Caltex Philippines vs Sulpicio Lines

FACTS:

 December 19, 1987 8 pm: motor tanker MT Vector owned and operated by Vector Shipping
Corporation carried 8,800 barrels of petroleum products of Caltex by virtue of a charter contract 
 December 20, 1987 6:30 am: MV Doña Paz passenger and cargo vessel owned and operated by
Sulpicio Lines, Inc. left the port of Tacloban headed for Manila with 1,493 passengers indicated in the
Coast Guard Clear
 December 20, 1987: MT Vector collided with MV Doña Paz in the open sea within the vicinity of Dumali
Point between Marinduque and Oriental Mindoro, killing almost all the passengers and crew members
of both ships except for 24 survivors 
 MV Doña Paz carried an estimated 4,000 passengers most were not in the passenger manifest
 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 Doña Paz
 February 13, 1989: Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and mother
respectively, filed a complaint for “Damages Arising from Breach of Contract of Carriage” against
Sulpicio Lines, Inc. for the death of Sebastian E. Cañezal (public school teacher 47 years old) and his
11-year old daughter Corazon G. Cañezal
 Sulpicio, in turn, filed a 3rd party complaint against Francisco Soriano, Vector Shipping Corporation
and Caltex 
 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
 RTC: dismissed the third party complaint and favored the Cañezal's against Sulpicio Lines
 CA: included Caltex as liable party

ISSUE: W/N Caltex as a voyage charterer of a sea vessel liable for damages resulting from a collision
between the chartered vessel and a passenger ship

HELD: NO. Grants Petition. CA set aside.

 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:
 bill of lading or equivalent shipping documents; or 
 charter party or similar contract on the other
 Caltex and Vector entered into a contract of affreightment, also known as a voyage charter
 charter party
 contract by which an entire ship, or some principal part thereof, is let by the owner to another person
for a specified time or use
 Charter parties fall into three main categories:  
 (1) Demise or bareboat
 charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or
service stipulated, subject to liability for damages caused by negligence 
 common carrier becomes private
 contract of affreightment 
 one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other
person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight
 may be either:
 (2)time charter - wherein the leased vessel is leased to the charterer for a fixed period of time
 (3) voyage charter - wherein the ship is leased for a single voyage
 charter-party provides for the hire of the vessel only, either for a determinate period of time or for a
single or consecutive voyage, the ship owner to supply the ship’s store, pay for the wages of the
master of the crew, and defray the expenses for the maintenance of the ship
 charterer is free from liability to third persons in respect of the ship

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 does not convert the common carrier into a private carrier
 Carriage of Goods by Sea Act :

Sec. 3.  (1) The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to -

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx                               xxx                                    xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship.  For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of
competent officers and crew.  The failure of a common carrier to maintain in seaworthy condition the
vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the
Civil Code

 a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its
crew, the carrier being obliged by law to impliedly warrant its seaworthiness
 nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his
cargoes
 Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years
before the tragic incident occurred in 1987.  Past services rendered showed no reason for Caltex to
observe a higher degree of diligence.
 Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself
was convinced of its seaworthiness

Annie Tan vs Great Harvest Ent. Inc.

Issue: WON petitioner Annie Tan should be held liable for the value of the stolen soya beans.

Ruling: Article 1732 of the Civil Code defines common carriers as "persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public."

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Law and economics provide the policy justification of our existing jurisprudence. The extraordinary diligence
required by the law of common carriers is primarily due to the nature of their business, with the public policy behind
it geared toward achieving allocative efficiency between the parties to the transaction.
Allocative efficiency is an economic term that describes an optimal market where customers are willing to pay for the
goods produced.[39] Thus, both consumers and producers benefit and stability is achieved.
Due to the public nature of their business, common carriers are compelled to exercise extraordinary diligence since
they will be burdened with the externalities or the cost of the consequences of their contract of carriage if they fail to
take the precautions expected of them.
Common carriers are mandated to internalize or shoulder the costs under the contracts of carriage. This is so
because a contract of carriage is structured in such a way that passengers or shippers surrender total control over
their persons or goods to common carriers, fully trusting that the latter will safely and timely deliver them to their
destination. In light of this inherently inequitable dynamics— and the potential harm that might befall passengers or
shippers if common carriers exercise less than extraordinary diligence— the law is constrained to intervene and
impose sanctions on common carriers for the parties to achieve allocative efficiency.
Here, petitioner is a common carrier obligated to exercise extraordinary diligence[42] over the goods entrusted to
her. Her responsibility began from the time she received the soya beans from respondent's broker and would only
cease after she has delivered them to the consignee or any person with the right to receive them.
Furthermore, Article 1734 of the Civil Code holds a common carrier fully responsible for the goods entrusted to him
or her, unless there is enough evidence to show that the loss, destruction, or deterioration of the goods falls under
any of the enumerated exceptions
Nothing in the records shows that any of these exceptions caused the loss of the soya beans. Petitioner failed to
deliver the soya beans to respondent because her driver absconded with them. She cannot shift the blame for the
loss to respondent's supposed diversion of the soya beans from the loading point to respondent's warehouse, as the
evidence has conclusively shown that she had agreed beforehand to deliver the cargo to respondent's warehouse if
the consignee refused to accept it.
In contrast to De Guzman, the loss of the soya beans here was not attended by grave or irresistible threat, violence,
or force. Instead, it was brought about by petitioner's failure to exercise extraordinary diligence when she neglected
vetting her driver or providing security for the cargo and failing to take out insurance on the shipment's value.
Besides, as the records would show, appellant did not observe extra-ordinary (sic) diligence in the conduct of her
business as a common carrier. In breach of their agreement, appellant did not provide security while the goods were
in transit and she also did not pay for the insurance coverage of said goods. These measures could have prevented
the hijacking (sic) or could have ensured the payment of the damages sustained by the appellee.

Aboitiz vs CA
Facts:
Respondent Malayan Insurance Company, Inc. (Malayan) filed five separate actions against several defendants for
the collection of the amounts of the cargoes allegedly paid by Malayan under various marine cargo policies...
defendants
Malayan International Shipping Corporation, a foreign corporation based in Malaysia, its local ship agent, Litonjua
Merchant Shipping Agency (Litonjua), and Aboitiz.
Compagnie Maritime des Chargeurs Reunis (CMCR), its local ship agent, F.E. Zuellig (M), Inc. (Zuellig), and Aboitiz
Malayan also filed Civil Case No. R-81-526 only against CMCR and Zuellig. Thus, defendants CMCR and Zuellig
filed a third-party complaint against Aboitiz. In... the fifth complaint docketed as Civil Case No. 138879, only Aboitiz
was impleaded as defendant.
The shipments were supported by their respective bills of lading and insured separately by Malayan against the risk
of loss or damage. In the five consolidated cases, Malayan sought the recovery of amounts totaling P639,862.02.
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Aboitiz raised the defenses of lack of jurisdiction, lack of cause of action and prescription. It also claimed that M/V P.
Aboitiz was seaworthy, that it exercised extraordinary diligence and that the loss was caused by a fortuitous event.
After trial on the merits, the RTC of Manila rendered a Decision dated 27 November 1989, adjudging Aboitiz liable
on the money claims.
Aboitiz, CMCR and Zuellig appealed the RTC decision to the Court of Appeals. The appeal was docketed as CA-
G.R. SP No. 35975-CV. During the pendency of the appeal, the Court promulgated the decision in the 1993
GAFLAC case.
On 31 March 1995, the Court of Appeals (Ninth Division) affirmed the RTC decision.
As to the computation of Aboitiz's liability, the Court of Appeals again based its ruling on the 1990 GAFLAC case
that Aboitiz's liability should be based on the declared value of the shipment in consonance with the exceptional rule
under Section 4(5)[5] of... the Carriage of Goods by Sea Act.
Respondents Asia Traders Insurance Corporation (Asia Traders) and Allied Guarantee Insurance Corporation
(Allied) filed separate actions for damages against Aboitiz to recover by way of subrogation the value of the cargoes
insured by them and lost in the sinking of the vessel
M/V P. Aboitiz. The two actions were consolidated and heard before the RTC of Manila, Branch 20.
Aboitiz reiterated the defense of force majeure. The trial court rendered a decision [11] on 25 April 1990 ordering
Aboitiz to pay damages in the amount of P646,926.30.
Aboitiz sought reconsideration, arguing that the trial court should have... considered the findings of the Board of
Marine Inquiry that the sinking of the M/V P. Aboitiz was caused by a typhoon and should have applied the real and
hypothecary doctrine in limiting the monetary award in favor of the claimants. The trial court denied Aboitiz's...
motion for reconsideration.
Aboitiz elevated the case to the Court of Appeals. While the appeal was pending, this Court promulgated the
decision in the 1993 GAFLAC case. The Court of Appeals subsequently rendered a decision on 30 May 1994,
affirming the RTC decision.[12]
The 22 November 1995 Resolution became final and executory. On 26 February 1996, Asia Traders and Allied filed
a motion for execution before the RTC of Manila
On 27 February 1981, Equitable Insurance Corporation (Equitable) filed an action for damages against Aboitiz to
recover by way of subrogation the value of the cargoes insured by Equitable that were lost in the sinking of M/V P.
Aboitiz.[22] The... complaint, which was docketed as Civil Case No. 138395, was later amended to implead Seatrain
Pacific Services S.A. and Citadel Lines, Inc. as party defendants.[23] The complaint against the latter defendants
was subsequently dismissed upon motion in view... of the amicable settlement reached by the parties.
On 7 September 1989, the RTC of Manila, Branch 7, rendered judgment [24] ordering Aboitiz to pay
Aboitiz invoked the doctrine of limited liability and claimed that the typhoon was the proximate cause of the loss. On
27 November 1998, the Court of Appeals rendered a decision, affirming the RTC decision.
Issues:
The principal issue common to all three petitions is whether Aboitiz can avail limited liability on the basis of the real
and hypothecary doctrine of maritime law. Corollary to this issue is the determination of actual negligence on the
part of Aboitiz.
Ruling:
The 1993 GAFLAC case was an offshoot of an earlier final and executory judgment in the 1990 GAFLAC case,
where the General Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC), as judgment obligee therein,
sought the execution of the monetary award against
Aboitiz. The trial court granted GAFLAC's prayer for execution of the full judgment award. The appellate court
dismissed Aboitiz's petition to nullify the order of execution, prompting Aboitiz to file a petition with this Court.

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the 1993 GAFLAC case, Aboitiz argued that the real and hypothecary doctrine warranted the immediate stay of
execution of judgment to prevent the impairment of the other creditors' shares. Invoking the rule on the law of the
case, private respondent therein countered... that the 1990 GAFLAC case had already settled the extent of Aboitiz's
liability.
Following the doctrine of limited liability, however, the Court declared in the 1993 GAFLAC case that claims against
Aboitiz arising from the sinking of M/V P. Aboitiz should be limited only to the extent of the value of the vessel.
In the 1993 GAFLAC case, the Court applied the limited liability rule in favor of Aboitiz based on the trial court's
finding therein that Aboitiz was not negligent.
n the few instances when the matter was considered by this Court, we have been consistent in this jurisdiction in
holding that the only time the Limited Liability Rule does not apply is when there is an actual finding of negligence
on the part of... the vessel owner or agent x x x. The pivotal question, thus, is whether there is finding of such
negligence on the part of the owner in the instant case.
the cause of the sinking of the vessel was because of unseaworthiness due to the failure of the crew and the master
to exercise extraordinary diligence. Indeed, there appears to have been no evidence presented sufficient to form a
conclusion that petitioner shipowner itself... was negligent, and no tribunal, including this Court, will add or subtract
to such evidence to justify a conclusion to the contrary.
The ruling in the 1993 GAFLAC case cited the real and hypothecary doctrine in maritime law that the shipowner or
agent's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its
extinction. "No vessel, no liability"... expresses in a nutshell the limited liability rule.
These articles precisely intend to limit the liability of the shipowner or agent to the value of the vessel, its
appurtenances and freightage earned in the voyage, provided that the owner or agent abandons the vessel.[35]
When the vessel is totally lost in... which case there is no vessel to abandon, abandonment is not required. Because
of such total loss the liability of the shipowner or agent for damages is extinguished.[36] However, despite the total
loss of the vessel, its insurance answers for the damages... for which a shipowner or agent may be held liable.
Nonetheless, there are exceptional circumstances wherein the ship agent could still be held answerable despite the
abandonment of the vessel, as where the loss or injury was due to the fault of the shipowner and the captain. The
international rule is to the effect that the right... of abandonment of vessels, as a legal limitation of a shipowner's
liability, does not apply to cases where the injury or average was occasioned by the shipowner's own fault.[38]
Likewise, the shipowner may be held liable for injuries to passengers... notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to the shipowner.
A perusal of the decisions of the courts below in all three petitions reveals that there is a categorical finding of
negligence on the part of Aboitiz.
The finding of actual fault on the part of Aboitiz is central to the issue of its liability to the respondents. Aboitiz's
contention, that with the sinking of M/V P. Aboitiz, its liability to the cargo shippers and shippers should be limited
only to the insurance proceeds... of the vessel absent any finding of fault on the part of Aboitiz, is not supported by
the record. Thus, Aboitiz is not entitled to the limited liability rule and is, therefore, liable for the value of the lost
cargoes as so duly alleged and proven during trial.
The instant petitions provide another occasion for the Court to reiterate the well-settled doctrine of the real and
hypothecary nature of maritime law. As a general rule, a ship owner's liability is merely co-extensive with his interest
in the vessel, except where actual fault... is attributable to the shipowner. Thus, as an exception to the limited...
liability doctrine, a shipowner or ship agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure to ensure the seaworthiness of the vessel.
The instant petitions cannot be spared from... the application of the exception to the doctrine of limited liability in
view of the unanimous findings of the courts below that both Aboitiz and the crew failed to ensure the seaworthiness
of the M/V P. Aboitiz.

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Designer Baskets, Inc. vs Air Sea Transport

From lawyerly.ph
Issues:
Whether ASTI and ACCLI may be held solidarily liable to DBI for the value of the shipment.
Ruling:
We deny the petition.
A bill of lading is defined as "a written acknowledgment of the receipt of goods and an agreement to transport and to
deliver them at a specified place to a person named or on his order."[53] It may also be defined as an instrument in
writing, signed by a carrier or his agent, describing the freight so as to identify it, stating the name of the consignor,
the terms of the contract of carriage, and agreeing or directing that the freight be delivered to bearer, to order or to a
specified person at a specified place.[54]

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A bill of lading, when issued by the carrier to the shipper, is the legal evidence of the contract of carriage between
the former and the latter. It defines the rights and liabilities of the parties in reference to the contract of carriage. The
stipulations in the bill of lading are valid and binding unless they are contrary to law, morals, customs, public order or
public policy.[55]
Here, ACCLI, as agent of ASTI, issued Bill of Lading
This bill of lading governs the rights, obligations and liabilities of DBI and ASTI. DBI claims that Bill of Lading...
contains a provision stating that ASTI and ACCLI are "to release and deliver the cargo/shipment to the consignee, x
x x, only after the original copy or copies of the said Bill of Lading is or are surrendered to them; otherwise they
become liable to [DBI] for the value of the shipment."[56] Quite tellingly, however, DBI does not point or refer to any
specific clause or provision on the bill of lading supporting this claim. The language of the bill of lading shows no
such requirement.
There is no obligation, therefore, on the part of ASTI and ACCLI to release the goods only upon the surrender of the
original bill of lading.
Further, a carrier is allowed by law to release the goods to the consignee even without the latter's surrender of the
bill of lading.
The general rule is that upon receipt of the goods, the consignee surrenders the bill of lading to the carrier and their
respective obligations are considered canceled. The law, however, provides two exceptions where the goods may
be released without the surrender of the bill of lading because the consignee can no longer return it. These
exceptions are when the bill of lading gets lost or for other cause. In either case, the consignee must issue a receipt
to the carrier upon the release of the goods. Such receipt shall produce the same effect as the surrender of the bill
of lading. We have already ruled that the non-surrender of the original bill of lading does not violate the carrier's duty
of extraordinary diligence over the goods.
Thus, we held that the surrender of the original bill of lading is not a condition precedent for a common carrier to be
discharged of its contractual obligation. Under special circumstances, we did not even require presentation of any
form of receipt by the consignee, in lieu of the original bill of lading, for the release of the goods.
In clearing the carrier from liability, we took into consideration that the shipper sent a telex to the carrier after the
goods were shipped. The telex instructed the carrier to deliver the goods without need of presenting the bill of lading
and bank guarantee per the shipper's request since "for prepaid shipt of charges already fully paid our end x x
x."[62] We also noted the usual practice of the shipper to request the shipping lines to immediately release
perishable cargoes through telephone calls.
Settled that the surrender of the original bill of lading is not absolute; that in case of loss or any other cause, a
common carrier may release the goods to the consignee even without it.
Principles:
A common carrier may release the goods to the consignee even without the surrender of the hill of lading.