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Cebu Salvage Corporation vs. Philippine Home Assurance Corporation

Cebu Salvage Corporation was hired to transport silica quartz from Negros Occidental to Misamis Oriental. The cargo was loaded onto the M/T Espiritu Santo, which sank before reaching its destination, resulting in the total loss of the cargo. The charterer's insurer paid for the loss and sued Cebu Salvage. The Supreme Court ruled that Cebu Salvage, as a common carrier, could be held liable even though it did not own the ship, because it represented itself as the carrier and had control over what vessel to use. The voyage charter was a contract of affreightment, making the carrier responsible for lost goods.

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183 views1 page

Cebu Salvage Corporation vs. Philippine Home Assurance Corporation

Cebu Salvage Corporation was hired to transport silica quartz from Negros Occidental to Misamis Oriental. The cargo was loaded onto the M/T Espiritu Santo, which sank before reaching its destination, resulting in the total loss of the cargo. The charterer's insurer paid for the loss and sued Cebu Salvage. The Supreme Court ruled that Cebu Salvage, as a common carrier, could be held liable even though it did not own the ship, because it represented itself as the carrier and had control over what vessel to use. The voyage charter was a contract of affreightment, making the carrier responsible for lost goods.

Uploaded by

Rhea Calabines
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Cebu Salvage Corporation vs.

Philippine Home Assurance Corporation


G.R. No. 150403, January 25, 2007

FACTS:
The carrier and the charterer entered into a voyage charter in which the carrier would transport tons of
silica quartz from Negros Occidental to Misamis Oriental to be delivered to consignee. The carrier
received and loaded 1,100 metric tons of silica quartz on board the M/T Espiritu Santo which is owned
by ALS Timber Enterprises (ALS). The shipment never reached its destination because the M/T Espiritu
Santo sank off the beach of Opol, Misamis Oriental, resulting in the total loss of the cargo.

The charterer filed a claim for the loss of the shipment with its insurer who paid the value of the
shipment lost and was subrogated to the rights of the charterer.

Parties:
Carrier – Cebu Salvage Corporation
Charterer – Maria Cristina Chemicals Industries, Inc. [MCCII]
Consignee – Ferrochrome Phils., Inc.
Insurer – Philippine Home Assurance Corporation

ISSUES:
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not own?

Petitioner’s argument: The agreement was merely a contract of hire wherein MCCII hired the vessel
from its owner, ALS. Not being the owner of the M/T Espiritu Santo, petitioner did not have control and
supervision over the vessel, its master and crew.

RULING:
Yes. Petitioner was a common carrier. At the time of the loss of the cargo, it was engaged in the business
of carrying and transporting goods by water, for compensation, and offered its services to the public.
Petitioner was the one which contracted with MCCII for the transport of the cargo. It had control over
what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common
carrier. The fact that it did not own the vessel it decided to use to consummate the contract of carriage
did not negate its character and duties as a common carrier.

It was shown that a contract of carriage of goods existed; the cargo was loaded on board the vessel; loss
or non-delivery of the cargo was proven; and petitioner failed to prove that it exercised extraordinary
diligence to prevent such loss or that it was due to some casualty or force majeure. The voyage charter
here being a contract of affreightment, the carrier was answerable for the loss of the goods received for
transportation.

NOTES:
A “voyage charter,” also known as a contract of affreightment wherein the ship was leased for a single
voyage for the conveyance of goods, in consideration of the payment of freight. Under a voyage charter,
the shipowner 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 freight. An owner who retains
possession of the ship remains liable as carrier and must answer for loss or non-delivery of the goods
received for transportation.

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