Valenzuela Hardwood & Industrial Supply, Inc. v.

Court of Appeals
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. 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.

Eastern Shipping Lines v. Intermediate Appellate

Court
G.R. No. L-69044, 29 May 1987, 150 SCRA 464

FACTS:

On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan for
delivery vessel “SS EASTERN COMET” owned by defendant Eastern Shipping Lines under a bill of
lading. The shipment was insured under plaintiffs Marine Insurance Policy. Upon arrival of the
shipment in Manila on December 12, 1981, it was discharged unto the custody of defendant Metro
Port Service, Inc. The latter excepted to one drum, said to be in bad order, which damage was
unknown to plaintiff. On January 7, 1982 defendant Allied Brokerage Corporation received the
shipment from defendant Metro Port Service, Inc., one drum opened and without seal. On January 8
and 14, 1982, defendant Allied Brokerage Corporation made deliveries of the shipment to the
consignees warehouse.

The latter excepted to one drum which contained spillages, while the rest of the contents was
adulterated/fake. Plaintiff contended that due to the losses/damage sustained by said drum, the
consignee suffered losses totaling P19, 032.95, due to the fault and negligence of defendants.
Claims were presented against defendants who failed and refused to pay the same. As a
consequence of the losses sustained, plaintiff was compelled to pay the consignee P19, 032.95
under the aforestated marine insurance policy, so that it became subrogated to all the rights of
action of said consignee against defendants.

ISSUE:

Whether or not a claim for damage sustained on a shipment of goods can be a solidary or joint and
several, liability of the common carrier, the arrastre operator and the customs broker.

RULING:

The common carriers duty to observe the requisite diligence in the shipment of goods lasts from the
time the articles are surrendered to or unconditionally placed in the possession of, and received by,
the carrier for transportation until delivered to, or until the lapse of a reasonable time for their
acceptance by, the person entitled to receive them (Arts. 1736-1738, Civil Code). When the goods
shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its
failure to observe that diligence, and there need not be an express finding of negligence to hold it
liable (Art. 1735, Civil Code). There are, of course, exceptional cases when such presumption of
fault is not observed but these cases, enumerated in Article 1734 of the Civil Code, are exclusive,
not one of which can be applied to this case.

As to the question of charging both the carrier and the arrastre operator with the obligation of
properly delivering the goods to the consignee, the legal relationship between the consignee and the
arrastre operator is akin to that of a depositor and warehouseman while the relationship between the
consignee and the common carrier is similar to that of the consignee and the arrastre operator.

Since it is the duty of the arrastre to take good care of the goods that are in its custody and to deliver
them in good condition to the consignee, such responsibility also devolves upon the carrier. Both the
arrastre and the carrier are therefore charged with the obligation to deliver the goods in good
condition to the consignee. A factual finding of both the Supreme Court and the appellate court was
that there was sufficient evidence that the shipment sustained damage while in the successive
possession of appellants. Accordingly, the liability imposed on Eastern Shipping Lines, Inc., the sole
petitioner in this case, is inevitable regardless of whether there are other solidarily liable with it.