G.R. No. L-48264 February 21, 1980
SWITZERLAND GENERAL INSURANCE COMPANY, LTD., petitioner, vs. HON. PEDRO A. RAMIREZ, Presiding Judge of the Court of First Instance of Manila, Branch XXX, OYAMA LINES, CITADEL LINES and MABUHAY BROKERAGE CO., INC., respondents.

FACTS

Petitioner Switzerland General Insurance Company, as insurer, paid the consignee, Borden International Phils., Inc., for damages to a shipment of urea nitrogen amounting to P38,698.94. The cargo was shipped from Japan aboard the S/S “St. Lourdes” and was discharged into lighters owned by Mabuhay Brokerage Co., Inc. Upon subrogation to the consignee’s rights, petitioner filed an admiralty case against Oyama Shipping Co., Ltd. (the charterer), its local agent Citadel Lines, Inc., and Mabuhay Brokerage as alternative defendants. The trial court found Oyama Lines liable as the carrier but absolved Citadel Lines and Mabuhay Brokerage. The court held that Citadel Lines, as a mere agent of a disclosed principal (Oyama), was not liable. Petitioner appealed, contesting the exoneration of Citadel Lines.

ISSUE

Whether Citadel Lines, Inc., as the ship agent in the Philippines for the vessel S/S “St. Lourdes”, can be held solidarily liable with its principal, Oyama Lines, for the cargo loss or damage.

RULING

Yes. The Supreme Court modified the trial court’s decision and held Citadel Lines solidarily liable with Oyama Lines. The legal logic is anchored on Articles 586 and 587 of the Code of Commerce. Article 586 provides that the ship agent shall be civilly liable for the indemnities in favor of third persons arising from the conduct of the captain in the care of goods. Article 587 further establishes that the ship agent is also liable for the indemnities against the owner of the goods, subject to the vessel’s abandonment. The Court emphasized that the liabilities of a ship agent are not contingent upon the solvency or insolvency of the shipowner. The law imposes direct liability on the ship agent to third parties for acts or omissions related to the vessel’s operation. Since Citadel Lines was the duly appointed ship agent for the S/S “St. Lourdes” in the port of Manila, and the trial court correctly found that the carrier (Oyama) failed to prove any exempting cause for the damage, Citadel Lines is solidarily liable with its principal for the loss. The insolvency of Oyama Lines declared by a Tokyo court does not extinguish this statutory liability of the agent. Therefore, Citadel Lines was ordered to pay solidarily with Oyama Lines the amount of P38,698.94, with interest, attorney’s fees, and costs.