Digests 011 - baixardoc

Transportation Law | Atty. Golangco | 2015-2016 | 2J

PUROMINES v CA

March 22, 1993 SUMMARY: A sales contract for the sale of prilled urea was entered into by Puromines and Makati Agro and it was provided therein that any disputes arising from the contract shall be settled by arbitration in London. The shipment covered by 3 bills of lading was undertaken by MV Liliana Dimitrova with Philipp Brothers as charterer of said vessel. When shipment covered by Bill of Lading 2&3 were discharged in Manila in bad order and condition, Puromines filed a complaint with TC for breach of contract of carriage against Maritime, ship-agent and Philipp Brothers, as charterer. Philipp filed a motion to dismiss on the basis that case should be brought to arbitration first. Puromines opposed contending that the sales contract does not include contract of carriage, the latter not covered by agreement on arbitration. SC: Granted Motion to Dismiss, sales contract and bill of lading provides covers arbitration clause. Assuming the cause of action is based on contract of carriage, it must be first determined what kind of charter party had with the shipowner to determine liability. If contract of affreightment, charterer is not liable as possession is still with owner. If charter of demise or bareboat, then charterer is liable as it is considered the owner and therefore would be liable for damage or loss. FACTS:

Puromines, Inc. and Makati Agro Trading, Inc. (not a party in this case) entered into a contract with Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk.

Sales Contract provided an arbitration clause: o "9. Arbitration: "Any disputes arising under this contract shall be settled by arbitration in

London in accordance with the Arbitration Act 1950 and any statutory amendment or modification thereof. Each party is to appoint an Arbitrator, and should they be unable to agree, the decision of an Umpire appointed by them to be final. The Arbitrators and Umpire are all to be commercial men and resident in London. This submission may be made a rule of the High Court of Justice in England by either party."

May 22, „88: M/V "Liliana Dimitrova" loaded on board at Yuzhny, USSR a shipment of 15k metric tons prilled Urea in bulk complete and in good order and condition for transport to Iloilo and Manila, to be delivered to Puromines.

3 bills of lading were issued by the ship-agent, Maritime Factors Inc: o Bill of Lading No. 1 dated May 12, „88 covering 10k metric tons for discharge to Manila; o Bill of Lading No. 2 of even date covering 4k metric tons for unloading in Iloilo City; and o Bill of Lading No. 3, same date, covering 1,500 metric tons likewise for discharge in Manila

Shipment covered by Bill of Lading No. 2 was discharged in Iloilo City complete and in good order and condition. However, shipments covered by Bill of Lading Nos. 1 and 3 were discharged in Manila in

bad order and condition, caked, hardened and lumpy, discolored and contaminated with rust and dirt. o Damages were valued at P683, 056. 29 including additional discharging expenses.

Puromines filed a complaint with the trial court for breach of contract of carriage against Maritime

Factors Inc. (not included as respondent in this petition) as ship-agent for the owners of the vessel MV "Liliana Dimitrova," while Philipp Brothers Oceanic Inc., was impleaded as charterer of the said vessel

o Caking and hardening, wetting and melting, and contamination by rust and dirt of the damaged portions of the shipment were due to the improper ventilation and inadequate storage facilities of the vessel

o Wetting of the cargo was attributable to the failure of the crew to close the hatches before and when it rained while the shipment was being unloaded in the Port of Manila;

o As a direct and natural consequence of the unseaworthiness and negligence of the vessel, Puromines suffered damages in the total amount of P683, 056.29.

Maritime Factors, Inc. filed its Answer to the complaint, while Philipp filed a motion to dismiss on the grounds that:

o the complaint states no cause of action; it was prematurely filed; and Puromines should comply with the arbitration clause in the sales contract.


Puromines opposed motion to dismiss contending the inapplicability of the arbitration clause inasmuch as the cause of action did not arise from a violation of the terms of the sales contract but rather for claims

of cargo damages where there is no arbitration agreement.

TC: Denied Philipp's motion to dismiss. Arbitration not applicable. o Sales contract states in part: 'Any disputes arising under this contract shall be settled by

arbitration’ o Facts alleged in the complaint show that the cause of action arose from a breach of contract of

carriage by the vessel chartered by Philipp Brothers thus; the arbitration clause cannot apply to the dispute in the present action which concerns Puromines' claim for cargo loss/damage arising from breach of contract of carriage.

o No merit to allegations that Philipp, not being the ship owner, is therefore not the real party in interest as it was impleaded as charterer of the vessel, hence, a proper party

CA: Complaint Dismissed. The arbitration provision in the sales contract and/or the bills of lading is applicable in the present case.

o Sales contract is broad enough to include the claim for damages arising from the carriage

and delivery of the goods subject-matter thereof. o Bills of lading state: 'Any dispute arising under this Bill of Lading shall be referred to

arbitration of the Maritime Arbitration Commission xxx

Hence, this special civil action for certiorari and prohibition. o Puromines argues that the sales contract does not include the contract of carriage which is a

different contract entered into by the carrier with the cargo owners. o Error for CA to touch upon the arbitration provision of the bills lading in its decision inasmuch as

the same was not raised as an issue by Philipp who was not a party in the bills of lading ISSUES: 1) Whether the phrase "any dispute arising under this contract" in the arbitration clause of the sales contract covers a cargo claim against the vessel (owner and/or charterers) for breach of contract of carriage? (YES) 2) Assuming that the cause of action arises from the contract of carriage, whether Philipp, as charterer, would be liable for the loss or damage? (Depends on type of charter, YES if charter of demise, NO if contract of affreightment) 3) Whether arbitration provision should not have been discussed as it was not raised as a defense? (NO)

RATIO:

1) Sales contract is comprehensive enough to include claims for damages arising from carriage and delivery of the goods.

GENERAL RULE: Seller has the obligation to transmit the goods to the buyer, and concomitant thereto, the contracting of a carrier to deliver the same.

o Art. 1523: Where in pursuance of a contract of sale, the seller is authorized or required to send

the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the

buyer, EXCEPT in the cases provided for in article 1503, first, second and third paragraphs, or UNLESS a contrary intent appear.

o "Unless otherwise authorized by the buyer, the seller must take such contract with the carrier

on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in

course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to

himself, or may hold the seller responsible in damages."

Sales Contract provides for conditions relative to the delivery of goods, such as date of shipment, demurrage, weight as determined by the bill of lading at load port and more particularly the provisions in the contract. xxxx

Puromines derives his right to the cargo from the bill of lading which is the contract of affreightment

together with the sales contract. It is BOUND by the provisions and terms of said bill of lading and of the ARBITRATION CLAUSE incorporated in the sales contract.


2) Assuming that the liability of Philipp is not based on the sales contract, but rather on the contract of carriage, being the charterer of the vessel MV "Liliana Dimitrova," it is material to show what kind of charter party Philipp had with owner of vessel to determine former's liability. Assuming that in the present case, the charter party is a demise or bareboat charter, then Philipp Brothers is liable to Puromines, Inc., subject to the terms and conditions of the sales contract. On the other hand, if the contract between Philipp and the owner of the vessel MV "Liliana Dimitrova" was merely that of affreightment, then it cannot be held liable for the damages caused by the breach of contract of carriage, the evidence of which is the bill of lading. Charter party: Definition

American jurisprudence defines charter party as a 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. (Ward v. Thompson) Two Kinds of Charter Parties

o Charter of demise or bareboat AND contracts of affreightment.

Demise or Bareboat Charter of Veseel Contract of Affreightment

Charterer will generally be considered as OWNER for the voyage or service stipulated

Owner of the vessel leases part or all of its space to haul goods for others

The charterer mans the vessel with his own people and becomes, in effect, the owner pro hac vice, subject to liability to others for damages caused by negligence. (Assistance, Inc. v. Teledyne Industries Inc)

It is a contract for a special service to be rendered by the owner of the vessel and under such contract the GENERAL OWNER RETAINS the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. (US v. Shea)

To create a demise, the owner of a vessel must completely and exclusively relinquish possession.

Anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all.

Responsibility to third persons for goods shipped on board a vessel follows the vessel's possession and employment; and if possession is transferred to the charterer by virtue of a demise, the charterer,

and not the owner, is liable as carrier on the contract of affreightment made by himself or by the master with third persons, and is answerable for loss, damage or non-delivery of goods received for transportation.

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, responsibilities

of ownership rest on the owner and the charterer

is usually free from liability to third persons in respect of the ship. (Leary v. US) An owner who retains possession of the ship, though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading or unloading of the cargo. (Gracie v. Palmer)

o In any case, whether the liability of Philipp should be based on the same contract or that of the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions on the sales contract

and/or the bill of lading. Puromines being a signatory and party to the sales contract cannot escape from his obligation under the arbitration clause as stated therein.

Arbitration Clauses o Arbitration has been held valid and constitutional. Even before the enactment of RA 876, SC has

countenanced the settlement of disputes through arbitration. The rule now is that UNLESS the agreement is such as absolutely to close the doors of the courts against the parties, which agreement would be void, the courts will look with favor upon such amicable arrangements and will only interfere with

great reluctance to anticipate or nullify the action of the arbitrator. (Arbitration as a Means of Reducing Court Congestion, Coquia, Jorge quoting Malcolm, J.)

o Mindanao Portland Cement Corp. v. McDonough Construction Company of Florida: With a written provision for arbitration as well as failure on respondent's part to comply, parties must proceed to their arbitration in accordance with the terms of their agreement (Sec. 6, RA 876). Proceeding in court is merely a summary remedy to enforce the agreement to arbitrate. The duty of the court in this case is not to resolve the merits of the parties' claims but only to determine if they should proceed to arbitration or

not. And although it has been ruled that a frivolous or patently baseless claim should not be ordered to


arbitration it is also recognized that the mere fact that a defense exist against a claim does not make it

frivolous or baseless. 3) Puromines contention that the arbitration provision in the bills of lading should not have been discussed as an issue in the CA decision since it was not raised as a special or affirmative defense is without merit. The 3 bills of lading were attached to the complaint as Annexes and are therefore parts thereof and may be considered as evidence although not introduced as such. (Philippine Bank of Communications v. CA) It was then proper for CA/TC to discuss the contents of the bills of lading, having been made part of the record.

DISPOSITIVE: Arbitration clause stated in Sales Contract valid and applicable. CA Affirmed.

○○○○○ LITONJUA SHIPPING CO INC v. NATIONAL SEAMAN BOARD & GREGORIO CANDONGO

G.R. No. L-51910, August 10, 1989 FACTS: Petitioner is the duly appointed local crewing managing office of the Fairwind Shipping Corporation. On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry owned by the R.D. Mullion ship broking agency under charter by Fairwind, while in the port of Cebu contracted the services (among others) of Gregorio Candongo as Third Engineer for 12 months with a monthly wage of US$500.00. The agreement was executed before the Cebu Area Manning Unit of the NSB, after which respondent boarded the vessel. On December 28, 1976 before the expiration of contract, respondent was required to disembark at Port Kilang, Malaysia. Describe in his seaman‟s handbook is the reason “by owner‟s arrange.” Condongo filed a complaint against Mullion (Shipping company) for violation of contract and against Litonjua as agent of shipowner. On February 1977, NSB rendered a judgment by default for failure of petitioners to appear during the initial hearing, rendering the same to pay Candongo because there was no sufficient or valid cause for the respondents to terminate the service of the complainant. Litonjua‟s defense: Contends that the shipowner, nor the charterer, was the employer of private respondent; and that liability for damages cannot be imposed upon petitioner which was a mere agent of the charterer. ISSUE: W/N Litonjua may be held liable to the private respondent on the contract of employment – YES HELD: The first basis is the charter party which existed between Mullion, the shipowner, and Fairwind, the charterer. It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of the seamen Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on the contract of employment between the ship captain and the private respondent. There is a second and ethically more compelling basis for holding petitioner Litonjua liable on the contract of employment of private respondent. The charterer of the vessel, Fairwind, clearly benefitted from the


employment of private respondent as Third Engineer of the Dufton Bay, along with the ten (10) other Filipino crewmembers recruited by Captain Ho in Cebu at the same occasion. In so doing, petitioner Litonjua certainly in effect represented that it was taking care of the crewing and other requirements of a vessel chartered by its principal, Fairwind. Last, but certainly not least, there is the circumstance that extreme hardship would result for the private respondent if petitioner Litonjua, as Philippine agent of the charterer, is not held liable to private respondent upon the contract of employment.

○○○○○ PLANTERS PRODUCTS v. 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. 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 petitioner's warehouse was made of corrugated galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer. It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July 12th, 14th and 18th). A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge. 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 trial court 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. Relying on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party. Accordingly, the Civil Code provisions on common carriers which set forth a presumption of negligence do not find application in the case at bar. ISSUE: W/N a charter-party between a shipowner and a charterer transform a common carrier into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo 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. In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee should first prove the fact of shipment and its consequent loss or damage while the same was in the possession, actual or constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by law or that the loss, damage or deterioration of the cargo was due to fortuitous event, or some other circumstances inconsistent with its liability. Although it is considered a common carrier, respondent has sufficiently overcome, by clear and

convincing proof, the prima facie presumption of negligence.


The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom. It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. When M/V "Sun Plum" docked at its berthing place, representatives of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis. Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo.

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PLANTERS PRODUCTS INC v. CA G.R. No. 101503 September 15, 1993

FACTS:

Planters Products - purchased from Mitsubishi Inter‟l Corp. 9.3K metric tons of Urea (fertilizer), 46% of which the latter shipped in bulk aboard the cargo vessel M/V “Sun Plum” owned by Kyosei Kisen Kabushiki Kaisha (KKKK) 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 before loading the fertilizer aboard the vessel they were inspected by the charterer‟s representative and found

fit After the Urea fertilizer was loaded in bulk by stevedores (somebody whose job is to load and unload ships)

hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. 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 survey report 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 sand, rust and dirt Planters Products sent a claim letter to Soriamont Steamship Agencies, the resident agent of the carrier, for

damages ISSUES: (1) W/N a common carrier becomes a private carrier by reason of a charter-party; (2) W/N the shipowner was able to prove that he had exercised that degree of diligence required of him HELD: (1) Yes. 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; contract of affreightment by which the owner of a ship or other vessel lets the whole or a 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 2 types of charter-party:


a. contract of affreightment – involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; may either be: i) time charter - vessel is leased to the charterer for a fixed period of time; or ii) voyage charter - ship is leased for a single voyage b. charter by demise or bareboat charter – whole vessel is let to the charterer with a transfer to him of its

entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants In both types, the charter-party provides for the hire of vessel only, either for a determinate period of time or

for a single or consecutive voyage, the shipowner to supply the ship‟s stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. common or public carrier – see Art. 1732; extends to carriers either by land, air or water which hold

themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as a public employment and not as a casual occupation distinction between a “common or public carrier” and a “private or special carrier” lies in the character of the

business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier common carrier - should observe extraordinary diligence in the vigilance over the goods they carry; in case

of loss, destruction or deterioration of the goods, it is presumed to be at fault or to have acted negligently, and the burden of proving otherwise rests on it private carrier - exercise of ordinary diligence in the carriage of goods will suffice; no such presumption

applies to private carriers 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 when Planters Products 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. As stranger to the crew and to the ship, Planters Products did not have the duty of caring for its cargo as it did not have control of the means in doing so.

(2) Yes. Before the fertilizer was loaded, the 4 hatches of the vessel were cleaned, dried and fumigated. After

completing the loading of the cargo in bulk in the ship‟s holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with 3 layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship‟s boom. the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or

seepage of water inside the hull of the vessel stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole

operation on rotation basis Urea also contains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen and

ammonia do not normally evaporate even on a long voyage, provided that the temperature inside the hull does not exceed 80 degrees centigrade. dissipation of quantities of fertilizer, or its deterioration in value, is caused either by an extremely high

temperature in its place of storage, or when it comes in contact with water probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was transported in “bulk,” thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it risk the shipper or the owner of the goods has to face

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CALTEX [PHILS] v. SULPICIO LINES FACTS: On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided in the open sea with passenger ship MV Doña Paz, causing the death of all but 25 of the latter‟s passengers. Among those who died were Sebastian Canezal and his daughter Corazon Canezal. On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation was at fault. On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal‟s wife and mother respectively, filed with the Regional Trial Court of Manila a complaint for damages arising from breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party complaint against Vector and Caltex. The trial court dismissed the complaint against Caltex, but the Court of Appeals included the same in the liability. Hence, Caltex filed this petition. FACTS (alternative): 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 a charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship HELD: First: The charterer has no liability for damages under Philippine Maritime laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. A charter party is a 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; a contract of affreightment is 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. A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the 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. 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.


Second: MT Vector is a common carrier 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 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. A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, 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. Third: Is Caltex liable for damages under the Civil Code? 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 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 vessel‟s 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. 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.

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DELA TORRE VS. CA G.R. No. 160088, Jul. 13, 2011 FACTS: Crisostomo G. Concepcion (Concepcion) owned LCT-Josephine, a vessel registered with the Philippine Coast Guard. Concepcion and the Philippine Trigon Shipyard Corporation (PTSC), represented by Roland, entered into a "Contract of Agreement," wherein the latter would charter LCT-Josephine. PTSC/Roland sub-chartered LCT-Josephine to Trigon Shipping Lines (TSL), a single proprietorship owned by Roland‟s father, Agustin de la Torre (Agustin). TSL, this time represented by Roland per Agustin‟s Special Power of Attorney, sub-chartered LCT-Josephine to Ramon Larrazabal (Larrazabal) for the transport of cargo consisting of sand and gravel to Leyte. The LCT-Josephine with its cargo of sand and gravel arrived at Philpos, Isabel, Leyte. The vessel was beached near the NDC Wharf. With the vessel‟s ramp already lowered, the unloading of the vessel‟s cargo began with the use of Larrazabal‟s payloader. While the payloader was on the deck of the LCT-Josephine scooping a load of the cargo, the vessel‟s ramp started to move downward, the vessel tilted and sea water rushed in. Shortly thereafter, LCT-Josephine sank. Concepcion demanded that PTSC/ Roland refloat LCT-Josephine. The latter assured Concepcion that negotiations were underway for the refloating of his vessel. Unfortunately, this did not materialize. For this reason, Concepcion was constrained to institute a complaint for "Sum of Money and Damages" against PTSC and Roland before the RTC. PTSC and Roland filed their answer together with a third-party complaint against Agustin. Agustin, in turn, filed his

Digests 011 - baixardoc

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