G.R. No. 102316, 30 June 1997, 274 SCRA 642

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 “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.

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.

*Case digest by Honeyleth Luvie T. Hayag, LLB-4, Andres Bonifacio Law School, SY 2018-2019