G.R. No. 77638 and G.R. No. 77674. July 12, 1990.
MARITIME AGENCIES & SERVICES, INC., petitioner, vs. COURT OF APPEALS and UNION INSURANCE SOCIETY OF CANTON, LTD., respondents. UNION INSURANCE SOCIETY OF CANTON, LTD., petitioner, vs. COURT OF APPEALS, HONGKONG ISLAND CO., LTD., MARITIME AGENCIES & SERVICES, INC., and/or VIVA CUSTOMS BROKERAGE, respondents.

FACTS

Transcontinental Fertilizer Company chartered the vessel “Hongkong Island” from Hongkong Island Shipping Company to ship bagged urea from the USSR to the Philippines. Of the cargo consigned to Atlas Fertilizer Company and insured by Union Insurance Society of Canton, Ltd., a shortage of 1,383 bags (valued at P87,163.54) was discovered upon discharge in Manila, and an additional 574 bags (valued at P36,030.23) were lost due to spillage during lighterage operations after discharge. The consignee’s claims against the vessel’s agent and the lighterage operator were rejected. Union Insurance, as insurer, paid the consignee and, as subrogee, filed a complaint for reimbursement against the vessel owner (through its agent Macondray & Co., Inc.) and the charterer’s agent, Maritime Agencies & Services, Inc.
The trial court held both the vessel owner and Maritime liable for the respective losses. The Court of Appeals modified this decision, exonerating the vessel owner and holding only the charterer, represented by its agent Maritime, liable for the entire amount. Maritime and Union filed separate petitions for review.

ISSUE

The primary issue is the determination of liability for cargo loss under a voyage charter party, specifically whether the charterer or the vessel owner is responsible, and whether the charterer’s agent can be held directly liable.

RULING

The Supreme Court reinstated the trial court’s decision with modifications. The Court clarified that the charter party in question was a voyage charter, a contract of private carriage where the parties may freely stipulate their responsibilities. Examining the Uniform General Charter, the Court found the charterer (Transcontinental) was responsible for loading, stowage, and discharging operations, while the vessel owner was responsible for the care of cargo during the voyage.
Applying this contractual allocation, the loss of 1,383 bags (shortlanded cargo) occurred during the discharge from the vessel, a duty falling upon the charterer. Therefore, the charterer was liable for this amount. Conversely, the loss of 574 bags due to spillage occurred after discharge during lighterage operations, which were also under the charterer’s responsibility pursuant to the charter party terms. Consequently, the charterer was liable for both claims.
Regarding the liability of Maritime as the charterer’s agent, the Court ruled that an agent is not personally liable for contracts entered into on behalf of a disclosed principal, unless it expressly binds itself or exceeds its authority. There was no evidence that Maritime assumed personal liability. Thus, Maritime could not be held directly liable; the liability properly pertained to its disclosed principal, the charterer. However, as the charterer was not impleaded in the case, the claim could not be enforced against it. The Court also modified the award of interest to the legal rate of 6% from the date of the filing of the original complaint.