[73] Planters Products, Inc. v.

CA ● After the Urea fertilizer was loaded in bulk by stevedores hired by

G.R. No. 101503 | September 15, 1993 | Bellosillo, J. and under the supervision of the shipper, the steel hatches were
closed with heavy iron lids, covered with 3 layers of tarpaulin, then
TOPIC: Common Carriers; In General; Liberal Approach tied with steel bonds. The hatches remained closed and tightly
sealed throughout the entire voyage.
SUMMARY: PPI purchased from Mitsubishi Urea 46% fertilizer, which the ● Upon arrival of the vessel at port on July 3, 1974, the steel pontoon
latter shipped aboard the cargo vessel M/V Sun Plum on June 16, 1974. Prior hatches were opened with the use of the vessel’s boom. PPI
to its voyage, a time-charter party was entered into between Mitsubishi as unloaded the cargo from the holds into its steel-bodied dump trucks
shipper, and KKKK as shipowner. Before loading the fertilizer aboard the which were parked alongside the berth, using metal scoops attached
vessel, four of her holds were presumably inspected by the charterer’s to the ship, pursuant to the terms and conditions of the charter-party.
representative and found it fit to take the load. After loading the cargo, the The hatches remained open throughout the duration of the
steel hatches were closed with heavy iron lids, covered with 3 layers of discharge.
tarpaulin then tied with steel bonds. It remained sealed throughout the entire ● Each time a dump truck was filled up, its load of Urea was covered
voyage. Upon arrival of the vessel, PPI unloaded the cargo, which took 11 with tarpaulin before it was transported to the consignee’s
days. A private marine and cargo surveyor, CSCI, reported shortage of the warehouse located some 50 meters from the wharf.
Urea fertilizer and contamination due to dirt. PPI sent a claim letter against ○ Midway to the warehouse, the trucks were made to pass
SSA, the resident agent of KKKK. The request was denied, hence, PPI filed an through a weighing scale where they were individually
action for damages before the CFI Manila. The CFI sustained the PPI’s claim, weighed for the purpose of ascertaining the net weight of the
but such decision was reversed by the CA. The SC held that the time charter cargo.
party did not make the carrier a private carrier. When the vessel was ○ The port area was windy, certain portions of the route to the
chartered, the ship captain, its officers and compliment were under the warehouse were sandy and the weather was variable, raining
employ of the shipowner and therefore continued to be under its direct occasionally while the discharge was in progress.
supervision and control. ● PPI’s warehouse was made of corrugated galvanized iron sheets,
with an opening at the front where the dump trucks entered and
DOCTRINE: See highlighted part unloaded the fertilizer on the warehouse floor. Tarpaulins and GI
sheets were placed in-between and alongside the trucks to contain
FACTS: spillages of the fertilizer.
● Planters Products, Inc. (PPI), purchased from Mitsubishi ● It took 11 days for PPI to unload the cargo, from July 5 to 18, 1974.
International Corporation (MITSUBISHI) of New York, U.S.A., ● Private marine and cargo surveyor, Cargo Superintendents Company
9,329.7069 metric tons (M/T) of Urea 46% fertilizer Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo
● A time charter-party on the vessel M/V "Sun Plum" was entered into shipped, by taking draft readings of the vessel prior to and after
between Mitsubishi as shipper/charterer and Kyosei Kisen Kabushiki discharge.
Kaisha (KKKK) as shipowner, in Tokyo, Japan. ○ The survey report submitted by CSCI revealed a shortage in
○ Mitsubishi shipped this in bulk on 16 June 1974 aboard the the cargo of 106.726 M/T and that a portion of the Urea
cargo vessel M/V “Sun Plum” owned by KKKK from Kenai, fertilizer approximating 18 M/T was contaminated with dirt.
Alaska, U.S.A., to Poro Point, San Fernando, La Union, ○ The same results were contained in a Certificate of
Philippines Shortage/Damaged Cargo prepared by PPI which showed
● Before loading the fertilizer aboard the vessel, 4 of her holds were all that the cargo delivered was indeed short of 94.839 M/T and
presumably inspected by the charterer’s representative and found fit about 23 M/T were rendered unfit for commerce, having
to take a load of urea in bulk pursuant to par. 16 of the charter-party 1 been polluted with sand, rust and dirt.
● PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the
resident agent of KKKK, for P245,969.31 representing the cost of the
1 "16. At loading port, notice of readiness to be accomplished by certificate from National Cargo Bureau alleged shortage in the goods shipped and the diminution in value of
inspector or substitute appointed by charterers for his account certifying the vessel’s readiness to receive that portion said to have been contaminated with dirt.
cargo spaces. The vessel’s hold to be properly swept, cleaned and dried at the vessel’s expense and the
vessel to be presented clean for use in bulk to the satisfaction of the inspector before daytime commences" ○ SSA denied the claim because they had nothing to do with
the discharge of the shipment.
 ● PPI then filed an action for damages with CFI Manila. ● "Common or public carrier" refers to carriers either by land, air or
○ The carrier argued that the strict public policy governing water which hold themselves out as ready to engage in carrying
common carriers does not apply to them because they have goods or transporting passengers or both for compensation as a
become private carriers by reason of the provisions of the public employment and not as a casual occupation. (Art 1732 CC)
charter-party. ● The distinction between a "common or public carrier" and a "private
● CFI Manila ruled in favor of PPI on the ground that all that a shipper or special carrier" lies in the character of the business, such that if
has to do in a suit to recover for loss or damage is to show receipt by the undertaking is a single transaction, not a part of the general
the carrier of the goods and delivery by it of less than what it business or occupation, although involving the carriage of goods for
received. After that, the burden of proving that the loss or damage a fee, the person or corporation offering such service is a private
was due to any of the causes which exempt him from liability is carrier.
shifted to the carrier, common or private he may be. ● Article 1733 NCC 🡪 Common carriers, by reason of the nature of their
● CA reversed. Relying on the 1968 case of Home Insurance Co. v. business, should observe extraordinary diligence in the vigilance over
American Steamship Agencies, Inc., it ruled that the cargo vessel was the goods they carry. In the case of private carriers, the exercise of
a private carrier and not a common carrier by reason of the time ordinary diligence in the carriage of goods will suffice.
charter-party. Accordingly, the CC provisions on common carriers ● In case of loss, destruction or deterioration of the goods, common
which set forth a presumption of negligence do not apply. carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. No
ISSUE/RATIO: such presumption applies to private carriers, for whosoever alleges
damage to or deterioration of the goods carried has the onus of
1. [RELEVANT] W/N a common carrier becomes a private carrier by proving that the cause was the negligence of the carrier.
reason of a charter-party - NO ● It is not disputed that respondent carrier, in the ordinary course of
business, operates as a common carrier, transporting goods
● “Charter-party” 🡪 a contract by which an entire ship, or some indiscriminately for all persons.
principal part thereof, is let by the owner to another person for a ● When the vessel was chartered, the ship captain, its officers and
specified time or use; a contract of affreightment by which the owner compliment were under the employ of the shipowner and therefore
of a ship or other vessel lets the whole or a part of her to a merchant continued to be under its direct supervision and control.
or other person for the conveyance of goods, on a particular voyage, ○ The charterer, a stranger to the crew and to the ship, cannot
in consideration of the payment of freight. be charged with the duty of caring for his cargo when the
● Two types of charter parties: charterer did not have any control of the means in doing so.
○ (a) contract of affreightment 🡪 involves the use of shipping ○ The steering of the ship, the manning of the decks, the
space on vessels leased by the owner in part or as a whole, determination of the course of the voyage and other
to carry goods for others technical incidents of maritime navigation were all
■ May either be time charter (vessel is leased to the consigned to the officers and crew who were screened,
charterer for a fixed period of time) or voyage chosen and hired by the shipowner.
charter (ship is leased for a single voyage) ● Thus, a public carrier shall remain as such, notwithstanding the
■ In both, the charter-party provides for the hire of the charter of the whole or portion of a vessel by one or more persons,
vessel only, the shipowner to supply the ship’s provided the charter is limited to the ship only, as in the case of a
stores, pay for the wages of the master and the time-charter or voyage-charter.
crew, and defray the expenses for the maintenance ○ It is only when the charter includes both the vessel and its
of the ship. crew, as in a bareboat or demise that a common carrier
○ (b) charter by demise or bareboat charter 🡪 the whole vessel becomes private, at least insofar as the particular voyage
is let to the charterer with a transfer to him of its entire covering the charter-party is concerned.
command and possession and consequent control over its ○ Indubitably, a shipowner in a time or voyage charter retains
navigation, including the master and the crew, who are his possession and control of the ship, although her holds may,
servants. for the moment, be the property of the charterer.
● Reliance on Home Insurance Co. is misplaced; the meat of the representing CSCI, opened the hatches and inspected the condition
controversy therein was the validity of a stipulation in the charter- of the hull of the vessel. The stevedores unloaded the cargo under
party exempting the shipowner from liability for loss due to the the watchful eyes of the shipmates who were overseeing the whole
negligence of its agent, not the effects of a special charter on operation on rotation basis.
common carriers. ● The period during which the carrier was to observe the degree of
○ At any rate, the US rule that a ship chartered by a single diligence required of it as a public carrier began from the time the
shipper to carry special cargo is not a common carrier, does cargo was unconditionally placed in its charge after the vessel’s
not find application in our jurisdiction. holds were duly inspected and passed scrutiny by the shipper, up to
○ The growing concern for safety in the transportation of and until the vessel reached its destination and its hull was re-
passengers and/or carriage of goods by sea requires a examined by the consignee, but prior to unloading.
more exacting interpretation of admiralty laws: the rules ○ This is clear from the limitation clause agreed upon by the
governing common carriers. parties in the time charter-party which provided for an
● In an action for recovery of damages against a common carrier on F.I.O.S., meaning, that the loading, stowing, trimming and
the goods shipped, the shipper or consignee should first prove the discharge of the cargo was to be done by the charterer, free
fact of shipment and its consequent loss or damage while the same from all risk and expense to the carrier.
was in the possession, actual or constructive, of the carrier. ○ Moreover, a shipowner is liable for damage to the cargo
● Thereafter, the burden of proof shifts to respondent to prove that he resulting from improper stowage only when the stowing is
has exercised extraordinary diligence required by law or that the loss, done by stevedores employed by him, and therefore under
damage or deterioration of the cargo was due to fortuitous event, or his control and supervision, not when the same is done by
some other circumstances inconsistent with its liability. the consignee or stevedores under the employ of the latter.
● Article 1734 NCC provides that common carriers are not
2. W/N the shipowner in the instant case was able to prove that he had responsible for the loss, destruction or deterioration of the goods if
exercised that degree of diligence required of him under the law - caused by the character of the goods or defects in the packaging or
YES in the containers.
○ The Code of Commerce also provides that all losses and
● Respondent carrier has sufficiently overcome, by clear and deteriorations which the goods may suffer during the
convincing proof, the prima facie presumption of negligence. transportation by reason of fortuitous event, force majeure,
● The master of the carrying vessel, Captain Lee Tae Bo, in his or the inherent defect of the goods, shall be for the account
deposition taken before the Philippine Consul and Legal Attache in and risk of the shipper, and that proof of these accidents is
the Philippine Embassy in Tokyo, Japan, testified that: incumbent upon the carrier.
○ Before the fertilizer was loaded, the 4 hatches of the vessel ● The carrier, nonetheless, shall be liable for the loss and damage
were cleaned, dried and fumigated. resulting from the preceding causes if it is proved, as against him,
○ After completing the loading of the cargo in bulk in the ship’s that they arose through his negligence or by reason of his having
holds, the steel pontoon hatches were closed and sealed failed to take the precautions which usage has established among
with iron lids, then covered with 3 layers of serviceable careful persons.
tarpaulins which were tied with steel bonds. ● Mr. Estanislao Chupungco (witness of respondent; chemical
○ The hatches remained close and tightly sealed while the ship engineer working with Atlas Fertilizer):
was in transit as the weight of the steel covers made it ○ described Urea as a chemical compound consisting mostly
impossible for a person to open without the use of the ship’s of ammonia and carbon monoxide compounds which are
boom. used as fertilizer. Urea contains 46% nitrogen and is highly
● It was also shown during the trial that the hull of the vessel was in soluble in water. However, during storage, nitrogen and
good condition, foreclosing the possibility of spillage of the cargo ammonia do not normally evaporate even on a long voyage,
into the sea or seepage of water inside the hull of the vessel. provided that the temperature inside the hull does not
● When M/V "Sun Plum" docked at its berthing place, representatives exceed 80 degrees centigrade.
of the consignee boarded, and in the presence of a representative of ○ In unloading fertilizer in bulk with the use of a clamped shell,
the shipowner, the foreman, the stevedores, and a cargo surveyor losses due to spillage during such operation amounting to
 1% against the bill of lading is deemed "normal" or ● On the other hand, no proof was adduced by the petitioner showing
"tolerable." The primary cause of these spillages is the that the carrier was remiss in the exercise of due diligence in order to
clamped shell which does not seal very tightly. Also, the wind minimize the loss or damage to the goods it carried.
tends to blow away some of the materials during the
unloading process. RULING: Petition dismissed.
● The 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. When Urea is
drenched in water, either fresh or saline, some of its particles
dissolve. But the salvaged portion which is in liquid form still remains
potent and usable although no longer saleable in its original market
value.
● The 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.
● The evidence of respondent carrier also showed that it was highly
improbable for sea water to seep into the vessel’s holds during the
voyage since the hull of the vessel was in good condition and her
hatches were tightly closed and firmly sealed, making the M/V "Sun
Plum" in all respects seaworthy to carry the cargo she was
chartered for.
● If there was loss or contamination of the cargo, it was more likely to
have occurred while the same was being transported from the ship
to the dump trucks and finally to the consignee’s warehouse.
○ Testimony of the marine and cargo surveyor of CSCI who
supervised the unloading: the 18 M/T of alleged "bad order
cargo" as contained in their report to PPI was just an
approximation or estimate made by them after the fertilizer
was discharged from the vessel and segregated from the
rest of the cargo.
● It was in July when the vessel arrived port and unloaded her cargo. It
rained from time to time at the harbor area while the cargo was
being discharged according to the supply officer of PPI, who also
testified that it was windy at the waterfront and along the shoreline
where the dump trucks passed enroute to the consignee’s
warehouse.
● The 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.
● 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.