Planters Products vs CA

Facts:
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which
the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by
private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro
Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed by
the master of the vessel and issued on the date of departure. On 17 May 1974, or prior to its
voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General
Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in
Tokyo, Japan. Riders to the aforesaid charter-party starting from par. 16 to 40 were attached to
the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party were also
subsequently entered into on the 18th, 20th, 21st and 27th of May 1974, respectively. Before
loading the fertilizer aboard the vessel, four (4) of her holds were all presumably inspected by
the charterer's representative and found fit to take a load of urea in bulk pursuant to par. 16 of
the charter-party.

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of
the shipper, the steel hatches were closed with heavy iron lids, covered with three (3) layers of
tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed throughout
the entire voyage. Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon
hatches were opened with the use of the vessel's boom. Petitioner unloaded the cargo from the
holds into its steelbodied dump trucks which were parked alongside the berth, using metal
scoops attached to the ship, pursuant to the terms and conditions of the charter-partly (which
provided for an F.I.O.S. clause). The hatches remained open throughout the duration of the
discharge. Each time a dump truck was filled up, its load of Urea was covered with tarpaulin
before it was transported to the consignee's warehouse located some fifty (50) meters from the
wharf. Midway to the warehouse, the trucks were made to pass through a weighing scale where
they were individually weighed for the purpose of ascertaining the net weight of the cargo. The
port area was windy, certain portions of the route to the warehouse were sandy and the weather
was variable, raining occasionally while the discharge was in progress.

The survey report submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a
shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18
M/T was contaminated with dirt. The same results were contained in a Certificate of
Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that the cargo
delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for commerce,
having been polluted with sand, rust and dirt.

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship
Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing the cost
of the alleged shortage in the goods shipped and the diminution in value of that portion said to
have been contaminated with dirt.
Respondent SSA explained that they were not able to respond to the consignee's claim for
payment because, according to them, what they received was just a request for shortlanded
certificate and not a formal claim, and that this "request" was denied by them because they "had
nothing to do with the discharge of the shipment." Hence, on 18 July 1975, PPI filed an action
for damages with the Court of First Instance of Manila. The defendant carrier argued that the
strict public policy governing common carriers does not apply to them because they have
become private carriers by reason of the provisions of the charter-party. The court a quo
however sustained the claim of the plaintiff against the defendant carrier for the value of the
goods lost or damaged. On appeal, respondent Court of Appeals reversed the lower court and
absolved the carrier from liability for the value of the cargo that was lost or damaged.

Issue:
whether a common carrier becomes a private carrier by reason of a charter-party; in the
negative, whether the shipowner in the instant case was able to prove that he had exercised
that degree of diligence required of him under the law.

Ruling:
It is not disputed that respondent carrier, in the ordinary course of business, operates as a
common carrier, transporting goods indiscriminately for all persons. When petitioner chartered
the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ
of the shipowner and therefore continued to be under its direct supervision and control. Hardly
then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring
for his cargo when the charterer did not have any control of the means in doing so. This is
evident in the present case considering that the steering of the ship, the manning of the decks,
the determination of the course of the voyage and other technical incidents of maritime
navigation were all consigned to the officers and crew who were screened, chosen and hired by
the shipowner. It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided
the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be the property of
the charterer.
Caltex vs Sulpicio Lines
Facts:
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute
to Masbate, loaded with 8,800 barrels of petroleum products shipped by petitioner Caltex. MT
Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation,
engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and
crude oil. During that particular voyage, the MT Vector carried on board gasoline and other oil
products owned by Caltex by virtue of a charter contract between them.

On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doa Paz left the port of
Tacloban headed for Manila with a complement of 59 crew members including the master and
his officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance.4 The MV
Doa Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the
route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips
twice a week.

At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the
vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV
Doa Paz died, while the two survivors from MT Vector claimed that they were sleeping at the
time of the incident.

On March 22, 1988, the board of marine inquiry in BMI Case No. 653-87 after investigation
found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual
operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doa
Paz. On February 13, 1989, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and
mother respectively, filed with the Regional Trial Court, Branch 8, Manila, a complaint for
Damages Arising from Breach of Contract of Carriage against Sulpicio Lines, Inc. (hereafter
Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT
Vector with gross and evident bad faith knowing fully well that MT Vector was improperly
manned, ill-equipped, unseaworthy and a hazard to safe navigation; as a result, it rammed
against MV Doa Paz in the open sea setting MT Vectors highly flammable cargo ablaze.

On September 15, 1992, the trial court rendered decision dismissing the third party complaint
against petitioner. On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April
15, 1997, the Court of Appeal modified the trial courts ruling and included petitioner Caltex as
one of the those liable for damages.

Issue:
Is the charterer of a sea vessel liable for damages resulting from a collision between the
chartered vessel and a passenger ship?

Ruling:
First: The charterer has no liability for damages under Philippine Maritime laws. The respective
rights and duties of a shipper and the carrier depends not on whether the carrier is public or
private, but on whether the contract of carriage is a bill of lading or equivalent shipping
documents on the one hand, or a charter party or similar contract on the other.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. If
the charter is a contract of affreightment, which leaves the general owner in possession of the
ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner.
The charterer is free from liability to third persons in respect of the ship.

In this case, the charter party agreement did not convert the common carrier into a private
carrier. The parties entered into a voyage charter, which retains the character of the vessel as a
common carrier. It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided
the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only
when the charter includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be the property of
the charterer.

The charterer of a vessel has no obligation before transporting its cargo to ensure that the
vessel it chartered complied with all legal requirements. The duty rests upon the common carrier
simply for being engaged in public service. The Civil Code demands diligence which is required
by the nature of the obligation and that which corresponds with the circumstances of the
persons, the time and the place. Hence, considering the nature of the obligation between Caltex
and MT Vector, the liability as found by the Court of Appeals is without basis.

The relationship between the parties in this case is governed by special laws. Because of the
implied warranty of seaworthiness, shippers of goods, when transacting with common carriers,
are not expected to inquire into the vessels seaworthiness, genuineness of its licenses and
compliance with all maritime laws. To demand more from shippers and hold them liable in case
of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the
public in general is concerned. By the same token, we cannot expect passengers to inquire
every time they board a common carrier, whether the carrier possesses the necessary papers or
that all the carriers employees are qualified. Such a practice would be an absurdity in a
business where time is always of the essence. Considering the nature of transportation
business, passengers and shippers alike customarily presume that common carriers possess all
the legal requisites in its operation. Thus, the nature of the obligation of Caltex demands
ordinary diligence like any other shipper in shipping his cargoes. Clearly, as a mere voyage
charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine
Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal
basis to hold petitioner liable for damages.
Sea-Land Service Inc. vs IAC
Facts:
On or about January 8, 1981, Sea-Land Service, Inc. (Sea-Land for brevity), a foreign shipping
and forwarding company licensed to do business in the Philippines, received from Seaborne
Trading Company in Oakland, California a shipment consigned to Sen Hiap Hing the business
name used by Paulino Cue in the wholesale and retail trade which he operated out of an
establishment located on Borromeo and Plaridel Streets, Cebu City.

The shipper not having declared the value of the shipment, no value was indicated in the bill of
lading. The bill described the shipment only as "8 CTNS on 2 SKIDS-FILES. 1Based on volume
measurements Sea-land charged the shipper the total amount of US$209.28 for freight age and
other charges. The shipment was loaded on board the MS Patriot, a vessel owned and operated
by Sea-Land, for discharge at the Port Of Cebu.

The shipment arrived in Manila on February 12, 1981, and there discharged in Container No.
310996 into the custody of the arrastre contractor and the customs and port authorities.
Sometime between February 13 and 16, 1981, after the shipment had been transferred, along
with other cargoes to Container No. 40158 near Warehouse 3 at Pier 3 in South Harbor, Manila,
awaiting trans-shipment to Cebu, it was stolen by pilferers and has never been recovered.

On March 10, 1981, Paulino Cue, the consignee, made formal claim upon Sea-Land for the
value of the lost shipment allegedly amounting to P179,643.48. Sea-Land offered to settle for
US$4,000.00, or its then Philippine peso equivalent of P30,600.00. asserting that said amount
represented its maximum liability for the loss of the shipment under the package limitation
clause in the covering bill of lading. Cue rejected the offer and thereafter brought suit for
damages against Sea-Land in the then Court of First Instance of Cebu, Branch X. Said Court,
after trial, rendered judgment in favor of Cue, sentencing Sea-Land to pay him P186,048.00
representing the Philippine currency value of the lost cargo, P55,814.00 for unrealized profit
with one (1%) percent monthly interest from the filing of the complaint until fully paid,
P25,000.00 for attorney's fees and P2,000.00 as litigation expenses.

Issue:
whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of
lading limiting to a fixed amount the liability of the carrier for loss or damage to the cargo where
its value is not declared in the bill.

Ruling:
Since, as already pointed out, Article 1766 of the Civil Code expressly subjects the rights and
obligations of common carriers to the provisions of the Code of Commerce and of special laws
in matters not regulated by said (Civil) Code, the Court fails to fathom the reason or justification
for the Appellate Court's pronouncement in its appealed Decision that the Carriage of Goods by
Sea Act " ... has no application whatsoever in this case. Not only is there nothing in the Civil
Code which absolutely prohibits agreements between shipper and carrier limiting the latter's
liability for loss of or damage to cargo shipped under contracts of carriage; it is also quite clear
that said Code in fact has agreements of such character in contemplation in providing, in its
Articles 1749 and 1750. Private respondent, by making claim for loss on the basis of the bill of
lading, to all intents and purposes accepted said bill.

Clause 22, first paragraph, of the long form bill of lading customarily issued by Sea-Land to its
shipping clients is a virtual copy of the first paragraph of the foregoing provision. It says:
22. VALUATION. In the event of any loss, damage or delay to or in connection with goods
exceeding in actual value $500 per package, lawful money of the United States, or in case of
goods not shipped in packages, per customary freight unit, the value of the goods shall be
deemed to be $500 per package or per customary freight unit, as the case may be, and the
carrier's liability, if any, shall be determined on the basis of a value of $500 per package or
customary freight unit, unless the nature and a higher value shall be declared by the shipper in
writing before shipment and inserted in this Bill of Lading.

And in its second paragraph, the bill states:

If a value higher than $500 shag have been declared in writing by the shipper upon delivery to
the carrier and inserted in this bill of lading and extra freight paid, if required and in such case if
the actual value of the goods per package or per customary freight unit shall exceed such
declared value, the value shall nevertheless be deemed to be declared value and the carrier's
liability, if any, shall not exceed the declared value and any partial loss or damage shall be
adjusted pro rata on the basis of such declared value.

The private respondent had no direct part or intervention in the execution of the contract of
carriage between the shipper and the carrier as set forth in the bill of lading in question. As
pointed out in Mendoza vs. PAL, supra, the right of a party in the same situation as respondent
here, to recover for loss of a shipment consigned to him under a bill of lading drawn up only by
and between the shipper and the carrier, springs from either a relation of agency that may exist
between him and the shipper or consignor, or his status as a stranger in whose favor some
stipulation is made in said contract, and who becomes a party thereto when he demands
fulfillment of that stipulation, in this case the delivery of the goods or cargo shipped. In neither
capacity can he assert personally, in bar to any provision of the bill of lading, the alleged
circumstance that fair and free agreement to such provision was vitiated by its being in such fine
print as to be hardly readable. Parenthetically, it may be observed that in one comparatively
recent case where this Court found that a similar package limitation clause was "(printed in the
smallest type on the back of the bill of lading, it nonetheless ruled that the consignee was bound
thereby on the strength of authority holding that such provisions on liability limitation are as
much a part of a bill of lading as though physically in it and as though placed therein by
agreement of the parties. There can, therefore, be no doubt or equivocation about the validity
and enforceability of freely-agreed-upon stipulations in a contract of carriage or bill of lading
limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher
value and inserts it into said contract or bill. This pro position, moreover, rests upon an almost
uniform weight of authority.