(D4) VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, INC. V. CA AND HELD: No.

HELD: No. Whatever rights Valenzuela Hardwood may have under the aforementioned
SEVEN BROTHERS SHIPPING CORP. statutory provisions were waived when it entered into the charter party.

G.R. No. 102316 June 30, 1997 ISSUE: WON the charter party stipulation is void for being contrary to Arts. 1170 and
1173

FACTS: HELD: No. These articles are applicable only to the obligor or the one with an obligation
 Valenzuela Hardwood entered into an agreement with Seven Brothers whereby the to perform. In this case, Seven Brothers is not an obligor in respect of the cargo, for this
latter undertook to load on board its vessel the former’s 940 lauan round logs at the obligation to bear the loss was shifted to petitioner by virtue of the charter party.
port of Maconacon, Isabela for shipment to Manila.
 The charter party between Valenzuela Hardwood and Seven Brothers stipulated that ISSUE: what is the effect of the South Sea Resolution wherein the SC affirmed the
the owners shall not be responsible for loss, split, short-landing, breakages and any liability of South Sea for the loss suffered by Valenzuela Hardwood with respect to the
kind of damages to the cargo. latter’s action for damages against Seven Brothers?
 Valenzuela Hardwood insured the logs against loss and/or damage with South Sea
Surety and Insurance Co., Inc.
 the vessel sank resulting in the loss of the insured logs HELD: The Resolution SC affirming the liability of South Sea does not, by itself,
 a check to cover payment of the premium and documentary stamps due on the necessarily preclude the petitioner from proceeding against private respondent.
insurance policy procured by Valenzuela Hardwood was tendered to the insurer but Pursuant to Art. 2207, an aggrieved party may still recover the deficiency for the person
was not accepted; South Sea Surety cancelled the insurance policy it issued as of the causing the loss in the event the amount paid by the insurance company does not fully
date of the inception for non-payment of the premium due in accordance with Section cover the loss.
77 of the Insurance Code
 Valenzuela Hardwood demanded from defendant South Sea Surety the payment of
the proceeds of the policy but the latter denied liability under the policy; it also filed a
formal claim with Seven Brothers for the value of the lost logs but the latter denied the
claim.

ISSUE: WON a stipulation in a charter party that the owners shall not be responsible for
loss, split, short-landing, breakages and any kind of damages to the cargo is valid

HELD: Yes. Seven Brothers had acted as a private carrier in transporting petitioner’s
lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers may
not be applied unless expressly stipulated by the parties in their charter party.
 the proximate cause of the sinking of the vessel resulting in the loss of its cargo was
the snapping of the iron chains and the subsequent rolling of the logs to the portside
due to the negligence of the captain in stowing and securing the logs on board the
vessel and not due to fortuitous event
 contract of private carriage – parties may validly stipulate that responsibility for the
cargo rests solely on the charterer, exempting the shipowner from liability for loss of
or damage to the cargo caused even by the negligence of the ship captain
 pursuant to Art. 1306, the assailed stipulation is valid because it is freely entered into
by the parties and the same is not contrary to law, morals, good customs, public order,
or public policy

ISSUE: WON the charter party stipulation is contrary to Arts. 586 and 587 of the Code
of Commerce which confer on petitioner the right to recover damages from the
shipowner and ship agent for the acts or conduct of the captain
(D4) Valenzuela Hardwood and Industrial Supply, Inc. v. CA and Seven Brothers
Shipping Corp.
FACTS:
Plaintiff shipped at Maconcon Port, Isabela 940 round logs on board M/V Seven
Ambassador, a vessel owned by defendant Seven Brothers Shipping Corporation.
Plaintiff insured the logs against loss and/or damage with defendant South Sea Surety
and Insurance Co., Inc. for P2M and the latter issued its Marine Cargo Insurance Policy
on said date. In the meantime, the M/V Seven Ambassador sank resulting in the loss of
the plaintiff’s insured logs.
Plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc. the
payment of the proceeds of the policy but the latter denied liability under the policy.
Plaintiff likewise filed a formal claim with defendant Seven Brothers Shipping
Corporation for the value of the lost logs but the latter denied the claim.
Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South
Sea Surety and Insurance Company (“South Sea”), but modified it by holding that Seven
Brothers Shipping Corporation (“Seven Brothers”) was not liable for the lost cargo.
ISSUE:
Whether defendants shipping corporation and the surety company are liable to the
plaintiff for the latter’s lost logs.
HELD:
The charter party between the petitioner and private respondent stipulated that the
“(o)wners shall not be responsible for loss, split, short-landing, breakages and any kind
of damages to the cargo” –VALID
There is no dispute between the parties that the proximate cause of the sinking of M/V
Seven Ambassadors resulting in the loss of its cargo was the “snapping of the iron
chains and the subsequent rolling of the logs to the portside due to the negligence of
the captain in stowing and securing the logs on board the vessel and not due to fortuitous
event.” Likewise undisputed is the status of Private Respondent Seven Brothers as a
private carrier when it contracted to transport the cargo of Petitioner Valenzuela. Even
the latter admits this in its petition.
Private respondent had acted as a private carrier in transporting petitioner’s lauan logs.
Thus, Article 1745 and other Civil Code provisions on common carriers which were cited
by petitioner may not be applied unless expressly stipulated by the parties in their
charter party.
In a contract of private carriage, the parties may validly stipulate that responsibility for
the cargo rests solely on the charterer, exempting the shipowner from liability for loss of
or damage to the cargo caused even by the negligence of the ship captain. Pursuant to
Article 1306 of the Civil Code, such stipulation is valid because it is freely entered into
by the parties and the same is not contrary to law, morals, good customs, public order,
or public policy. Indeed, their contract of private carriage is not even a contract of
adhesion. We stress that in a contract of private carriage, the parties may freely stipulate
their duties and obligations which perforce would be binding on them. Unlike in contract
involving a common carrier, private carriage does not involve the general public. Hence,
the stringent provisions of the Civil Code on common carriers protecting the general
public cannot justifiably be applied to a ship transporting commercial goods as a private
carrier. Consequently, the public policy embodied therein is not contravened by
stipulations in a charter party that lessen or remove the protection given by law in
contracts involving common carriers.
The provisions of our Civil Code on common carriers were taken from Anglo-American
law. Under American jurisprudence, 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. 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 this case of a ship totally chartered for the use of
a single party. (Home Insurance Co. vs. American Steamship Agencies Inc., 23 SCRA
24, April 4, 1968)
(D4) Valenzuela Hardwood and Industrial Supply, Inc. v. CA and Seven Brothers
Shipping Corp.
FACTS:
Plaintiff shipped at Maconcon Port, Isabela 940 round logs on board M/V Seven
Ambassador, a vessel owned by defendant Seven Brothers Shipping Corporation.
Plaintiff insured the logs against loss and/or damage with defendant South Sea Surety
and Insurance Co., Inc. for P2M and the latter issued its Marine Cargo Insurance Policy
on said date. In the meantime, the M/V Seven Ambassador sank resulting in the loss of
the plaintiff’s insured logs.
Plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc. the
payment of the proceeds of the policy but the latter denied liability under the policy.
Plaintiff likewise filed a formal claim with defendant Seven Brothers Shipping
Corporation for the value of the lost logs but the latter denied the claim.
In a contract of private carriage, the parties may validly stipulate that responsibility for
the cargo rests solely on the charterer, exempting the shipowner from liability for loss of
or damage to the cargo caused even by the negligence of the ship captain. Pursuant to
Article 1306 17 of the Civil Code, such stipulation is valid because it is freely entered
into by the parties and the same is not contrary to law, morals, good customs, public
order, or public policy. Indeed, their contract of private carriage is not even a contract of
adhesion. We stress that in a contract of private carriage, the parties may freely stipulate
their duties and obligations which perforce would be binding on them. Unlike in a
contract involving a common carrier, private carriage does not involve the general public.
Hence, the stringent provisions of the Civil Code on common carriers protecting the
general public cannot justifiably be applied to a ship transporting commercial goods as
a private carrier. Consequently, the public policy embodied therein is not contravened
by stipulations in a charter party that lessen or remove the protection given by law in
contracts involving common carriers.

Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South
Sea Surety and Insurance Company (“South Sea”), but modified it by holding that Seven
Brothers Shipping Corporation (“Seven Brothers”) was not liable for the lost cargo.

ISSUE:

Whether defendants shipping corporation and the surety company are liable to the
plaintiff for the latter’s lost logs.

HELD:

The charter party between the petitioner and private respondent stipulated that the
“Owners shall not be responsible for loss, split, short-landing, breakages and any kind
of damages to the cargo” is VALID.

There is no dispute between the parties that the proximate cause of the sinking of M/V
Seven Ambassadors resulting in the loss of its cargo was the “snapping of the iron
chains and the subsequent rolling of the logs to the portside due to the negligence of
the captain in stowing and securing the logs on board the vessel and not due to fortuitous
event.” Likewise undisputed is the status of Private Respondent Seven Brothers as a
private carrier when it contracted to transport the cargo of Petitioner Valenzuela. Even
the latter admits this in its petition.

Private respondent had acted as a private carrier in transporting petitioner’s lauan logs.
Thus, Article 1745 and other Civil Code provisions on common carriers which were cited
by petitioner may not be applied unless expressly stipulated by the parties in their
charter party.