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

SUPREME COURT REPORTS ANNOTATED VOLUME 315 5/15/21, 10:47 AM
VOL. 315, SEPTEMBER 30, 1999 709

Caltex (Philippines), Inc. vs. Sulpicio Lines, Inc.
*
G.R. No. 131166. September 30, 1999.
CALTEX (PHILIPPINES), INC., petitioner, vs. SULPICIO

LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO
S. GO, CARLOS S. GO, VICTORIANO S. GO,
DOMINADOR S. GO, RICARDO S. GO, EDWARD S. GO,
ARTURO S. GO, EDGAR S. GO, EDMUND S. GO,
FRANCISCO SORIANO, VECTOR SHIPPING
CORPORATION, TERESITA G. CAÑEZAL AND SOTERA
E. CAÑEZAL, respondents.
Contracts; Common Carriers; Respective rights and duties of a

shipper and carrier depends 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.·The respective
rights and duties of a shipper and the carrier depends not on
whether the
_______________
* FIRST DIVISION.
710
710 SUPREME COURT REPORTS ANNOTATED
carrier is public or private, but on whether the contract of carriage
http://www.central.com.ph/sfsreader/session/000001796deaef5e4123b0ef003600fb002c009e/p/APT551/?username=Guest Page 1 of 20
is a bill of lading or equivalent shipping documents on the one

hand, or a charter party or similar contract on the other.
Same; Same; Words and Phrases; 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 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.
Same; Same; Same; 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.·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 shipÊs
store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.
Same; Same; Same; Under a demise or bareboat charter on the
other hand, the 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.·Under a
demise or bareboat charter on the other hand, the 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.
Same; Same; Same; 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.·A common carrier is a person or corporation
whose regular business is to carry passengers or property for all
persons who may choose to
711
VOL. 315, SEPTEMBER 30, 1999 711
employ and to remunerate him. MT Vector fits the definition of a

common carrier under Article 1732 of the Civil Code.
Same; Same; Same; 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 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.
Same; Same; Same; 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 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.
Same; Same; Same; Because of the implied warranty of
seaworthiness, shippers of goods, when transacting with common
carriers, are not expected to inquire into the vesselÊs seaworthiness.·
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 vesselÊs 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 carrierÊs 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 cus-
712
tomarily presume that common carriers possess all the legal

requisites in its operation.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Platon, Martinez, Flores, San Pedro & Leano for
petitioner.
Reynaldo Umali for Teresita Cañezal, et al.
Arthur D. Lim Law Office for Sulpicio Lines, Inc.
Cruz and Pascual for Francisco Soriano & Vector
Shipping Corporation.
PARDO, J.:
Is the charterer of a sea vessel liable for damages resulting

from a collision between the chartered vessel and a
passenger ship?
When MT Vector left the port of Limay, Bataan, on
December 19, 1987 carrying petroleum products of Caltex
(Philippines), Inc. (hereinafter Caltex) no one could have
guessed that it would collide with MV Doña Paz, killing
almost all the passengers and crew members of both ships,
and thus resulting in one of the countryÊs worst maritime
disasters.
The petition before us seeks to reverse the Court of
1
Appeals decision holding petitioner jointly liable with the
operator of MT Vector for damages when the latter collided
with Sulpicio Lines, Inc.Ês passenger ship MV Doña Paz.
The facts are as follows:
_______________
1 In CA-G.R. CV No. 29526 promulgated on April 15, 1997, Justice

Jorge S. Imperial, ponente, Justices Mabutas and Hormachuelos,
concurring.
713
VOL. 315, SEPTEMBER 30, 1999 713

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
2
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
3
charter contract between them.
On December 20, 1987, at about 6:30 a.m., the passenger
ship MV Doña 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
4
as indicated in the Coast Guard Clearance. The MV Doña
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 crew-members of MV Doña Paz died, while the two
survivors from MT Vector claimed that they were sleeping
at the time of the incident.
The MV Doña Paz carried an estimated 4,000
passengers; many indeed, were not in the passenger
manifest. Only 24 survived the tragedy after having been
rescued from the burning waters by vessels that responded
5
to distress calls. Among those who perished were public
school teacher Sebastian Cañezal (47 years old) and his
daughter Corazon
_______________
2 Findings and Recommendation of the Board of Marine Inquiry dated

March 22, 1988, Rollo, p. 358.
3 Ibid., Rollo, p. 350.
4 Ibid., Rollo, p. 357. Actually, there were more than 4,000 passengers.
5 Decision, Court of Appeals, dated April 15, 1997, Rollo, pp. 54-75.
714

Cañezal (11 years old), both unmanifested passengers but

proved to be on board the vessel.
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 Doña
6
Paz.
On February 13, 1989, Teresita Cañezal and Sotera E.
Cañezal, Sebastian CañezalÊs 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 Doña Paz in the open sea setting MT
VectorÊs highly flammable cargo ablaze.
On September 15, 1992, the trial court rendered decision
dismissing the third party complaint against petitioner.
The dispositive portion reads:
„WHEREFORE, judgement is hereby rendered in favor of plaintiffs

and against defendant-3rd party plaintiff Sulpicio Lines, Inc., to
wit:
„1. For the death of Sebastian E. Cañezal and his 11-year old
daughter Corazon G. Cañezal, including loss of future
earnings of said Sebastian, moral and exemplary damages,
attorneyÊs fees, in the total amount of P1,241,287.44 and
finally;
„2. The statutory costs of the proceedings.
„Likewise, the 3rd party complaint is hereby DISMISSED

for want of substantiation and with costs against the 3rd
party plaintiff.
_______________
6 Finding and Recommendations of the Board of Marine Inquiry dated

March 22, 1988, Rollo, pp. 347-402.
715
VOL. 315, SEPTEMBER 30, 1999 715

„IT IS SO ORDERED.
„DONE IN MANILA, this 15th day of September 1992.
„ARSENIO M. GONONG
„Judge‰7
On appeal to the Court of Appeals interposed by Sulpicio

Lines, Inc., on April 15, 1997, the Court of Appeal modified
the trial courtÊs ruling and included petitioner Caltex as
one of those liable for damages. Thus:
„WHEREFORE, in view of all the foregoing, the judgment rendered

by the Regional Trial Court is hereby MODIFIED as follows:
„WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay
the heirs of Sebastian E. Cañezal and Corazon Cañezal:
„1. Compensatory damages for the death of Sebastian E.

Cañezal and Corazon Cañezal the total amount of ONE
HUNDRED THOUSAND PESOS (P100,000);
„2. Compensatory damages representing the unearned income
of Sebastian E. Cañezal, in the total amount of THREE
HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY

(P306,480.00) PESOS;
„3. Moral damages in the amount of THREE HUNDRED
THOUSAND PESOS (P 300,000.00);
„4. AttorneyÊs fees in the concept of actual damages in the
amount of FIFTY THOUSAND PESOS (P 50,000.00);
„5. Costs of the suit.
„Third party defendants Vector Shipping Co. and Caltex (Phils.),

Inc. are held equally liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-
mentioned damages, attorneyÊs fees and costs which the latter is
adjudged to pay plaintiffs, the same to be shared half by Vector
Shipping Co. (being the vessel at fault for the collision) and the
other half by Caltex (Phils.), Inc. (being the charterer that
negligently caused the shipping of combustible cargo aboard an
unseaworthy vessel).
„SO ORDERED.
_______________
7 Rollo, pp. 156-225.
716

„JORGE S. IMPERIAL
„Associate Justice
„WE CONCUR:
„RAMON U. MABUTAS, PORTIA ALIÑO
JR. HERMACHUELOS
8
„Associate Justice Associate Justice‰
Hence, this petition.

We find the petition meritorious.
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,
9
or a charter party or similar contract on the other.
Petitioner and Vector entered into a contract of
10
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,
11
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
_______________
8 Court of Appeals decision in CA-G.R. CV No. 39526, dated April 15,

1997, Rollo, pp. 54-75.
9 Philippine Admiralty and Maritime Law, by Attys. Eduardo
Hernandez and Antero Peñasales, 1987, p. 237, citing Schoenbaum &
Yiannopoulos, Admiralty and Maritime Law, at p. 364.
10 Ibid., p. 495, citing Healy & Sharp, Admiralty, p. 405.
11 Tabacalera Insurance Co. vs. North Front Shipping Services, 272
SCRA 527 (1997), citing Planters Products, Inc. vs. Court of Appeals, 226
SCRA 476 (1993).
717
VOL. 315, SEPTEMBER 30, 1999 717

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 shipÊs store, pay for
the wages of the master of the crew,12 and defray the
expenses for the maintenance of the ship.
Under a demise or bareboat charter on the other hand,
the 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. 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 13is free from
liability to third persons in respect of the ship.
Second : MT Vector is a common carrier.
Charter parties fall into three main categories: (1)
Demise or bareboat, (2) time charter, (3) voyage charter.
Does a charter party agreement turn the common carrier
into a private one? We need to answer this question in
order to shed light on the responsibilities of the parties.
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. 14
In Planters Products, Inc. vs. Court of Appeals, we said:
„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
_______________
12 Ibid., citing Planters Products, Inc. vs. Court of Appeals, 226 SCRA 476
(1993).
13 Puromines vs. Court of Appeals, 220 SCRA 281 (1993).
14 226 SCRA 476 (1993).
718

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.‰
Later, we ruled 15in Coastwise Lighterage Corporation vs.

Court of Appeals:
„Although a charter party may transform a common carrier into a

private one, the same however is not true in a contract of
affreightment x x x‰
A common carrier is a person or corporation whose regular

business is to carry passengers or property for all persons
16
who may choose to employ and to remunerate him. MT
Vector fits the definition of a common carrier under Article
17
1732 of the Civil Code. In Guzman vs. Court of Appeals,
we ruled:
„The Civil Code defines „common carriers‰ in the following terms:

„Article 1732. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or transporting
passengers for passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.‰
„The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity
(in local idiom, as „a sideline‰). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one
offering such services on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the „general public,‰ i.e., the general
community or
_______________
15 245 SCRA 797 (1995).

16 United States vs. Quinajon, 31 Phil. 189 (1915); United States vs. Tan
Piaoco, 40 Phil. 853 (1920).
17 168 SCRA 612, 617-619 (1988).
719
VOL. 315, SEPTEMBER 30, 1999 719

population, and one who offers services or solicits business only

from a narrow segment of the general population. We think that
Article 1733 deliberately refrained from making such distinctions.
„It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely
„backhauled‰ goods for other merchants from Manila to
Pangasinan, although such backhauling was done on a periodic,
occasional rather than regular or scheduled manner, and even
though respondentÊs principal occupation was not the carriage of
goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that the fee
frequently fell below commercial freight rates is not relevant here.‰
Under the 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
18
Civil Code.
The provisions owed their conception to the nature of
the business of common carriers. This business is
impressed with a special public duty. 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
_______________
18 Trans-Asia Shipping Lines vs. Court of Appeals, 254 SCRA 260
(1996), citing Chan Keep vs. Chan Gioco, 14 Phil. 5 (1909).
720

19
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.
This aside, we now rule on whether Caltex is liable for
damages under the Civil Code.
Third: Is Caltex liable for damages under the Civil
Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its
highly combustible fuel cargo aboard an unseaworthy
vessel such as the MT Vector when Caltex:
1. Did not take steps to have M/T VectorÊs certificate

of inspection and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by
Mr. Carlos Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents
and certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector to

transport its cargo despite these deficiencies:
1. The master of M/T Vector did not possess the

required Chief Mate license to command and
navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of
a Minor Patron, authorized to navigate only in bays
and rivers when the subject collision occurred in the
open sea;
3. The Chief Engineer, Filoteo Aguas, had no license
to operate the engine of the vessel;
4. The vessel did not have a Third Mate, a radio
operator and a lookout; and
20
The vessel had a defective main engine.
20
5. The vessel had a defective main engine.
_______________
19 Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil

Code of the Philippines, Volume V, 1992, p. 298, citing Commission
Report, pp. 66-67.
20 Memorandum of Sulpicio Lines, Inc., Rollo, pp. 493-520.
721
VOL. 315, SEPTEMBER 30, 1999 721

As basis for the liability of Caltex, the Court of Appeals

relied on Articles 20 and 2176 of the Civil Code, which
provide:
„Article 20.·Every person who contrary to law, willfully or

negligently causes damage to another, shall indemnify the latter for
the same.
„Article 2176.·Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter.‰
And what is negligence?

The Civil Code provides:
„Article 1173. The fault or negligence of the obligor consists in the

omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad faith, the
provisions of Article 1171 and 2201 paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family
shall be required.‰
21
In Southeastern College, Inc. vs. Court of Appeals, we said
that negligence, as commonly understood, is conduct which
naturally or reasonably creates undue risk or harm to
others. It may be the failure to observe that degree of care,
precaution, and vigilance, which the circumstances justly

demand, or the omission to do something which ordinarily
regulate the conduct of human affairs, would do.
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
_______________
21 292 SCRA 422 (1998), citing Valenzuela vs. Court of Appeals, 253
SCRA 303 (1996); Cf. Quibal vs. Sandiganbayan, 244 SCRA 224 (1995);
Citibank, NA vs. Gatchalian, 240 SCRA 212 (1995).
722

common 22 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
23
laws. Because of the implied warranty
of seaworthiness, shippers of goods, when transacting
with common carriers, are not expected to inquire into the
vesselÊs 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 carrierÊs
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.
A cursory reading of the records convinces us that Caltex
had reasons to believe that MT Vector could legally
transport cargo that time of the year.
„Atty. Poblador: Mr. Witness, I direct your attention to this portion

here containing the entries here under „VESSELÊS DOCUMENTS‰
1. Certificate of Inspection No. 1290-85, issued December 21,
1986, and Expires December 7, 1987,‰ Mr. Witness, what steps did
_______________
22 De Guzman vs. Court of Appeals, 168 SCRA 612 (1988).

23 Under Section 3 (1) of the Carriage of Goods by Sea Act.
723
VOL. 315, SEPTEMBER 30, 1999 723

you take regarding the impending expiry of the C.I. or the

Certificate of Inspection No. 1290-85 during the hiring of MT
Vector?
„Apolinar Ng: At the time when I extended the Contract, I did
nothing because the tanker has a valid C.I. which will expire on
December 7, 1987 but on the last week of November, I called the
attention of Mr. Abalos to ensure that the C.I. be renewed and Mr.
Abalos, in turn, assured me they will renew the same.
„Q: What happened after that?

„A: On the first week of December, I again made a follow-
up from Mr. Abalos, and said they24were going to send
me a copy as soon as possible, sir.
xxxxxxxxx
„Q: What did you do with the C.I.?
„A: We did not insist on getting a copy of the C.I. from Mr.
Abalos on the first place, because of our long business
relation, we trust Mr. Abalos and the fact that the
vessel was able to 25sail indicates that the documents

are in order. x x x‰
On cross examination·
„Atty. Sarenas: This being the case, and this being an

admission by you, this Certificate of Inspection has
expired on December 7. Did it occur to you not to let the
vessel sail on that day because of the very approaching
date of expiration?
„Apolinar Ng: No sir, because as I said before, the operation
Manager assured us that they were able to secure a
renewal of the Certificate of Inspection and that they
26
will in time submit us a copy.‰
_______________
24 TSN, May 7, 1991, pp. 18-19.

25 TSN, Direct Examination of Apolinario Ng, dated May 7, 1991, pp.
21-22.
26 TSN, Cross-Examination of Apolinario Ng, dated May 13, 1991, p.
7.
724

Finally, on Mr. NgÊs redirect examination:
„Atty. Poblador: Mr. Witness, were you aware of the

pending expiry of the Certificate of Inspection in the
coastwise license on December 7, 1987. What was your
assurance for the record that this document was
renewed by the MT Vector?
„Atty. Sarenas: x x x
„Atty. Poblador: The certificate of Inspection?
„A: As I said, firstly, we trusted Mr. Abalos as he is a long

time business partner; secondly, those three years,
they were allowed to sail by the Coast Guard. That
are some that make me believe that they in fact were
able to secure the necessary renewal.

„Q: If the Coast Guard clears a vessel to sail, what would
that mean?
„Atty. Sarenas: Objection.

„Court: He already answered that in the cross examination
to the effect that if it was allowed, referring to MV
Vector, to sail, where it is loaded and that it was
scheduled for a destination by the Coast Guard, it
means that it has Certificate of Inspection extended as
assured to this witness by Restituto Abalos. That in no
case MV Vector will be allowed to sail if the Certificate
of Inspection is, indeed, not to be extended. That was his
repeated explanation to the cross-examination. So, there
is no need 27to clarify the same in the re-direct
examination.‰
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.
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
_______________
27 TSN, Re-direct Examination of Apolinario Ng, dated May 13, 1991,

p. 51.
725
VOL. 315, SEPTEMBER 30, 1999 725

things considered, we find no legal basis to hold petitioner

liable for damages.
As Vector Shipping Corporation did not appeal from the
Court of AppealsÊ decision, we limit our ruling to the
liability of Caltex alone. However, we maintain the Court of
AppealsÊ ruling insofar as Vector is concerned.

WHEREFORE, the Court hereby GRANTS the petition
and SETS ASIDE the decision of the Court of Appeals in
CA-G.R. CV No. 39626, promulgated on April 15, 1997,
insofar as it held Caltex liable under the third party
complaint to reimburse/indemnify defendant Sulpicio
Lines, Inc. the damages the latter is adjudged to pay
plaintiffs-appellees. The Court AFFIRMS the decision of
the Court of Appeals insofar as it orders Sulpicio Lines,
Inc. to pay the heirs of Sebastian E. Cañezal and Corazon
Cañezal damages as set forth therein. Third-party
defendant-appellee Vector Shipping Corporation and
Francisco Soriano are held liable to reimburse/indemnify
defendant Sulpicio Lines, Inc. whatever damages,
attorneysÊ fees and costs the latter is adjudged to pay
plaintiffs-appellees in the case.
No costs in this instance.
SO ORDERED.
Davide, Jr. (C.J.), Kapunan and Ynares-Santiago,

JJ., concur.
Puno, J., No part due to close relation with a party.

Petition granted.
Reviewed decision insofar as it held Caltex liable under
the third party complaint to reimburse/indemnify Sulpicio
Lines the damages the latter is adjudged to pay plaintiff-
appellees set aside.
Reviewed decision insofar as it orders Sulpicio Lines,
Inc. to pay the heirs of Sebastian E. Cañezal and Corazon
Cañezal damages affirmed.
726

Notes.·A common carrier is required to observe

extraordinary diligence in its vigilance over the goods it
transports. (Tabacalera Insurance Co. vs. North Front
Shipping Services, Inc., 272 SCRA 527 [1997])
Extraordinary diligence requires common carriers to
render service with the greatest skill and foresight. (Ibid.)
··o0o··
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SUPREME COURT REPORTS ANNOTATED VOLUME 315 5/15/21, 10:47 AM

VOL. 315, SEPTEMBER 30, 1999 709

CALTEX (PHILIPPINES), INC., petitioner, vs. SULPICIO

Contracts; Common Carriers; Respective rights and duties of a

710 SUPREME COURT REPORTS ANNOTATED

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

carrier is public or private, but on whether the contract of carriage

is a bill of lading or equivalent shipping documents on the one

VOL. 315, SEPTEMBER 30, 1999 711

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

employ and to remunerate him. MT Vector fits the definition of a

would be an absurdity in a business where time is always of the

712 SUPREME COURT REPORTS ANNOTATED

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

tomarily presume that common carriers possess all the legal

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

Is the charterer of a sea vessel liable for damages resulting

1 In CA-G.R. CV No. 29526 promulgated on April 15, 1997, Justice

VOL. 315, SEPTEMBER 30, 1999 713

On December 19, 1987, motor tanker MT Vector left Limay,

2 Findings and Recommendation of the Board of Marine Inquiry dated

714 SUPREME COURT REPORTS ANNOTATED

Cañezal (11 years old), both unmanifested passengers but

„WHEREFORE, judgement is hereby rendered in favor of plaintiffs

„Likewise, the 3rd party complaint is hereby DISMISSED

6 Finding and Recommendations of the Board of Marine Inquiry dated

VOL. 315, SEPTEMBER 30, 1999 715

On appeal to the Court of Appeals interposed by Sulpicio

„WHEREFORE, in view of all the foregoing, the judgment rendered

„1. Compensatory damages for the death of Sebastian E.

HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY

„Third party defendants Vector Shipping Co. and Caltex (Phils.),

7 Rollo, pp. 156-225.

716 SUPREME COURT REPORTS ANNOTATED

Hence, this petition.

carrier depends not on whether the carrier is public or

8 Court of Appeals decision in CA-G.R. CV No. 39526, dated April 15,

VOL. 315, SEPTEMBER 30, 1999 717

period of time, or voyage charter, wherein the ship is leased

„It is therefore imperative that a public carrier shall remain as

718 SUPREME COURT REPORTS ANNOTATED

for the moment, be the property of the charterer.‰

Later, we ruled 15in Coastwise Lighterage Corporation vs.

„Although a charter party may transform a common carrier into a

A common carrier is a person or corporation whose regular

„The Civil Code defines „common carriers‰ in the following terms:

15 245 SCRA 797 (1995).

VOL. 315, SEPTEMBER 30, 1999 719

population, and one who offers services or solicits business only

Under the Carriage of Goods by Sea Act:

(a) Make the ship seaworthy;

xxx xxx xxx

Thus, the carriers are deemed to warrant impliedly the

18 Trans-Asia Shipping Lines vs. Court of Appeals, 254 SCRA 260

(1996), citing Chan Keep vs. Chan Gioco, 14 Phil. 5 (1909).

720 SUPREME COURT REPORTS ANNOTATED

1. Did not take steps to have M/T VectorÊs certificate

Sulpicio further argues that Caltex chose MT Vector to