G.R. No. 102316 June 30, 1997
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC., petitioner, vs. COURT OF APPEALS AND SEVEN BROTHERS SHIPPING CORPORATION, respondents.

FACTS

On January 16, 1984, petitioner Valenzuela Hardwood and Industrial Supply, Inc. entered into a charter party agreement with private respondent Seven Brothers Shipping Corporation for the shipment of 940 lauan logs from Maconacon, Isabela to Manila aboard the M/V Seven Ambassador. The charter party contained a stipulation that the “(o)wners shall not be responsible for loss, split, short-landing, breakages and any kind of damages to the cargo.” On January 20, 1984, petitioner insured the logs for P2,000,000.00 with South Sea Surety and Insurance Co., Inc. The vessel sank on January 25, 1984, resulting in the total loss of the cargo. The proximate cause of the sinking was the negligence of the captain in stowing and securing the logs, which caused the iron chains to snap and the logs to roll to the portside. Petitioner demanded payment from both the insurer and the shipping corporation. The insurer denied liability, claiming the policy was cancelled for non-payment of premium, while the shipping corporation denied liability based on the exemption clause in the charter party. The Regional Trial Court held both the insurer and the shipping corporation liable in the alternative. The Court of Appeals affirmed the insurer’s liability but reversed the shipping corporation’s liability, upholding the validity of the exemption clause in the charter party. The Supreme Court denied the insurer’s petition for review, leaving only the petition regarding the shipping corporation’s liability.

ISSUE

Whether the Court of Appeals committed reversible error in upholding the validity of the stipulation in the charter party exempting Seven Brothers Shipping Corporation from liability for the loss of the cargo arising from the negligence of its captain.

RULING

The petition is not meritorious. The Supreme Court affirmed the decision of the Court of Appeals. The stipulation in the charter party exempting the shipowner from liability for any kind of damages to the cargo is valid. The M/V Seven Ambassador, being a private carrier under the charter party, is not governed by the stringent provisions of the Civil Code on common carriers. The law on common carriers, which holds them to a higher standard of diligence and restricts stipulations limiting their liability, does not apply to private carriers. As a private carrier, the shipowner may stipulate exemptions from liability, including those arising from negligence, provided such stipulations are not contrary to law, morals, good customs, public order, or public policy. The cited provisions of the Civil Code (Articles 1745, 1170, 1173) and the Code of Commerce (Articles 586, 587) apply only to common carriers, not to private carriers like the respondent in this case. The contract of carriage being a private carriage, the parties were free to agree on the terms and conditions, including the exemption clause. Therefore, Seven Brothers Shipping Corporation is not liable for the loss of the cargo.