HOME INSURANCE COMPANY, PLAINTIFF-APPELLEE, VS. AMERICAN STEAMSHIP AGEN­CIES, INC. AND LUZON STE­VEDORING CORPORATION, DEFENDANTS, AMERICAN STEAMSHIP AGEN­CIES, INC., DEFENDANT-…

“Consorcio Pesquero
del Peru of South America” ship­ped freight pre-paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal
through SS Crowborough, covered by clean bills of
lading Numbers 1 and 2, both dated January 17, 1963.  The cargo, consigned to San Miguel Brewery,
Inc., now San Miguel Corporation, and insured 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.

Because the others denied liability, Home Insurance Company paid
the consignee P14,870.71 – the insurance 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 recovery of P14,870.71 with leg­al interest, plus attorney’s fees.

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 prescribed under Article 366
of the Code of Commerce stating that the claim must be made within 24 hours
from receipt of the cargo.

American Steamship Agencies denied liability by al­leging that
under the provisions of the Charter party re­ferred to 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, it was not responsible for losses or damages to the cargo.

On November 17, 1965,
the Court of First Instance, after trial, absolved Luzon Stevedoring
Corporation, hav­ing found the latter to have merely delivered what it re­ceived
from the carrier in the same condition and quality, and ordered American
Steamship Agencies to pay plaintiff P14,870.71 with legal interest plus P1,000
attorneys fees.  Said court cited the
following grounds:

(a)  
The non-liability claim of
American Steamship Agencies under the charter party contract is not tenable
because Article 587 of the Code of Commerce makes the ship agent also civilly
liable for damages in favor of 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 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 Code unless they prove extraordinary diligence,
and they cannot by contract exempt themselves from liability resulting from
their negligence or that of their servants; and

(d)  
When goods are delivered to the
carrier in good order and the same are in bad order at the place of des­tination,
the carrier is prima facie liable.

Disagreeing with such judgment, American Steamship Agencies
appealed directly to Us.  The appeal
brings forth for determination this legal issue: Is the stipulation in the
charter party of the owner’s non-liability valid so as to absolve the American
Steamship Agencies from liability for loss?

The bills of lading,^[1]
covering the shipment of Peru­vian fish meal provide at the back thereof that
the bills of lading 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 face of the bills are stamped
“Freight prepaid as per charter party. Subject to all terms, conditions
and excep­tions of charter party dated London,
Dec. 13, 1962.”

A perusal of the charter party^[3]
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 charterer
had the option to go north or south, or vice-versa,^[5]
loading, stowing and discharging at its risk and expense.^[6]
Accordingly, the charter party contract is one of affrrightment
over the whole vessel rather than a demise. 
As such, the liability of the shipowner for
acts or negligence of its captain and crew, would re­main in the absence of
stipulation.

Section 2, paragraph 2 of the charter party, provides that the
owner is liable for loss or damage to the goods caused by personal want of due
diligence on its part or its manager to make the vessel in all respects
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 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 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 exerting
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 charterer, as
shipper, is in fact and legal contemplation merely a receipt and a document of
title not a contract, for the contract is the charter party.^[10]
The consignee may not claim ignorance of said charter party because the bills
of lading expressly referred to the same. 
Accordingly, the consignees under the bills of lading must likewise
abide by the terms of the charter party. 
And as stated recovery cannot be had thereunder,
for loss or damage to the cargo, against the shipowners,
unless the same is due to personal acts or negligence of said owner or its
manager, as dis­tinguished from its other agents or employees.  In this case, no such personal act or
negligence has been proved.

WHEREFORE, the judgment appealed from is hereby re­versed
and appellant is absolved from liability to plain­tiff.  No costs.

SO ORDERED.

Reyes, J.B.L., (Acting C.J.), Makalintal,
Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
Exhibits 1 & 2.

^[2]
No. 26 of the bills of lading.

^[3]
Exhibit 3, page 78 of the records.

^[4]
Owner shoulders payment for overtime work officers and crew (Clauses 17 & 29),
duties and taxes on ves­sel (Clause 14), and rigging opening and closing of
hatches at owner’s time and expense (Clause 41).

^[5]
Clause l paragraph 2 of contract.

^[6]
Clause 18 of contract.

^[7] Maranan v. Perez, L-22272, June 26, 1967.

^[8]
C.J.S., pp. 692-693.

^[9]
The Crowe, 294 Fed. 506; The Fri, 154 Fed. 333.

^[10]
The Crowe, The Fri, supra.