELD
Appeal is without merit.
1. Yes, liability is limited only to CIF value of lost goods.
As provided in the Bill of Lading for the rights and liabilities of parties in reference to contract
to carry, liability is limited to the value of the goods appearing in the bill is valid and binding.
The limitation of carrier's liability is sanctioned by the freedom of contracting parties to
establish such stipulations , clauses, terms, or conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs and public policy. Stipulation
fixing or limiting the sum that may be recovered from the carrier on the loss or deterioration of
the goods is valid, provided it is (a) reasonable and just under the circumstances, and (b) has
been fairly and freely agreed upon.
In the case at bar, liabilities of the defendants-appellees with respect to the lost or damaged
shipments are expressly limited to the C.I.F. value of the goods as per contract of sea carriage
embodied in the bill of lading:

"Whenever the value of the goods is less than $500 per package or other freight unit,
their value in the calculation and adjustment of claims for which the Carrier may be
liable shall for the purpose of avoiding uncertainties and difficulties in fixing value be
deemed to be the invoice value, plus freight and insurance if paid, irrespective of
whether any other value is greater or less.
"The limitation of liability and other provisions herein shall inure not only to the
benefit of the carrier, its agents, servants and employees, but also to the benefit of any
independent contractor performing services including stevedoring in connection with
the goods covered hereunder."
The ship (ambot unsay pangan sa ship) and Steamship Inc are therefore bound by the
stipulations since it is expressly stated that in accepting the Bill of lading, shipper, owner, and
consignee of goods and holder of bill of Lading all agree to be bound by stipulations,
exceptions and conditions whether written, stamped or printed as if they were signed by
shipper, owner, consignee or holder.
(Therefore ang gist is not more than P500 ra ang ma-collect ni Winthrop-Steams Inc dahil
nakasaad sa BoL)
2. Since St. Paul Fire & Marine Insurance company are subrogated merely to the rights of the
assured, it can only recover the amount that is recoverable by Winthrop-Steams Inc as limited
and restricted by the provisions of the Bill of Lading.
"The insurer after paying the claim of the insured for damages under the insurance is subrogated
merely to the rights of the insured and therefore can necessarily recover only that to what was
recoverable by the insured."
Also, the contention of St. Paul Fire & Marine Insurance Company that it should be paid according to
the full amount in dollars it paid Winthrop-Steams Inc is of no moment (haha ka ew sa of no moment).
The obligation of the carrier to pay for the damage commenced on the date it failed to deliver the
shipment in good condition to the consignee. The C.I.F. Manila value of the goods which were lost or
damaged, according to the claim of the consignee dated September 26, 1960 is $226.37 (for the
pilferage, Exhibit "G") and $324.33 (shortlanded, Exhibit "H") or P456.14 and P653.53, respectively,
in Philippine Currency. The peso equivalent was based by the consignee on the exchange rate of P2.015
to $1.00 which was the rate existing at that time. We find, therefore, that the trial court committed no
error in adopting the aforesaid rate of exchange.
(Gist is di dapat feelingero si St.Paul Fire &Marine Insurance Company na ma-reimbursean sha of the
full amount na iya gi pay kay Winthrop since si Winthrop bound by Bill of Lading, insurance company
is also bound by the said stipulation. Furthermore, hindi in dollars ang reimbursement and should start
on the date of filing of complaint. )