Home Insurance vs.

American Steamship

23 SCRA 24

Facts:

• The Consorcio Pesquero del Peru of South America shipped jute bags of Peruvian fishmeal
through SS Crowborough, consigned to San Miguel Brewery, Inc.
• The cargo, which was insured by Home Insurance Company, arrived at the port of Manila
and was discharged to the lighters of the Luzon Stevedoring Corporation.
• When the same was delivered to the consignee, there were shortages amounting to P 12,
033.85, prompting the latter to pay against Luzon Stevedoring Co.
• Because the others denied liability, Home Insurance paid San Miguel the insurance value
loss.
• This cost was brought by the former to recover indemnity from Luzon Stevedoring and the
ship owner.
• Luzon Stevedoring raised the defense that it deliver with due diligence in the same from the
carrier.
• Mexican Steamship Agencies denied liability on the ground that the charter party referred
to in the bills of lading, the charter, not the ship owner, was responsible for any loss or
damage of the cargo. Furthermore, it claimed to have exercised due diligence in stowing the
goods and as a mere forwarding agent, it was not responsible for losses or damages to the
cargo.

Issue:

• Whether or not the stipulation in the charter party to owner’s non-liability was valid as to
absolve the American Steamship from liability loss? – Yes for public carrier

Held:

• Yes. A common carrier undertaking to carry a special cargo or chartered to a special

person only, becomes a private carrier. As a private carrier, a stipulation exempting the
owner from liability for the negligence of its agent is not against public policy, and is
deemed valid.
• The Civil Code provision 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 is 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.