Magellan Mftg. Marketing Corp. vs. Court of Appeals (Insurance Law)

 

Magellan Mftg. Marketing Corp. vs. Court of Appeals

(Insurance Law)

201 SCRA 102 (G.R. No. 95529)

August 22, 1991

 

Petitioners:	Magellan Manufacturing Marketing Corporation
Respondents:	Court of Appeals, Orient Overseas Container Lines and F. E. Zuellig

 

J. Regalado:

 

FACTS:

 

On May 20, 1980, Magellan Manufacturing Marketing Corp. (MMMC) entered into a contract with Choji Co. of Yokohama, Japan to export 136,000 of anahaw fans for consideration of $23,220.00. As payment Magellan (MMMC) received from Choji a letter of credit. Magellan (MMMC) received from Choji a letter of credit. Magellan (MMMC) through its president, James Cu, contracted F. E. Zuellig a shipping agent, through its solicitor, one Mrs. King, to ship the anahaw through Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on board bill of lading and that transhipment is not allowed under the letter of credit.

 

On June 30, 1980, Magellan paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US $23,220 covered by the letter of credit to Magellan’s account. However, James Cu, Magellan’s president went back to the bank he was informed that the payment was refused by the buyer allegedly because there was no board bill of lading and there was a transhipment of goods. As a result of the buyer’s refusal, the anahaw fans were shipped back to Manila by the respondent shippers for which demanded from Magellan payment of ₱246,043.43. Petitioner Magellan abandoned the whole cargo and appellees for damages.

 

The lower court decided the case in favor of private respondents. It dismissed the complaint on the ground that Magellan had given its consent to the contents of the bill of lading where it is clearly indicated that there will be transhipment.

 

On Appeal the appellate affirmed the decision of the lower court but modified the liability of the petitioner because private respondents did not timely informed the petitioner that the goods were already in Manila in addition to the fact that private respondent had given petitioner the option of abandoning the goods in exchange for the demurrage.

 

ISSUE:

 

Whether or not there is transhipment when the goods are transferred from one vessel to another which both belong to the same owner.

 

HELD:

 

Transhipment in maritime law is defined as the act of taking cargo out of one ship and loading it in another “or” the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached, “or” the transfer for further transportation from one ship or conveyance to another.

 

Clearly, either in its ordinary or its strictly legal acceptation, there is transhipment whether or not the same person, form or entity owns the vessels. In other words, the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyance or in changer of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of cargo from one vessel to another.

 

Moreover, it is well known commercial usage that transhipment of freight without legal excuse, however competent and safe the vessel into which the transfer is made, is a violation of the contract and an infringement of the right of the shipper and subjects the carrier to liability if the freight is lost even by a cause otherwise excepted. It is highly improbable to suppose that private respondents having been engaged in the shipping business for so long, would be aware of such a custom of the trade as to have undertaken such transhipment without petitioner’s consent and unnecessarily expose themselves to a possible liability.

 

It is a long-standing jurisprudential rule that a bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination and freight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. A bill of lading usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct, known to the shipper and he is generally bound by his acceptance whether he reads the bill or not.

 

The holding in most jurisdictions has been that a shipper who receives a bill of lading without objection after an opportunity to inspect it, and permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the contract and to have asserted to its terms. In other words, the acceptance of the bill without dissent raises the presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by him and in, the absence of fraud or mistake, he is estopped from thereafter denying that he asserted to such terms. This rule applies with particular fence where a shipper accepts a bill lading with full knowledge of its contents and acceptance under such circumstances makes it a binding contract.

 

An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods, whereas received for shipment bill of lading is one in which it is stated that the goods are to be shipped. Received for shipment bills of lading are issued whenever conditions are not normal and there is insufficiency of shipping space. An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation that the shipment is as good as on its way.

 

It will be recalled that petitioner entered in to the contract with Choji Co., Ltd. way back on May 20, 1980 or over a month before the expiry date of the letter of credit on June 30, 1980, thus giving it more than ample time to find a carrier that could comply with the requirements of shipment under the letter of credit. It is conceded that bills of lading constitute a class of contracts of adhesion. However, as ruled in the earlier case of Ong Yui vs. Court of Appeals, et. al. and reiterated in Servando et. al. vs. Philippine Stream Navigation Co., plane tickets as well as bills of lading are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he give consent. The respondent court correctly observed in the present case that “when the appellant received the bill of lading, it was tantamount to appellant’s adherence to the terms and conditions as embodied therein.”

Demurrage, in its strict sense, is the compensation provided for in contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage. Liability for demurrage using the word in its technical sense, exists only when expressly stipulated in the contract. Using the term in its broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract.