Valenzuela Hardwood and Industrial Supply, Inc. v. CA and Seven Brothers Shipping Corp. G.R. No.

102316 June 30, 1997 Panganiban, J. FACTS: Valenzuela Hardwood entered into an agreement with Seven Brothers whereby the latter undertook to load on board its vessel the formers 940 lauan round logs at the port of Maconacon, Isabela for shipment to Manila. The charter party between Valenzuela Hardwood and Seven Brothers stipulated that the owners shall not be responsible for loss, split, short-landing, breakages and any kind of damages to the cargo. 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 a check to cover payment of the premium and documentary stamps due on the insurance policy procured by Valenzuela Hardwood was tendered to the insurer but was not accepted; South Sea Surety cancelled the insurance policy it issued as of the date of the inception for non-payment of the premium due in accordance with Section 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 petitioners 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 HELD: No. Whatever rights Valenzuela Hardwood may have under the aforementioned statutory provisions were waived when it entered into the charter party. ISSUE: WON the charter party stipulation is void for being contrary to Arts. 1170 and 1173 HELD: No. These articles are applicable only to the obligor or the one with an obligation to perform. In this case, Seven Brothers is not an obligor in respect of the cargo, for this obligation to bear the loss was shifted to petitioner by virtue of the charter party.

ISSUE: what is the effect of the South Sea Resolution wherein the SC affirmed the liability of South Sea for the loss suffered by Valenzuela Hardwood with respect to the latters action for damages against Seven Brothers? HELD: The Resolution SC affirming the liability of South Sea does not, by itself, necessarily preclude the petitioner from proceeding against private respondent. Pursuant to Art. 2207, an aggrieved party may still recover the deficiency for the person causing the loss in the event the amount paid by the insurance company does not fully cover the loss.