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2. G.R. No. 101503. September 15, 1993.

PLANTERS PRODUCTS, INC., petitioner, vs. COURT OF APPEALS,


SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI
KAISHA, respondents.

BELLOSILLO, J.

TOPIC: Charter Parties

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 2 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 4 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 charterparty (which provided for an F.I.O.S
clause). 6 The hatches remained open throughout the duration of the discharge.
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 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.
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 court a quo:
Sustained the claim of the plaintiff against the defendant carrier for the value of the goods lost or
damaged when it ruled thus:
x x x x Prescinding from the provision of the law that a common carrier is presumed negligent in
case of loss or damage of the goods it contracts to transport, all that a shipper has to do in a suit
to recover for loss or damage is to show receipt by the carrier of the goods and delivery by it of
less than what it received. After that, the burden of proving that the loss or damage was due to
any of the causes which exempt him from liability is shifted to the carrier, common or private he
deemed valid, and the defendants considered private carriers, it was still incumbent upon them
to prove that the shortage or contamination sustained by the cargo is attributable to the fault or
negligence on the part of the shipper or consignee in the loading, stowing, trimming and
discharge of the cargo. This they failed to do. By this omission, coupled with their failure to
destroy the presumption of negligence against them, the defendants are liable” (italics supplied).
CA:
Reversed the lower court and absolved the carrier from liability for the value of the cargo that
was lost or damaged. 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 charter-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.
Petitioner:
Argued that since the possession and control of the vessel remain with the shipowner, absent any
stipulation to the contrary, such shipowner should be made liable for the negligence of the
captain and crew.
ISSUE:

Whether a common carrier becomes a private carrier by reason of a charter party; in the negative,
whether the shipowner in the instant case was able to prove that he had exercised that degree of
diligence required of him under the law.

RULING:
A “charter-party” is defined 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; a 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; Charter parties are of two types: (a) contract of affreightment which
involves the use of shipping space on vessels leased by the owner in part or as a whole, to
carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which
the 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. Contract of affreightment may either be time charter, wherein the 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 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.
Upon the other hand, the term “common or public carrier” is defined in Art. 1732 of the Civil
Code. 23 The definition 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. The 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.
Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of
their business, should observe extraordinary diligence in the vigilance over the goods they
carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage
of goods will suffice. Moreover, in case of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault or to have acted negligently, and the
burden of proving otherwise rests on them. On the contrary, no such presumption applies to
private carriers, for whosoever alleges damage to or deterioration of the goods carried has the
onus of proving that the cause was the negligence of the carrier.
***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. 28
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.
To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the
prima facie presumption of negligence.
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.
Article 1734 of the New Civil Code provides that common carriers are not responsible for the
loss, destruction or deterioration of the goods if caused by the character of the goods or defects in
the packaging or in the containers. The Code of Commerce also provides that all losses and
deteriorations which the goods may suffer during the transportation by reason of fortuitous event,
force majeure, or the inherent defect of the goods, shall be for the account and risk of the
shipper, and that proof of these accidents is incumbent upon the carrier.
In the common carriage of highly soluble goods, like fertilizer, it is the shipper or owner of the
goods that commonly face risk of loss or damage. Indeed, we agree with respondent carrier
that bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or
damage. More so, with a variable weather condition prevalent during its unloading, as was the
case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent
carrier has sufficiently proved the inherent character of the goods which makes it highly
vulnerable to deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing
that the carrier was remiss in the exercise of due diligence in order to minimize the loss or
damage to the goods it carried.

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