FIRST DIVISION

[G.R. No. 101503. September 15, 1993.]

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

SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN
KABUSHIKI KAISHA , respondents.

Gonzales, Sinense, Jimenez & Associates for petitioner.

Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.

DECISION

BELLOSILLO , J : p

Does a charter-party 1 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?
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. 3 Riders to the aforesaid
charter-party starting from par. 16 to 40 were attached to the pre-printed agreement.
Addenda Nos. 1, 2, 3 and 4 to the charter-party were also subsequently entered into on the
18th, 20th, 21st and 27th of May 1974, respectively.
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 which reads:
"16. . . . At loading port, notice of readiness to be accomplished by certificate
from National Cargo Bureau inspector or substitute appointed by charterers for
his account certifying the vessel's readiness to receive 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" (emphasis supplied).
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. 5

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 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 steel-bodied dump trucks which were parked alongside the berth, using metal
scoops attached to the ship, pursuant to the terms and conditions of the charter-party
(which provided for an F.I.O.S. clause). 6 The hatches remained open throughout the
duration of the discharge. 7
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. 8
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 fertilizer. 9
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974
(except July 12th, 14th and 18th). 1 0 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. 1 1
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 Certi cate 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. 1 2
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. 1 3
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." 1 4 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 court a quo however sustained the claim of the plaintiff against the
defendant carrier for the value of the goods lost or damaged when it ruled thus: 1 5
". . . 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
may be. Even if the provisions of the charter-party aforequoted are 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
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 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).

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. 1 6 Relying on the 1968
case of Home Insurance Co. v. American Steamship Agencies, Inc., 1 7 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. Thus
". . . In the absence of such presumption, it was incumbent upon the plaintiff-
appellee to adduce sufficient evidence to prove the negligence of the defendant
carrier as alleged in its complaint. It is an old and well settled rule that if the
plaintiff, upon whom rests the burden of proving his cause of action, fails to show
in a satisfactory manner the facts upon which he bases his claim, the defendant
is under no obligation to prove his exception or defense (Moran, Commentaries on
the Rules of Court, Volume 6, p. 2, citing Belen v. Belen, 13 Phil. 202).
"But, the record shows that the plaintiff-appellee dismally failed to prove the basis
of its cause of action, i.e., the alleged negligence of defendant carrier. It appears
that the plaintiff was under the impression that it did not have to establish
defendant's negligence. Be that as it may, contrary to the trial court's finding, the
record of the instant case discloses ample evidence showing that defendant
carrier was not negligent in performing its obligations . . ." 1 8 (emphasis
supplied).

Petitioner PPI appeals to us by way of a petition for review assailing the decision of the
Court of Appeals. Petitioner theorizes that the Home Insurance case has no bearing on the
present controversy because the issue raised therein is the validity of a stipulation in the
charter-party delimiting the liability of the shipowner for loss or damage to goods caused
by want of due diligence on its part or that of its manager to make the vessel seaworthy in
all respects, and not whether the presumption of negligence provided under the Civil Code
applies only to common carriers and not to private carriers. 1 9 Petitioner further argues
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. In fine, PPI faults the appellate court in not applying the presumption of
negligence against respondent carrier, and instead shifting the onus probandi on the
shipper to show want of due diligence on the part of the carrier, when he was not even at
hand to witness what transpired during the entire voyage.
As earlier stated, the primordial issue here is 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.

It is said that etymology is the basis of reliable judicial decisions in commercial cases.
This being so, we find it fitting to first define important terms which are relevant to our
discussion.

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 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; 2 0 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; 2 1 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. 2 2 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. 2 3 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. 2 4
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. 2 5 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. 2 6 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. 2 7
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
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 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. 2 8
Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American
Steamship Agencies, supra, is misplaced for the reason that the meat of the controversy
therein was the validity of a stipulation in the charter-party exempting the shipowner from
liability for loss due to the negligence of its agent, and not the effects of a special charter
on common carriers. At any rate, the rule in the United States that a ship chartered by a
single shipper to carry special cargo is not a common carrier, 2 9 does not find application
in our jurisdiction, for we have observed that the growing concern for safety in the
transportation of passengers and/or carriage of goods by sea requires a more exacting
interpretation of admiralty laws, more particularly, the rules governing common carriers.
We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law 3 0

"As a matter of principle, it is difficult to find a valid distinction between cases in
which a ship is used to convey the goods of one and of several persons. Where
the ship herself is let to a charterer, so that he takes over the charge and control of
her, the case is different; the shipowner is not then a carrier. But where her
services only are let, the same grounds for imposing a strict responsibility exist,
whether he is employed by one or many. The master and the crew are in each
case his servants, the freighter in each case is usually without any representative
on board the ship; the same opportunities for fraud or collussion occur; and the
same difficulty in discovering the truth as to what has taken place arises . . ."

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. 3 1
To our mind, respondent carrier 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, testi ed 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. 3 2
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. 3 3 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
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 the cargo under the watchful eyes of the shipmates who were overseeing the whole
operation on rotation basis. 3 4
Verily, the presumption of negligence on the part of respondent carrier has been
efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the
carrier in the care of the cargo. This was confirmed by respondent appellate court thus
". . . Be that as it may, contrary to the trial court's finding, the record of the instant
case discloses ample evidence showing that defendant carrier was not negligent
in performing its obligations. Particularly, the following testimonies of plaintiff-
appellee's own witnesses clearly show absence of negligence by the defendant
carrier; that the hull of the vessel at the time of the discharge of the cargo was
sealed and nobody could open the same except in the presence of the owner of
the cargo and the representatives of the vessel (TSN, 20 July 1977, p. 14); that the
cover of the hatches was made of steel and it was overlaid with tarpaulins, three
layers of tarpaulins and therefore their contents were protected from the weather
(TSN, 5 April 1978, p. 24); and, that to open these hatches, the seals would have
to be broken, all the seals were found to be intact (TSN, 20 July 1977, pp. 15-16)"
(italics supplied).

The period during which private respondent was to observe the degree of diligence
required of it as a public carrier began from the time the cargo was unconditionally placed
in its charge after the vessel's holds were duly inspected and passed scrutiny by the
shipper, up to and until the vessel reached its destination and its hull was re-examined by
the consignee, but prior to unloading. This is clear from the limitation clause agreed upon
by the parties in the Addendum to the standard "GENCON" time charter-party which
provided for an F.I.O.S., meaning, that the loading, stowing, trimming and discharge of the
cargo was to be done by the charterer, free from all risk and expense to the carrier. 3 5
Moreover, a shipowner is liable for damage to the cargo resulting from improper stowage
only when the stowing is done by stevedores employed by him, and therefore under his
control and supervision, not when the same is done by the consignee or stevedores under
the employ of the latter. 3 6

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. 3 7 The carrier, nonetheless, shall be liable for the loss and damage resulting
from the preceding causes if it is proved, as against him, that they arose through his
negligence or by reason of his having failed to take the precautions which usage has
established among careful persons. 3 8
Respondent carrier presented a witness who testified on the characteristics of the
fertilizer shipped and the expected risks of bulk shipping. Mr. Estanislao Chupungco, a
chemical engineer working with Atlas Fertilizer, described Urea as a chemical compound
consisting mostly of ammonia and carbon monoxide compounds which are used as
fertilizer. Urea also contains 46% nitrogen and is highly soluble in water. However, during
storage, nitrogen and ammonia do not normally evaporate even on a long voyage, provided
that the temperature inside the hull does not exceed eighty (80) degrees centigrade. Mr.
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 Chupungco further added that in unloading fertilizer in bulk with the use of a clamped shell,
losses due to spillage during such operation amounting to one percent (1%) against the
bill of lading is deemed "normal" or "tolerable." The primary cause of these spillages is the
clamped shell which does not seal very tightly. Also, the wind tends to blow away some of
the materials during the unloading process.
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. This may be gleaned from the testimony of the marine and cargo surveyor of
CSCI who supervised the unloading. He explained that 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.
The Court notes that it was in the month of 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.
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.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals,
which reversed the trial court, is AFFIRMED. Consequently, Civil Case No. 98623 of the then
Court of the First Instance, now Regional Trial Court, of Manila should be, as it is hereby,
DISMISSED.
Costs against petitioner.
SO ORDERED.
Davide, Jr. and Quiason, JJ ., concur.
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 Cruz, J ., took no part.
Grio-Aquino, J ., is on leave.
Footnotes

1. A charter-party is 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 (70 Am Jur 2d, p. 580, citing
Ward v. Thompson, 63 US 330, 16 L Ed 249; a contract in which the owner of a vessel
lets for consideration the whole or part thereof for the conveyance of goods and/or
passengers on a particular voyage to one or more places or until the expiration of a
specified time and surrenders unto the lessee or charterer the control, by vesting upon
the latter the right to appoint the captain, officers and members of the crew, of the vessel
leased or chartered during the duration of the contract (R.A. 913).
2. The Baltic and International Maritime Uniform General Charter (As Revised 1922 and
1976), Including "F.I.O.S." Alternative, etc., Code Name: "GENCON" Adopted by the
Documentary Committee of the General Council of British Shipping, London, and the
Documentary Committee of the Japan Shipping Exchange, Inc., Tokyo.
3. Rollo, pp. 105, 128.

4. Although par. 40 of the Rider (Description of "Sun Plum") states that the vessel has 3
holds/3 hatches, Hatch No. 4 which usually was not used for cargo, was converted for
such purpose. The time sheet for 12 July 1974 shows that Hatch No. 4 was first to be
discharged of cargo. This was also testified to by the master of the vessel, Captain Lee
Tae Bo.

5. Id., p. 129.
6. Under the terms and conditions of the charter-party, F.I.O.S. (Free In and Out
Shipping/Stevedoring) means that the shipper takes care of the loading, while the
unloading is the sole responsibility of the consignee (Rollo, pp. 128, 184).

7. TSN, 20 July 1977, p. 17.

8. TSN, 20 July 1977, p. 18.
9. Rollo, p. 130.
10. Id., p. 129; ADDENDUM NO. 4 dated 17 May 1974 provides: "The cargo to be discharged
at the average rate of 1,000 metric tons per day of 24 hours weather working days,
Sundays, Holidays excluded unless used, assuming four (4) sets of vessel's gear
simultaneously workable at vessel's bearthing side."

11. TSN, 5 April 1978, pp. 7-8. "Drop survey" is the drop of the vessel showing certain
meters or centimeters of the vessel. In the ship there is a draft from one meter upward.
When the vessel arrives, (CSCI) conducted initial draft survey before discharging,
together with the ship's representative by getting the draft forward and aft. They divided
it by 2 to get the mean draft and the average draft. After getting the mean draft, they got
the displacement scale of the vessel to show certain tons of the ship, then deducted the
non-cargo weight, like the fuel oil, the fresh water. Finally, the total load of the ship is
taken. After discharging, CSCI went over same procedure to get the weight of the vessel.
These figures were then subtracted from the total load of the ships to get the weight of
the cargo.
12. Id., p. 106.

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 13. Id., pp. 49, 68.
14. TSN, 28 Aug. 1979, pp. 9-10.
15. Id., p. 68; "Planters Products, Inc. v. Soriamont Steamship Agencies, et al.," Civil Case
No. 98623, CFI of Manila, Br. 27, decision penned by Judge E.L. Peralta, 24 March 1980.
16. The Court of Appeals (Twelfth Division) rendered its decision on 13 August 1991 in CA-
G.R. CV No. 02736 entitled "Planters Products, Inc. vs. Kyosei Kisen Kabushiki Kaisha &
Soriamont Steamship Agencies." Decision penned by Justice Alfredo L. Benipayo,
concurred in by Justices Manuel C. Herrera and Cancio C. Garcia, Rollo, pp. 13-24.

17. No. L-25599, 4 April 1968, 23 SCRA 24.

18. Rollo, p. 109.
19. Rollo, pp. 8 & 9.
20. Charter Parties; Charters of Demise and Contracts of Affreightment; 70 Am Jur 2d, p.
580; citing Ward v. Thompson, 63 US 330, 16 L Ed 249; E.R. Harvey Ivamy, Carriage of
Goods by Sea, 13th Ed., Chap. 2, pp. 5, 8-10. The term is also defined under R.A. No. 913,
known as "An Act Defining 'Lease' or 'Charter' of Vessels" as to mean a "contract in
which the owner of a vessel lets for consideration the whole or principal part thereof for
the conveyance of goods and/or passengers on a particular voyage to one or more
places or until the expiration of a specified time and surrenders unto the lessee or
charterer the control, by vesting upon the latter the right to appoint the captain, officers
and members of the crew, of the vessel leased or chartered during the duration of the
contract."
21. Bouvier's Law Dictionary, Third Rev., Vol. I, p. 470.
22. Id. pp. 581-582.
23. Art. 1732. Common carriers are persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or goods or both, by land, water or
air, for compensation, offering their services to the public.
24. See De Guzman v. Court of Appeals, No. L-47822, 22 December 1988, 168 SCRA 612;
U.S. v. Quinajon, No. 8686, 30 July 1915.
25. Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all the circumstances
of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Arts.
1734, 1735 and 1745, Nos. 5, 6 and 7, while the extraordinary diligence for the safety of
the passengers is further set forth in Arts. 1755 and 1756.
26. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required in article 1733.

27. E.R. Harvey Ivamy, pp. 8-10.

28. 70 Am Jur 2nd, p. 608 S 238, citing Grace v. Palmer, 21 US 605, 5 L Ed 696, and Kerry v.
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 Pacific Marine Co., 12 CAL 564, 54, p. 89.
29. 30 C.J.S., pp. 269-693.
30. British Shipping Laws, Vol. 2, "Carver's Carriage by Sea," By Raoul Colinvaux, Vol. 1,
12th Ed., Published by Stevens & Sons Limited of London, Printed in Great Britain, 1971.
31. See Ynchausti Steamship Co. v. Dexter, No. 15652, 41 Phil. 289, 14 Dec. 1920; Mirasol
v. Robert Dollar, Co., No. 29721, 53 Phil. 124, 27 March 1929.
32. Deposition of Capt. Lee Tae Bo, Exh. "4", pp. 22-23.
33. TSN, 20 July 1977, p. 14.
34. TSN, 5 April 1978, pp. 24-25.

35. See Note 6.

36. 70 Am Jur 2d, p. 603 S 230, citing Oxford Paper Co. v. The Nidarholm, 282 US 681, 75L
Ed 614, 51 S Ct 266.
37. Art. 361, par. 4, Code of Commerce.
38. Art. 362, par. 1, id.

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