Case Digest (G.R. No. 101503)
Facts:
Planters Products, Inc. (PPI) purchased urea shipped in bulk under Bill of Lading No. KP-1 aboard M/V "Sun Plum" owned by Kyosei Kisen Kabushiki Kaisha (KKKK) and, before the voyage, a time charter-party (GENCON with addenda and riders) was entered into between Mitsubishi as charterer and KKKK. The vessel's holds were inspected, loaded under an F.I.O.S. arrangement, and the hatches were sealed; on arrival at Poro Point on 3 July 1974 the cargo was discharged from 5 to 18 July 1974.
A marine surveyor reported a shortage and contamination of the cargo, and PPI claimed damages and sued the carrier in the Court of First Instance, which ruled for PPI; the Court of Appeals reversed, treating the vessel as a private carrier under the charter-party, and absolved the carrier; PPI appealed to the Supreme Court.
Issues:
- Does a charter-party converting the vessel to a time or voyage charter make a common carrier a private carrier for purposes of the presumption of negligence?
- If the carrier remained a common carrier, did the carrier rebut the presumption of negligence and thus avoid liability for the alleged shortage and contamination?
Ruling:
The Court held that a time or voyage charter-party does not convert a common carrier into a private carrier because the shipowner retained possession and control of the vessel; only a bareboat or demise charter, which transfers control of the ship and crew, effects such conversion. The Court nevertheless found that the carrier sufficiently rebutted the presumption of negligence by clear and convincing evidence and affirmed the Court of Appeals' judgment absolving the carrier; the petition was dismissed and the trial court case was dismissed.
Ratio:
The Court relied on the definitions and distinctions in Art. 1732, Art. 1733, and Art. 1735 of the Civil Code concerning common and private carriers and the applicable burden of proof. Because the shipowner remained responsible for the master, crew and navigation under a time charter, the strict regime for common carriers continued to apply; however, the carrier presented evidence—captain's deposition on cleaning, fumigation and sealed hatches, proof of seaworthiness, testimony on the inherent solubility and risks of bulk urea, the F.I.O.S. allocation of loading/discharge, weather and unloading conditions, and the surveyor's estimation—that showed loss or contamination was attributable to inherent vice, inadequate packaging, or risks during discharge, thereby overcoming the presumption of negligence.
Doctrine:
- A time or voyage charter-party does not convert a common carrier into a private carrier when the shipowner retains possession and control of the vessel.
- A bareboat or demise charter transfers control of the vessel and crew and may convert a common carrier into a private carrier for the chartered period.
- Under Art. 1733 and Art. 1735, common carriers are presumed negligent for loss or deterioration of goods but may rebut the presumption by proving extraordinary diligence or that loss resulted from fortuitous event or inherent vice.
- An F.I.O.S. clause allocating loading and discharge to the charterer/consignee relieves the shipowner of liability for improper stowage performed by stevedores not under the shipowner’s control.
- Loss due to the inherent characteristics of the cargo or defective packaging is for the account of the shipper unless the carrier fails to prove due diligence.