EASTERN SHIPPING LINES, INC., PETITIONER, VS. MARGARINE-VERKAUFS-UNION GMBH, RESPONDENT.

The Court affirms the appealed judgment holding peti­tioner liable
under the terms of its own bill of lading for the damage suffered by
respondent’s copra cargo on board petitioner’s vessel, but sets aside the award
of attorney’s fees to respondent-plaintiff for lack of any statement or reason
in the lower court’s judgment that would justify the award.

Respondent corporation, a West German corporation not engaged in
business in the Philippines,
was the consignee of 500 long tons of Philippine copra in bulk with a total
value of US$108, 750.00 shipped from Cebu City
on board petitioner’s (a Philippine corpora­tion) vessel, the SS “EASTERN
PLANET” for discharge at Hamburg, Germany.  Petitioner’s bill of lading for the cargo
provided as fol­lows:

“x x x
Except as otherwise stated herein and in the Charter Party, this con­tract
shall be governed by the laws of the Flag of the Ship carrying the goods.  In case of average, same shall be adjusted
according to York-Antwerp Rules of 1950.”

While the vessel was off Gibraltar, a fire
broke out aboard the vessel and caused water damage to the copra shipment in
the amount of US$591.38.  Petitioner
corporation rejected respondent’s claim for payment of the damage and
respondent filed on June 18, 1966
in the Manila court of first instance its complaint
against petitioner as defendant for re­covery of the same and
US$250.00-attorney’s fees and expenses of litiga­tion.

After trial, the lower court rejected petitioner’s defense that
it was not liable under Philippine Law for the damage which did not exceed 5%
of respondent’s interest in the cargo and rendered judg­ment on April 25, 1969
“ordering the defendant, Eastern Shipping Lines, Inc. to pay to the
plaintiff, Margarine-Verkaufs-Union GMBH, the sum of
US$591.38, with interest at the legal rate from the date of the filing of the
complaint until fully paid, plus US$250.00 as attorney’s fees and the costs of
the suit.”

In this review on questions of law, petitioner reiterates as its
first assignment of error its submittal that Article 848 of the Code of
Commerce^[1]
which would bar claims for averages not exceeding 5% of the claimant’s interest
should be applied rather than the lower court’s ruling that petitioner’s bill
of lading expressly contained “an agreement to the contrary,” i.e. for the
application of the York-Antwerp Rules which provide for respondent’s full
recovery of the damage loss.

The Court finds no error and upholds the lower court’s ruling
sustaining respondent’s damage claim although the amount thereof did not exceed
5% of respondent’s interest in the cargo and would have been barred by the
cited article of the Commerce Code.  We
hold that the lower court correctly ruled the cited codal
article to be “not applicable in this particular case for the reason that the
bill of lading (Exhibit ‘F’) contains ‘an agreement to the contrary’ for it is
expressly provided in the last sentence of the first paragraph (Exhibit ‘1-A’)
that ‘In case of average, same shall be adjusted according to York-Antwerp
Rules of 1950.’ The insertion of said condition is expressly authorized by
Commonwealth Act No. 65 which has adopted in toto
the U. S. Carriage of Goods by Sea Act. 
Now, it has not been shown that said rules limit the recovery of damage,
to cases within a certain percentage or pro­portion that said damage may bear
to claimant’s interest either in the vessel or cargo as provided in Article 848
of the Code of Commerce.  On the
contrary, Rule 3 of said York-Antwerp Rules expressly states that ‘Damage done
to a ship and cargo, or either of them, by water or otherwise, including damage
by breaching or scuttling a burning ship, in extinguishing a fire on board the
ship, shall be made good as general average x x
x.'”

There is a clear and irreconcilable inconsistency between the
York-Antwerp Rules expressly adopted by the parties as their contract under the
bill of lading which sustains respondent’s claim and the codal
article cited by petitioner which would bar the same.  Furthermore, as correctly contended by
respondent, what is here in­volved is a contract of adhesion as embodied in the
printed bill of lading issued by petitioner for the shipment to which
respondent as the consignee merely adhered, having no choice in the matter, and
consequently, any ambiguity therein must be construed against peti­tioner as
the author.

We find, however, petitioner’s second and only other assign­ment
of error against the award of attorney’s fees of US$250.00 to be well
taken.  The text of the lower court’s
decision stated no justification nor reason for the award of attorney’s fees
and should therefore be disallowed.  As
restated in Buan vs. Camaganacan^[2],
the general rule is that it is contrary to sound public policy to place a
penalty on the right to litigate nor should attorney’s fees be awarded everytime a party wins a lawsuit.  Hence, Article 2208 of the Civil Code
provides that “in the absence of stipulation, attorney’s fees and expenses
of liti­gation, other than judicial costs, cannot be recovered,” save for
the eleven exceptions therein expressly provided.

Insofar as the present case is concerned, the lower court made no
finding that it falls within any of the exceptions that would justify the award
for attorney’s fees, such as gross and evident bad faith in refusing to satisfy
a plainly valid, just and demandable claim. 
Even under the broad eleventh exception of the cited article which
allows the imposition of attorney’s fees “in any other case where the
court deems it just and equitable that attorney’s fees and expenses of litiga­tion
should be recovered,” the Court stressed in Buan,
supra, that “the conclusion must be borne out by findings of facts
and law.  What is just and equitable in a
given case is not a mere matter of feeling but of demonstration…. Hence, the
exercise of judicial discretion in the award of attorney’s fees under Article
2208 (11) of the Civil Code demands a factual, legal or equitable justification
upon the basis of which the court exercises its discretion.  Without such a justification, the award is a
conclusion without a premise, its basis being improperly left to speculation
and conjecture.” The summary award of counsel’s fees made in the appealed
judgment must therefore be set aside.

A final observation.  The
appealed judgment ordered peti­tioner to pay respondent the sum of US$591.38
with interest at the legal rate (which we hold to be the rate of six [16%] per
cent under Article 2209 of the Civil Code in force at the time of the judgment
of April 25, 1969) from the filing of the complaint on June 18, 1966 until
fully paid.  Petitioner did not appeal
from nor question this portion of the judgment requiring that it pay
respondent-creditor the damage claim with interest in U. S. currency (with
reference to the general rule of discharging obligations in Philippine currency
measured at the prevailing rate of exchange^[3]).  Consequently, we find no necessity to make
any further pronouncement thereon.  We
merely affirm the judgment in U.S.
currency in favor of respondent corporation, a foreign corporation not engaged
in business herein, in view of petitioner’s acquiescence therein and view the
judgment as one wherein the lower court sentenced petitioner to pay and remit
to respondent as a non-resident foreign corporation the amount due under the
judgment in U. S.
currency.

ACCORDINGLY, the appealed judgment is hereby affirmed with
the modification that the award of attorney’s fees is set aside.  With costs against petitioner.

Makasiar, Fernandez, Guerrero, De
Castro, and Melencio-Herrera,
JJ., concur.

^[1]
The text reads:  “Article 848.  Claims for averages shall not be admitted if
they do not exceed 5 per cent of the interest which the claimant may have in
the vessel or in the cargo if it be gross average, and 1 per cent of the goods
damaged if particular average, deducting in both cases the expenses of
appraisal, unless there is an agree­ment to the contrary.”

^[2]
16 SCRA 321 (1966), per. Reyes, J. B. L., J. (retired).

^[3]
Cf. Art. 1249, Civil Code, and related Acts such as R.A. No. 529, etc.