G.R. No. L-25599 - Home Insurance Co. v. American Steamship Agencies, Inc

EN BANC Luzon Stevedoring Company.
When the cargo was delivered to consignee

San Miguel Brewery, Inc., there were shortages amounting to P12,033.85,
[G.R. No. L-25599. April 4, 1968.] causing the latter to lay claims against Luzon Stevedoring Corporation,
Home Insurance Company and the American Steamship Agencies, owner and
HOME INSURANCE COMPANY, plaintiff-appellee, vs. AMERICAN operator of SS Crowborough.
STEAMSHIP AGENCIES, INC., and LUZON STEVEDORING Because the others denied liability, Home Insurance Company paid the
CORPORATION, defendants, AMERICAN STEAMSHIP consignee P14,870.71 — the insurance value of the loss, as full settlement of
AGENCIES, INC., defendant-appellant. the claim. Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies, Home Insurance
Company, as subrogee to the consignee, filed against them on March 6,
Ross, Selph, Salcedo, del Rosario, Bito and Misa for appellants.
1964 before the Court of First Instance of Manila a complaint for recovery of
Quasha, Asperilla, Blanco, Zafra and Tayag for appellee. P14,870.71 with legal interest, plus attorney's fees.
In answer, Luzon Stevedoring Corporation alleged that it delivered with
SYLLABUS due diligence the goods in the same quantity and quality that it had received
the same from the carrier. It also claimed that plaintiff's claim had
1. CONTRACTS; TRANSPORTATION; CHARTER PARTY; EFFECT prescribed under Article 366 of the Code of Commerce stating that the claim
WHERE CONTRACT IS ONE OF AFFREIGHTMENT. — Where the charter party must be made within 24 hours from receipt of the cargo.
contract shows that altho possession and control of the ship were not American Steamship Agencies denied liability by alleging that under
entirely transferred to the charterer, the vessel was chartered to its full and the provisions of the Charter party referred to in the bills of lading, the
complete capacity and the charterer had the option to go north or south or charterer, not the shipowner, was responsible for any loss or damage of the
vice-versa, loading, stowing and discharging at its risk and expense, said cargo. Furthermore, it claimed to have exercised due diligence in stowing the
contract is one of affreightment rather than a demise. As such, in the goods and that as a mere forwarding agent, it was not responsible for losses
absence of stipulation, the liability of the shipowner for acts or negligence of or damages to the cargo.
its captain and crew would remain.
On November 17, 1965, the Court of First Instance, after trial, absolved
2. ID.; ID.; ID.; STIPULATION ABSOLVING THE OWNER FROM Luzon Stevedoring Corporation, having found the latter to have merely
LIABILITY FOR LOSS DUE TO THE NEGLIGENCE OF ITS AGENT VALID. — The delivered what it received from the carrier in the same condition and quality,
Civil Code provisions on common carriers, taken from Anglo-American law, and ordered American Steamship Agencies to pay plaintiff P14,870.71 with
should, following American jurisprudence on the matter, not be applied legal interest plus P1,000 attorneys fees. Said court cited the following
where the carrier is not acting as such but as a private carrier. The grounds:
stipulation in the charter party absolving the owner from liability for loss due
to the negligence of its agent would be void only if the strict public policy (a) The non-liability claim of American Steamship Agencies under
governing common carriers is applied. Such policy has no force where the the charter party contract is not tenable because Article 587 of the Code of
public at large is not involved, as in the case of a ship totally chartered for Commerce makes the ship agent also civilly liable for damages in favor of
the use of a single party. third persons due to the conduct of the captain of the carrier;
(b) The stipulation in the charter party contract exempting the
owner from liability is against public policy under Article 1744 of the Civil
DECISION Code;
(c) In case of loss, destruction or deterioration of goods, common
carriers are presumed at fault or negligent under Article 1735 of the Civil
BENGZON, J.P., J :
Code unless they prove extraordinary diligence, and they cannot by contract
p
"Consorcio Pesquero del Peru of South America" shipped freight pre- exempt themselves from liability resulting from their negligence or that of
paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal through SS their servants; and
Crowborough, covered by clean bills of lading Numbers 1 and 2, both dated (d) When goods are delivered to the carrier in good order and the
January 17, 1963. The cargo, consigned to San Miguel Brewery, Inc., now San same are in bad order at the place of destination, the carrier is prima facie
Miguel Corporation, and insured by Home Insurance Company for $202,505, liable.
arrived in Manila on March 7, 1963 and was discharged into the lighters of
Disagreeing with such judgment, American Steamship Agencies
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appealed directly to Us. The appeal brings forth for determination this legal such but as a private carrier. The stipulation in the charter party absolving
issue: Is the stipulation in the charter party of the owner's non-liability valid the owner from liability for loss due to the negligence of its agent would be
so as to absolve the American Steamship Agencies from liability for loss? void only if the strict public policy governing common carriers is applied.
The bills of lading, 1 covering the shipment of Peruvian fish meal Such policy has no force where the public at large is not involved, as in the
provide at the back thereof that the bills of lading shall be governed by and case of a ship totally chartered for the use of a single party.
subject to the terms and conditions of the charter party, if any, otherwise, And furthermore, in a charter of the entire vessel, the bill of lading
the bills of lading prevail over all the agreements. 2 On the face of the bills issued by the master to the charterer, as shipper, is in fact and legal
are stamped "Freight prepaid as per charter party. Subject to all terms, contemplation merely a receipt and a document of title, not a contract, for
conditions and exceptions of charter party dated London, Dec. 13, 1962." the contract is the charter party. 10 The consignee may not claim ignorance
A perusal of the charter party 3 referred to shows that while the of said charter party because the bills of lading expressly referred to the
possession and control of the ship were not entirely transferred to the same. Accordingly, the consignees under the bills of lading must likewise
charterer, 4 the vessel was chartered to its full and complete capacity (Exh. abide by the terms of the charter party. And as stated recovery cannot be
3). Furthermore, the charterer had the option to go north or south or vice- had thereunder, for loss or damage to the cargo, against the shipowners,
versa, 5 loading, stowing and discharging at its risk and expense. 6 unless the same is due to personal acts or negligence of said owner or its
Accordingly, the charter party contract is one of affreightment over the manager, as distinguished from its other agents or employees. In this case,
whole vessel rather than a demise. As such, the liability of the shipowner for no such personal act or negligence has been proved.
acts or negligence of its captain and crew, would remain in the absence of WHEREFORE, the judgment appealed from is hereby reversed and
stipulation. appellant is absolved from liability to plaintiff. No costs.
Section 2, paragraph 2 of the charter party, provides that the owner is SO ORDERED.
liable for loss or damage to the goods caused by personal want of due Reyes, J.B.L.,(Acting C.J.), Makalintal, Zaldivar, Sanchez, Ruiz Castro,
diligence on its part or its manager to make the vessel in all respects Angeles and Fernando, JJ., concur.
seaworthy and to secure that she be properly manned, equipped and
supplied or by the personal act or default of the owner or its manager. Said
paragraph, however, exempts the owner of the vessel from any loss or Footnotes
damage or delay arising from any other source, even from the neglect or
fault of the captain or crew or some other person employed by the owner on 1. Exhibits 1 & 2.
board, for whose acts the owner would ordinarily be liable except for said 2. No. 26 of the bills of lading.
paragraph.
3. Exhibit 3, page 78 of the records.
Regarding the stipulation, the Court of First Instance declared the
contract as contrary to Article 587 of the Code of Commerce making the ship 4. Owner shoulders payment for overtime work of officers and crew (Clauses
agent civilly liable for indemnities suffered by third persons arising from acts 17 & 29), duties and taxes on vessel (Clause 14), and rigging, opening and
or omissions of the captain in the care of the goods and Article 1744 of the closing of batches at owner's time and expense (Clause 41).
Civil Code under which a stipulation between the common carrier and the 5. Clause 1, paragraph 2 of contract.
shipper or owner limiting the liability of the former for loss or destruction of
the goods to a degree less than extraordinary diligence is valid provided it 6. Clause 18 of contract.
be reasonable, just and not contrary to public policy. The release from 7. Maranan v. Perez, L-22272, June 26, 1967.
liability in this case was held unreasonable and contrary to the public policy
on common carriers. 8. 80 C.J.S., pp. 692-693.
The provisions of our Civil Code on common carriers were taken from 9. The Crowe, 294 Fed. 506; The Fri, 154 Fed. 333.
Anglo-American law. 7 Under American jurisprudence, a common carrier
10. The Crowe, The Fri, supra.
undertaking to carry a special cargo or chartered to a special person only,
becomes a private carrier. 8 As a private carrier, a stipulation exempting the
owner from liability for the negligence of its agent is not against public
policy, 9 and is deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on
common carriers should not be applied where the carrier is not acting as
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EN BANC Luzon Stevedoring Company.

When the cargo was delivered to consignee

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