Case Digest (G.R. No. 102316) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In G.R. No. 102316, decided on June 30, 1997 under the 1987 Philippine Constitution, Valenzuela Hardwood and Industrial Supply, Inc. (plaintiff) contracted with Seven Brothers Shipping Corporation (private respondent) on January 16, 1984 to load 940 lauan round logs at Maconacon, Isabela for shipment to Manila. On January 20, the logs were insured for ₱2,000,000.00 with South Sea Surety and Insurance Co., Inc., and the premium check was delivered to its agent, Victorio Chua, on January 24. The vessel M/V Seven Ambassador sank on January 25, causing total loss of cargo. A subsequent check for ₱5,625.00 tendered on January 30 to cover unpaid premium and documentary stamps was rejected, and the insurer canceled the policy for non-payment under Section 77 of the Insurance Code. On February 2, Valenzuela demanded payment from South Sea, which denied liability. It also filed a claim with Seven Brothers, which likewise refused. The Regional Trial Court of Valenzuela, Branch 171, found Case Digest (G.R. No. 102316) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Contractual Agreements
- Valenzuela Hardwood and Industrial Supply, Inc. (“Petitioner”) engaged Seven Brothers Shipping Corporation (“Seven Brothers”) by charter party dated January 16, 1984, to transport 940 lauan round logs from Maconacon, Isabela to Manila aboard M/V Seven Ambassador.
- The charter party contained an exculpatory clause stating that “the owners shall not be responsible for loss, split, short-landing, breakages and any kind of damages to the cargo.”
- Insurance and Loss
- On January 20, 1984, Petitioner procured a marine cargo insurance policy from South Sea Surety and Insurance Co., Inc. (“South Sea”) for ₱2,000,000.00. Payment of premium was tendered on January 24, 1984, to Mr. Victorio Chua, purported agent.
- M/V Seven Ambassador sank on January 25, 1984; logs were lost. South Sea refused payment, cancelled the policy for non-payment of premium (per Insurance Code Section 77). Petitioner demanded indemnity from both insurers and carrier; all claims were denied.
- Trial Court Proceedings
- Petitioner filed suit in the Regional Trial Court (RTC) of Valenzuela, Metro Manila, Branch 171, against South Sea and Seven Brothers for ₱2,000,000.00 plus interest, attorneys’ fees (5%), and costs; Seven Brothers counterclaimed for unpaid freight (₱230,000.00) and attorneys’ fees.
- RTC ruled in favor of Petitioner: South Sea liable under insurance policy; alternatively, Seven Brothers liable under charter party despite exculpatory clause; counterclaim of freight balance awarded to carrier; counterclaim of insurers dismissed.
- Court of Appeals Decision
- South Sea’s liability affirmed; Seven Brothers’ liability reversed and set aside based on its status as private carrier and valid exculpatory stipulation (citing Home Insurance Co. vs. American Steamship Agencies, Inc., 23 SCRA 24).
- Petitioner filed for certiorari before the Supreme Court to reinstate Seven Brothers’ liability; South Sea separately sought review but that petition was denied on June 2, 1995, upholding South Sea’s liability.
Issues:
- Main Issue
- Whether the stipulation in the charter party exempting Seven Brothers (as private carrier) from liability for loss or damage to cargo—even if proximately caused by the captain’s negligence—is valid and enforceable.
- Subsidiary Considerations
- Whether Civil Code Article 1745 (on common carriers) and Code of Commerce Articles 586–587 apply to private carriers.
- Whether Articles 1170, 1173, 1306, and 1409 of the Civil Code constrain such exculpatory stipulations.
- Whether public policy demands strict construction against such clauses outside common-carrier contexts.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)