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Home Assurance v. American Steamship

1) An American shipping company appealed a court ruling that found it liable for cargo losses from damaged fish meal shipped from Peru to the Philippines. 2) The charter party between the shipping company and charterer stated that the owner was not responsible for losses caused by the captain or crew. 3) The court overturned the initial ruling, finding that the shipping company was a private carrier under the charter party, not a common carrier. As a private carrier, its limitation of liability in the charter party was valid and absolved it from responsibility for the cargo losses.

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48 views2 pages

Home Assurance v. American Steamship

1) An American shipping company appealed a court ruling that found it liable for cargo losses from damaged fish meal shipped from Peru to the Philippines. 2) The charter party between the shipping company and charterer stated that the owner was not responsible for losses caused by the captain or crew. 3) The court overturned the initial ruling, finding that the shipping company was a private carrier under the charter party, not a common carrier. As a private carrier, its limitation of liability in the charter party was valid and absolved it from responsibility for the cargo losses.

Uploaded by

Glen Soria
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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.R. No.

L-25599             April 4, 1968 agent, it was not responsible for losses or


damages to the cargo.
HOME INSURANCE COMPANY, plaintiff-
appellee, On November 17, 1965, the Court of First
vs. Instance, after trial, absolved Luzon Stevedoring
AMERICAN STEAMSHIP AGENCIES, INC. and Corporation, having found the latter to have
LUZON STEVEDORING merely delivered what it received from the carrier
CORPORATION, defendants, in the same condition and quality, and ordered
AMERICAN STEAMSHIP AGENCIES, American Steamship Agencies to pay plaintiff
INC., defendant-appellant. P14,870.71 with legal interest plus P1,000
attorney's fees. Said court cited the following
William H. Quasha and Associates for plaintiff- grounds:
appellee.
Ross, Selph, Salcedo and Associates for (a) The non-liability claim of American
defendant-appellant. Steamship Agencies under the charter
party contract is not tenable because
BENGZON, J.P., J.: Article 587 of the Code of Commerce
makes the ship agent also civilly liable for
"Consorcio Pesquero del Peru of South America" damages in favor of third persons due to
shipped freight pre-paid at Chimbate, Peru, the conduct of the captain of the carrier;
21,740 jute bags of Peruvian fish meal through
SS Crowborough, covered by clean bills of lading (b) The stipulation in the charter party
Numbers 1 and 2, both dated January 17, 1963. contract exempting the owner from
The cargo, consigned to San Miguel Brewery, liability is against public policy under
Inc., now San Miguel Corporation, and insured Article 1744 of the Civil Code;
by Home Insurance Company for $202,505,
arrived in Manila on March 7, 1963 and was (c) In case of loss, destruction or
discharged into the lighters of Luzon Stevedoring deterioration of goods, common carriers
Company. When the cargo was delivered to are presumed at fault or negligent under
consignee San Miguel Brewery Inc., there were Article 1735 of the Civil Code unless they
shortages amounting to P12,033.85, causing the prove extraordinary diligence, and they
latter to lay claims against Luzon Stevedoring cannot by contract exempt themselves
Corporation, Home Insurance Company and the from liability resulting from their
American Steamship Agencies, owner and negligence or that of their servants; and
operator of SS Crowborough.
(d) When goods are delivered to the carrier
Because the others denied liability, Home in good order and the same are in bad
Insurance Company paid the consignee order at the place of destination, the
P14,870.71 — the insurance value of the loss, as carrier is prima facie liable.
full settlement of the claim. Having been refused
reimbursement by both the Luzon Stevedoring Disagreeing with such judgment, American
Corporation and American Steamship Agencies, Steamship Agencies appealed directly to Us. The
Home Insurance Company, as subrogee to the appeal brings forth for determination this legal
consignee, filed against them on March 6, 1964 issue: Is the stipulation in the charter party of
before the Court of First Instance of Manila a the owner's non-liability valid so as to absolve the
complaint for recovery of P14,870.71 with legal American Steamship Agencies from liability for
interest, plus attorney's fees. loss?

In answer, Luzon Stevedoring Corporation alleged The bills of lading,1 covering the shipment of
that it delivered with due diligence the goods in Peruvian fish meal provide at the back thereof
the same quantity and quality that it had that the bills of lading shall be governed by and
received the same from the carrier. It also subject to the terms and conditions of the charter
claimed that plaintiff's claim had prescribed party, if any, otherwise, the bills of lading prevail
under Article 366 of the Code of Commerce over all the agreements.2 On the of the bills are
stating that the claim must be made within 24 stamped "Freight prepaid as per charter party.
hours from receipt of the cargo. Subject to all terms, conditions and exceptions of
charter party dated London, Dec. 13, 1962."
American Steamship Agencies denied liability by
alleging that under the provisions of the Charter A perusal of the charter party3 referred to shows
party referred to in the bills of lading, the that while the possession and control of the ship
charterer, not the shipowner, was responsible for were not entirely transferred to the
any loss or damage of the cargo. Furthermore, it charterer,4 the vessel was chartered to its full and
claimed to have exercised due diligence in complete capacity (Exh. 3). Furthermore, the,
stowing the goods and that as a mere forwarding
charter had the option to go north or south charterer, as shipper, is in fact and legal
or vice-versa,5 loading, stowing and discharging contemplation merely a receipt and a document
at its risk and expense.6 Accordingly, the charter of title not a contract, for the contract is the
party contract is one of affreightment over the charter party.10 The consignee may not claim
whole vessel rather than a demise. As such, the ignorance of said charter party because the bills
liability of the shipowner for acts or negligence of of lading expressly referred to the same.
its captain and crew, would remain in the Accordingly, the consignees under the bills of
absence of stipulation. lading must likewise abide by the terms of the
charter party. And as stated, recovery cannot be
Section 2, paragraph 2 of the charter party, had thereunder, for loss or damage to the cargo,
provides that the owner is liable for loss or against the shipowners, unless the same is due
damage to the goods caused by personal want of to personal acts or negligence of said owner or its
due diligence on its part or its manager to make manager, as distinguished from its other agents
the vessel in all respects seaworthy and to secure or employees. In this case, no such personal act
that she be properly manned, equipped and or negligence has been proved.
supplied or by the personal act or default of the
owner or its manager. Said paragraph, however, WHEREFORE, the judgment appealed from is
exempts the owner of the vessel from any loss or hereby reversed and appellant is absolved from
damage or delay arising from any other source, liability to plaintiff. No costs. So ordered.
even from the neglect or fault of the captain or
crew or some other person employed by the
owner on board, for whose acts the owner would
ordinarily be liable except for said paragraph..

Regarding the stipulation, the Court of First


Instance declared the contract as contrary to
Article 587 of the Code 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
between the common carrier and the 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 be
reasonable, just and not contrary to public
policy. The release from liability in this case was
held unreasonable and contrary to the public
policy on common carriers.

The provisions of our Civil Code on common


carriers were taken from Anglo-American
law.7 Under American jurisprudence, a common
carrier 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 such
but as a private carrier. The 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 governing
common carriers is applied. Such policy has no
force where the public at large is not involved, as
in the case of a ship totally chartered for the use
of a single party.

And furthermore, in a charter of the entire vessel,


the bill of lading issued by the master to the

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