Transportation Case Digest: Caltex v. Sulpicio Lines (1999)

G.R.No. 131166  September 30, 1999
Lessons Applicable: Charter Party (Transportation)

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
• 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