8/18/2016 G.R.No.

L25599

TodayisThursday,August18,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L25599April4,1968

HOMEINSURANCECOMPANY,plaintiffappellee,
vs.
AMERICANSTEAMSHIPAGENCIES,INC.andLUZONSTEVEDORINGCORPORATION,defendants,
AMERICANSTEAMSHIPAGENCIES,INC.,defendantappellant.

WilliamH.QuashaandAssociatesforplaintiffappellee.
Ross,Selph,SalcedoandAssociatesfordefendantappellant.

BENGZON,J.P.,J.:

"ConsorcioPesquerodelPeruofSouthAmerica"shippedfreightprepaidatChimbate,Peru,21,740jutebagsof
Peruvian fish meal through SS Crowborough, covered by clean bills of lading Numbers 1 and 2, both dated
January17,1963.Thecargo,consignedtoSanMiguelBrewery,Inc.,nowSanMiguelCorporation,andinsured
by Home Insurance Company for $202,505, arrived in Manila on March 7, 1963 and was discharged into the
lighters of Luzon Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc.,
there were shortages amounting to P12,033.85, causing the latter to lay claims against Luzon Stevedoring
Corporation, Home Insurance Company and the American Steamship Agencies, owner and operator of SS
Crowborough.

Becausetheothersdeniedliability,HomeInsuranceCompanypaidtheconsigneeP14,870.71theinsurance
value of the loss, as full settlement of 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, 1964 before the Court of First Instance of Manila a complaint for
recoveryofP14,870.71withlegalinterest,plusattorney'sfees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with 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
prescribedunderArticle366oftheCodeofCommercestatingthattheclaimmustbemadewithin24hoursfrom
receiptofthecargo.

AmericanSteamshipAgenciesdeniedliabilitybyallegingthatundertheprovisionsoftheCharterpartyreferredto
in the bills of lading, the charterer, not the shipowner, was responsible for any loss or damage of the cargo.
Furthermore, it claimed to have exercised due diligence in stowing the goods and that as a mere forwarding
agent,itwasnotresponsibleforlossesordamagestothecargo.

OnNovember17,1965,theCourtofFirstInstance,aftertrial,absolvedLuzonStevedoringCorporation,having
foundthelattertohavemerelydeliveredwhatitreceivedfromthecarrierinthesameconditionandquality,and
orderedAmericanSteamshipAgenciestopayplaintiffP14,870.71withlegalinterestplusP1,000attorney'sfees.
Saidcourtcitedthefollowinggrounds:

(a)ThenonliabilityclaimofAmericanSteamshipAgenciesunderthecharterpartycontractisnottenable
becauseArticle587oftheCodeofCommercemakestheshipagentalsocivillyliablefordamagesinfavor
ofthirdpersonsduetotheconductofthecaptainofthecarrier

(b) The stipulation in the charter party contract exempting the owner from liability is against public policy
underArticle1744oftheCivilCode

(c) In case of loss, destruction or deterioration of goods, common carriers are presumed at fault or
negligentunderArticle1735oftheCivilCodeunlesstheyproveextraordinarydiligence,andtheycannotby
contractexemptthemselvesfromliabilityresultingfromtheirnegligenceorthatoftheirservantsand

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(d)Whengoodsaredeliveredtothecarrieringoodorderandthesameareinbadorderattheplaceof
destination,thecarrierisprimafacieliable.

Disagreeingwithsuchjudgment,AmericanSteamshipAgenciesappealeddirectlytoUs.Theappealbringsforth
for determination this legal issue: Is the stipulation in the charter party of the owner's nonliability valid so as to
absolvetheAmericanSteamshipAgenciesfromliabilityforloss?

Thebillsoflading,1coveringtheshipmentofPeruvianfishmealprovideatthebackthereofthatthebillsoflading
shall be governed by and subject to the terms and conditions of the charter party, if any, otherwise, the bills of
lading prevail over all the agreements.2 On the of the bills are stamped "Freight prepaid as per charter party.
Subjecttoallterms,conditionsandexceptionsofcharterpartydatedLondon,Dec.13,1962."

A perusal of the charter party3 referred to shows that while the possession and control of the ship were not
entirely transferred to the charterer,4 the vessel was chartered to its full and complete capacity (Exh. 3).
Furthermore,the,charterhadtheoptiontogonorthorsouthorviceversa,5loading,stowinganddischargingat
itsriskandexpense.6Accordingly,thecharterpartycontractisoneofaffreightmentoverthewholevesselrather
thanademise.Assuch,theliabilityoftheshipownerforactsornegligenceofitscaptainandcrew,wouldremain
intheabsenceofstipulation.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods
causedbypersonalwantofduediligenceonitspartoritsmanagertomakethevesselinallrespectsseaworthy
andtosecurethatshebeproperlymanned,equippedandsuppliedorbythepersonalactordefaultoftheowner
or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or damage or delay
arising from any other source, even from the neglect or fault of the captain or crew or some other person
employedbytheowneronboard,forwhoseactstheownerwouldordinarilybeliableexceptforsaidparagraph..

Regardingthestipulation,theCourtofFirstInstancedeclaredthecontractascontrarytoArticle587oftheCode
of Commerce making the ship agent civilly liable for indemnities suffered by third persons arising from acts or
omissions of the captain in the care of the goods and Article 1744 of the Civil Code under which a stipulation
betweenthecommoncarrierandtheshipperorownerlimitingtheliabilityoftheformerforlossordestructionof
thegoodstoadegreelessthanextraordinarydiligenceisvalidprovideditbereasonable,justandnotcontraryto
public policy. The release from liability in this case was held unreasonable and contrary to the public policy on
commoncarriers.

The provisions of our Civil Code on common carriers were taken from AngloAmerican law.7 Under American
jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only,
becomesaprivatecarrier.8Asaprivatecarrier,astipulationexemptingtheownerfromliabilityforthenegligence
ofitsagentisnotagainstpublicpolicy,9andisdeemedvalid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where
thecarrierisnotactingassuchbutasaprivatecarrier.Thestipulationinthecharterpartyabsolvingtheowner
from liability for loss due to the negligence of its agent would be void only if the strict public policy governing
commoncarriersisapplied.Suchpolicyhasnoforcewherethepublicatlargeisnotinvolved,asinthecaseofa
shiptotallycharteredfortheuseofasingleparty.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as
shipper,isinfactandlegalcontemplationmerelyareceiptandadocumentoftitlenotacontract,forthecontract
is the charter party.10 The consignee may not claim ignorance of said charter party because the bills of lading
expresslyreferredtothesame.Accordingly,theconsigneesunderthebillsofladingmustlikewiseabidebythe
termsofthecharterparty.Andasstated,recoverycannotbehadthereunder,forlossordamagetothecargo,
againsttheshipowners,unlessthesameisduetopersonalactsornegligenceofsaidowneroritsmanager,as
distinguished from its other agents or employees. In this case, no such personal act or negligence has been
proved.

WHEREFORE,thejudgmentappealedfromisherebyreversedandappellantisabsolvedfromliabilitytoplaintiff.
Nocosts.Soordered.

Reyes,J.B.L.,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur.
DizonJ.,tooknopart.
Concepcion,C.J.,isonleave.

Footnotes
1Exhibits1&2.

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2No.26ofthebillsoflading.

3Exhibit3,page78oftherecords.

4Ownershoulderspaymentforovertimeworkofofficersandcrew(Clauses17&29),dutiesandtaxeson
vessel(Clause14),andrigging,openingandclosingofhatchesatowner'stimeandexpense(Clause41).
5Clause1,paragraph2ofcontract.

6Clause18ofcontract.

7Marananv.Perez,L22272,June26,1967.

880C.J.S.,pp.692693.

9TheCrowe,294Fed.506TheFri,154.333.

10TheCrowe,TheFri,supra.

TheLawphilProjectArellanoLawFoundation

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