4. Caltex (Philippines), Inc. vs. Sulpicio Lines, Inc.

ISSUES:
1. Does the charterer have liability for damages? No.
MT Vector- owned by Vector Shipping Corporation - carrying 2. Is MT Vector a common carrier? YES.
petroleum products of Caltex (charter) 3. Is Caltext liable for damages under the Civil Code? NO
MV Dona Paz - owned by Sulpicio Lines Inc - carrying passengers
HELD: Sulpicia Lines Inc and Vector Shipping Corp liable. Caltex not
1. Dec 19 1987 - Due to a virtue charter contract between liable.
Caltex and Vector Shipping Corporation, the latter
transported 8,800 barrels of petroleum products of Caltex 1. The charterer has no liability for damages under Philippine
via the motor tanker MV Vector from Bataan to Masbate Maritime laws.
2. Dec 20 - Passenger ship MV Doa Paz left the port of
Tacloban headed for Manila. At about 10:30pm, the 2 Rights & duties b/w the shipper & carrier depends if the
vessels collided in the open sea within the Dumali Point b/w contract of carriage is a bill of lading / equivalent shipping
Marinduque & Oriental Mindoror documents / charter party or similar contract and not if the
3. All the crew members of MV Dona died while 2 survivors carrier is a public or private carrier.
from MT Vector claimed they were sleeping when the In this case, Caltex & Vector entered into a contract
incident occurred of affreightment / voyage charter.
4. 4000 were estimated passengers. Some were not in the Charter party - contract where an entire ship or some
passenger manifest. Only 24 survived. One of those who principal part of it is let by the owner to another person for a
perished were public school teacher Sebestian Caezal (47) specified time or use or on a particular voyage in
and his daughter Corazon (11), both unmanifested consideration of the payment of freight.
passengers but proved to be on board the vessel A contract of affreightment may either be time charter or
5. After the investigation conducted by the Board of Marine
voyage charter.
Inquiry, it found out that the MT Vector were at fault.
o Time charter - the leased vessel is leased to the
6. The heirs (wife) of Caezal filed with the RTC a complaint for
charterer for a fixed period of time
damages arising from breach of contract of carriage against
o Voyage charter ship is leased for a single voyage
the owner of MV Dona Paz, Supliciio Lines
7. Sulipicio lines filed a 3rd party complaint against its o In both cases, the charter-party/ship owner supplies
registered operator (Francisco Siorano), Vector Shipping the ships store, pay for the wages of the master of
Corporation and Caltex. the crew & defray the expenses for the maintenance
8. Sulpicio alleged that Caltex chartered the MT Vector with of the ship
gross & evident bad faith knowing fully well that MT Vector In a demise or bareboat charter - the charterer himself mans
was improperly manned, unseaworthy. the vessel with his own people & becomes (in effect) the
9. RTC: Dismissed the 3rd party complaint against Caltex for owner for the voyage subject to liability for damages caused
want of substantiation and held Sulpicio Lines liable by negligence.
amounting P1,241,287.44 (loss of future earning public
school teacher, moral & exemplary damages) Hence, if the charter is a contract of affreightment, which
10. CA: Modified RTC ruling and included Caltex to be equally leaves the general owner in possession of the ship as owner
liable under the 3rd party complaint to reimburse/indemnify for the voyage, the rights & responsibilities of ownership
Sulpicio Lines, Inc. which the latter is adjudged to pay the rest on the owner. And the charterer is free from liability to
heirs of the victim. It is to be shared half by Vector Shipping 3rd persons in respect of the ship.
Co (being the vessel at fault for the collision) and the other
half by Caltex (being the charterer that negligently caused 2. In this case, the charter party agreement did not convert
the shipping of combustible cargo aboard an unseaworthy the common carrier into a private carrier. The parties
vessel) entered into a voyage charter, which retains the character
of the vessel as a common carrier.
 science and invention, transportation has become more rapid, more
A common carrier is a person or corporation whose regular complicated and somehow more hazardous. For these reasons, a
business is to carry passengers or property for all persons passenger or a shipper of goods is under no obligation to conduct
who may choose to employ and to remunerate him. MT an inspection of the ship and its crew, the carrier being obliged by
Vector fits the definition of a common carrier under Article 1732 of law to impliedly warrant its seaworthiness.
the Civil Code.
3. Caltex is not liable. The CA, making Caltex liable, relied on Art.
Article 1732. Common carriers are persons, corporations, firms 20 & 2176 of the NCC.
or associations engaged in the business of carrying or transporting
passengers for passengers or goods or both, by land, water, or air Article 20. Every person who contrary to law, willfully or negligently
for compensation, offering their services to the public. causes damage to another, shall indemnify the latter for the same.

The above article makes no distinction between one whose Article 2176. Whoever by act or omission causes damage to
principal business activity is the carrying of persons or another, there being fault or negligence, is obliged to pay for the
goods or both, and one who does such carrying only as an damage done. Such fault or negligence, if there is no pre- existing
ancillary activity (in local idiom, as a sideline). contractual relation between the parties, is called a quasi-delict and
Article 1732 also carefully avoids making any distinction is governed by the provisions of this Chapter.
between a person or enterprise offering transportation Negligence is defined by Art. 1173 as The fault or negligence of the
service on a regular or scheduled basis and one offering obligor consists in the omission of that diligence which is required
such services on an occasional, episodic or unscheduled by the nature of the obligation and corresponds with the
basis. circumstances of the persons, of the time and of the place.
Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the The charterer (Caltex) of a vessel has no obligation
general community or population, and one who offers before transporting its cargo to ensure that the
services or solicits business only from a narrow vessel it chartered complied with all legal
segment of the general population. requirements. The duty rests upon the common
carrier simply for being engaged in public service.
Under the Carraige of Goods by Sea Act, Sec 3. (1) The carrier shall The Civil Code demands diligence, which is required by the
be bound before and at the beginning of the voyage to exercise due nature of the obligation and that, which corresponds with
diligence to 1.(a)IMake the ship seaworthy; the circumstances of the persons, the time and the place.
Hence, considering the nature of the obligation between
The carriers are deemed to warrant impliedly the Caltex and MT Vector, the liability as found by the Court of
seaworthiness of the ship. For a vessel to be seaworthy, it Appeals is without basis.
must be adequately equipped for the voyage and manned
with a sufficient number of competent officers and crew. The relationship between the parties in this case is governed
The failure of a common carrier to maintain in seaworthy by special laws. Because of the implied warranty of
condition the vessel involved in its contract of carriage is a seaworthiness, shippers of goods, when transacting with
clear breach of its duty prescribed in Article 1755 of the Civil common carriers, are not expected to inquire into the
Code. vessels seaworthiness, genuineness of its licenses and
compliance with all maritime laws.
The provisions owed their conception to the nature of the business By the same token, we cannot expect passengers to inquire
of common carriers. This business is impressed with a special public every time they board a common carrier, whether the
duty. The public must of necessity rely on the care and skill of carrier possesses the necessary papers or that all the
common carriers in the vigilance over the goods and safety of the carriers employees are qualified. Such a practice would be
passengers, especially because with the modern development of an absurdity in a business where time is always of the
 essence. Considering the nature of transportation business, rendered showed no reason for Caltex to observe a higher
passengers and shippers alike customarily presume that degree of diligence. Clearly, as a mere voyage charterer,
common carriers possess all the legal requisites in its Caltex had the right to presume that the ship was seaworthy
operation. as even the Philippine Coast Guard itself was convinced of
its seaworthiness.
In this case, 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