PLANTERS PRODUCTS vs.

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.

DELSAN TRANSPORT LINES, INC vs. AMERICAN HOME ASSURANCE CORPORATION

G.R. No. 149019, August 15, 2006
FACTS:
Delsan is a domestic corporation which owns and operates the vessel MT Larusan.
On the other hand, respondent American Home Assurance Corporation (AHAC for
brevity) is a foreign insurance company duly. It is engaged, among others, in
insuring cargoes for transportation within the Philippines.
Unloading operations commenced, discharging of the diesel oil. The discharging had
to be stopped on account of the discovery that the port bow mooring of the vessel
was intentionally cut or stolen by unknown persons. Because there was nothing
holding it, the vessel drifted westward, ultimately caused the diesel oil to spill into
the sea.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss
from Delsan, but the latter refused to pay. As insurer, AHAC paid Caltex. AHAC, as
Caltexs subrogee, instituted Civil Case against Delsan. caused by the spillage. It
likewise prayed that it be indemnified for damages suffered
Delsan insists that the rule on contributory negligence against Caltex, the shipperowner of the cargo, and the diesel oil was already completely delivered to Caltex.
ISSUE:
W.O.N. Delsan is liable based on Article 1734 of the NCC and W.O.N. the rule on
contributory negligence should be applied against Caltex.
HELD:
Petition is DENIED. CA is affirmed.
Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes
only:
1) Flood storm, earthquake, lightning, or other natural disaster or calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act or omission of the shipper or owner of the goods;
4) The character of the goods or defects in the packing or in the containers;
5) Order or act of competent public authority.

Delsan failed to prove its claim that there was a contributory negligence on the part
of the owner of the goods Caltex. Dlesan, as the owner of the vessel, was obliged
to prove that the loss was caused by one of the excepted causes if it were to seek
exemption from responsibility. 7 Unfortunately, it miserably failed to discharge this
burden by the required quantum of proof.
Delsans argument that it should not be held liable for the loss of diesel oil due to
backflow because the same had already been actually and legally delivered to
Caltex at the time it entered the shore tank holds no water. It had been settled that
the subject cargo was still in the custody of Delsan because the discharging thereof
has not yet been finished.
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES
TRANSPORT SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE
CO., INC., respondent.
DECISION
PANGANIBAN, J.:
Facts:
CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg, Germany 242
coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel
Sky arrived at the port of Manila and, within the subsequent days, discharged the
subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No.
154974. Finding the four (4) coils in their damaged state to be unfit for the intended
purpose, the consignee Philippine Steel Trading Corporation declared the same as
total loss.
Despite receipt of a formal demand, Phil. First insurance refused to submit to the
consignees claim. Consequently, Belgian Overseas paid the consignee
P506,086.50, and was subrogated to the latters rights and causes of action against
defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.
Impugning the propriety of the suit against them, defendants-appellees imputed
that the damage and/or loss was due to pre-shipment damage, to the inherent
nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or
to insufficiency of packing thereof, or to the act or omission of the shipper of the
goods or their representatives. In addition thereto, defendants-appellees argued
that their liability, if there be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws. Finally, defendantsappellees averred that, in any event, they exercised due diligence and foresight
required by law to prevent any damage/loss to said shipment.
Issue: Whether or not petitioners have overcome the presumption of negligence of a
common carrier
Held:
No.

Petitioners contend that the presumption of fault imposed on common carriers

should not be applied on the basis of the lone testimony offered by private
respondent. The contention is untenable.
Well-settled is the rule that common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence and
vigilance with respect to the safety of the goods and the passengers they transport.
Thus, common carriers are required to render service with the greatest skill and
foresight and to use all reasonable means to ascertain the nature and
characteristics of the goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature requires. The
extraordinary responsibility lasts from the time the goods are unconditionally placed
in the possession of and received for transportation by the carrier until they are
delivered, actually or constructively, to the consignee or to the person who has a
right to receive them.
Owing to this high degree of diligence required of them, common carriers, as a
general rule, are presumed to have been at fault or negligent if the goods they
transported deteriorated or got lost or destroyed. That is, unless they prove that
they exercised extraordinary diligence in transporting the goods. In order to avoid
responsibility for any loss or damage, therefore, they have the burden of proving
that they observed such diligence.
However, the presumption of fault or negligence will not arise if the loss is due to
any of the following causes: (1) flood, storm, earthquake, lightning, or other natural
disaster or calamity; (2) an act of the public enemy in war, whether international or
civil; (3) an act or omission of the shipper or owner of the goods; (4) the character
of the goods or defects in the packing or the container; or (5) an order or act of
competent public authority. This is a closed list. If the cause of destruction, loss or
deterioration is other than the enumerated circumstances, then the carrier is liable
therefor.
Corollary to the foregoing, mere proof of delivery of the goods in good order to a
common carrier and of their arrival in bad order at their destination constitutes a
prima facie case of fault or negligence against the carrier. If no adequate
explanation is given as to how the deterioration, the loss or the destruction of the
goods happened, the transporter shall be held responsible.
That petitioners failed to rebut the prima facie presumption of negligence is
revealed in the case at bar by a review of the records and more so by the evidence
adduced by respondent
[G.R. No. 150751. September 20, 2004]
CENTRAL SHIPPING COMPANY, INC., petitioner, vs. INSURANCE COMPANY OF NORTH
AMERICA,
respondent.

FACTS:

On July 25, 1990 at Puerto Princesa, Palawan, Central Shipping Company received
on board its vessel, the M/V Central Bohol, 376 pieces [of] Philippine Apitong
Round Logs and undertook to transport said shipment to Manila for delivery to
Alaska Lumber Co., Inc.
The cargo was insured for P3,000,000.00 against total loss under Insurance
Company of North Americas Marine Cargo Policy No. MCPB- 00170. The vessel
completely sank. Due to the sinking of the vessel, the cargo was totally lost. The
consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment
to Central Shipping but the latter failed and refused to settle the claim, hence
Insurance company, being the insurer, paid said claim and now seeks to be
subrogated to all the rights and actions of the consignee as against Central
Shipping. Central Shipping raised as its main defense that the proximate and only
cause of the sinking of its vessel and the loss of its cargo was a natural disaster, a
tropical storm which neither Central Shipping nor the captain of its vessel could
have foreseen.

DECISION OF LOWER COURTS:

(1) RTC: Central Shipping Liable. RTC was unconvinced that the sinking of M/V
Central Bohol had been caused by the weather or any other caso fortuito. It noted
that monsoons, which were common occurrences during the months of July to
December, could have been foreseen and provided for by an ocean-going vessel.
(2) CA: affirmed RTC. Given the season of rains and monsoons, the ship captain and
his crew should have anticipated the perils of the sea. The CA found no merit in
petitioners assertion of the vessels seaworthiness. It held that the Certificates of
Inspection and Drydocking were not conclusive proofs thereof. In order to consider a
vessel to be seaworthy, it must be fit to meet the perils of the sea.

ISSUES & RULING:

(1) Whether the carrier is liable for the loss of the cargo; and
Yes.
A common carrier is presumed to be at fault or negligent. It shall be liable for the
loss, destruction or deterioration of its cargo, unless it can prove that the sole and
proximate cause of such event is one of the causes enumerated in Article 1734 of
the Civil Code, or that it exercised extraordinary diligence to prevent or minimize
the loss. In the present case, the weather condition encountered by petitioners
vessel was not a storm or a natural disaster comprehended in the law. Given the
known weather condition prevailing during the voyage, the manner of stowage
employed by the carrier was insufficient to secure the cargo from the rolling action
of the sea. The carrier took a calculated risk in improperly securing the cargo.
Having lost that risk, it cannot now disclaim any liability for the loss.
Established is the fact that between 10:00 p.m. on July 25, 1990 and 1:25 a.m. on
July 26, 1990, M/V Central Bohol encountered a southwestern monsoon in the

course of its voyage. Having made such factual representation in its Note of Marine
Protest, petitioner cannot now be allowed to retreat and claim that the
southwestern monsoon was a storm. Normally expected on sea voyages,
however, were such monsoons, during which strong winds were not unusual.

According to PAGASA, a storm has a wind force of 48 to 55 knots, equivalent to 55

to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the
vessel stated that the wind was blowing around force 7 to 8 on the Beaufort Scale.
Consequently, the strong winds accompanying the southwestern monsoon could not
be classified as a storm. Such winds are the ordinary vicissitudes of a sea voyage.
Also, even if it were a storm, it was not the proximate and only cause of the loss.
The loss of the vessel was caused not only by the southwestern monsoon, but also
by the shifting of the logs in the hold. Such shifting could been due only to improper
stowage.

(2) Whether the doctrine of limited liability is applicable

No. The doctrine of limited liability under Article 587 of the Code of Commerce is not
applicable to the present case. This rule does not apply to situations in which the
loss or the injury is due to the concurrent negligence of the shipowner and the
captain.