6. MOF COMPANY, INC. vs.

SHIN YANG BROKERAGE CORPORATION

DOCTRINE: The refusal of the consignee named in the bill of lading to pay the freightage on the claim that it
is not privy to the contract of affreightment propelled the shipper to sue for collection of money, stressing that
its sole evidence, the bill of lading, suffices to prove that the consignee is bound to pay.

FACTS: Halla Trading Co., a company based in Korea, shipped to Manila second hand cars and other articles on
board the vessel Hanjin Busan. The bill of lading covering the shipment which was prepared by the carrier Hanjin
Shipping Co., Ltd., named Shin Yang Brokerage Corp. as the consignee and indicated that payment was on a
"Freight Collect" basis.

The shipment arrived in Manila on October 29, 2000. MOF Company, Inc. repeatedly demanded the payment of
ocean freight, documentation fee and terminal handling charges from Shin Yang. The latter failed and refused to pay
contending that it did not cause the importation of the goods, that it is only the Consolidator of the said shipment,
that the ultimate consignee did not endorse in its favor the original bill of lading and that the bill of lading was
prepared without its consent.

MOF filed a case for sum of money before the Metropolitan Trial Court of Pasay City. MOF alleged that Shin Yang
caused the importation and shipment of the goods and assured it that ocean freight and other charges would be paid
upon arrival of the goods in Manila. After Hanjin's compliance, Shin Yang unjustly breached its obligation to pay.
MOF argued that Shin Yang, as the named consignee in the bill of lading, entered itself as a party to the contract and
bound itself to the "Freight Collect" arrangement. MOF thus prayed for the payment of ₱57,646.00 representing
ocean freight, documentation fee and terminal handling charges as well as damages and attorney’s fees.

Claiming that it is merely a consolidator/forwarder and that Bill of Lading was not endorsed to it by the ultimate
consignee, Shin Yang denied any involvement in shipping the goods or in promising to shoulder the freightage. It
asserted that it never authorized Halla Trading Co. to ship the articles or to have its name included in the bill of
lading. Shin Yang also alleged that MOF failed to present supporting documents to prove that it was Shin Yang that
caused the importation or the one that assured payment of the shipping charges upon arrival of the goods in Manila.

ISSUE: Whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof.

RULING: The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the
intervention of the consignee. However, the latter can be bound by the stipulations of the bill of lading when a) there
is a relation of agency between the shipper or consignor and the consignee or b) when the consignee demands
fulfillment of the stipulation of the bill of lading which was drawn up in its favor.

In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the carrier,
becomes a party to the contract by reason of either a) the relationship of agency between the consignee and the
shipper/ consignor; b) the unequivocal acceptance of the bill of lading delivered to the consignee, with full
knowledge of its contents or c) availment of the stipulation pour autrui, i.e., when the consignee, a third person,
demands before the carrier the fulfillment of the stipulation made by the consignor/shipper in the consignee’s favor,
specifically the delivery of the goods/cargoes shipped.

In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading, Co. to ship
the goods on its behalf; or that it got hold of the bill of lading covering the shipment or that it demanded the release
of the cargo. Basic is the rule in evidence that the burden of proof lies upon him who asserts it, not upon him who
denies, since, by the nature of things, he who denies a fact cannot produce any proof of it.17 Thus, MOF has the
burden to controvert all these denials, it being insistent that Shin Yang asserted itself as the consignee and the one
that caused the shipment of the goods to the Philippines.

In civil cases, the party having the burden of proof must establish his case by preponderance of evidence, 18 which
means evidence which is of greater weight, or more convincing than that which is offered in opposition to it. 19 Here,
MOF failed to meet the required quantum of proof. Other than presenting the bill of lading, which, at most, proves
that the carrier acknowledged receipt of the subject cargo from the shipper and that the consignee named is to
shoulder the freightage, MOF has not adduced any other credible evidence to strengthen its cause of action. It did
not even present any witness in support of its allegation that it was Shin Yang which furnished all the details
indicated in the bill of lading and that Shin Yang consented to shoulder the shipment costs. There is also nothing in
the records which would indicate that Shin Yang was an agent of Halla Trading Co. or that it exercised any act that
would bind it as a named consignee. Thus, the CA correctly dismissed the suit for failure of petitioner to establish its
cause against respondent.

7. PHILAM INSURANCE vs HUENG-A SHIPPING CORPORATION

DOCTRINE: In a contract of affreightment, the voyage remains under the responsibility of the carrier and it is
answerable for the loss of goods received for transportation. The charterer is free from liability to third persons in
respect of the ship.

FACTS: Novartis Consumer Health Philippines, Inc. (NOVARTIS) imported from Jinsuk Trading Co. Ltd.,
(JINSUK) in South Korea, 19 pallets of 200 rolls of Ovaltine Power 18 Glaminated plastic packaging material. In
order to ship, JINSUK engaged the services of Protop Shipping Corporation (PROTOP), a freight forwarder.
PROTOP shipped the cargo through Dongnama Shipping Co. Ltd. (DONGNAMA) which in turn loaded the same
on M/V Heung-A Bangkok V-019 owned and operated by Heung-A Shipping Corporation, (HEUNG-A), a Korean
corporation, pursuant to a ‘slot charter agreement’ whereby a space in the latter’s vessel was reserved for the
exclusive use of the former. The shipment was thereafter withdrawn on January 4, 2001, by NOVARTIS’ appointed
broker, Stephanie Customs Brokerage Corporation (STEPHANIE) from ATI’s container yard.

NOVARTIS insured the shipment with Philam Insurance Company. The shipment reached the NORVATIS, and
upon inspection, the boxes of the shipment were wet and damp. The shipment is entirely damaged and was found
that the damage was caused by salt water. NOVARTIS rejected the shipment and filed an insurance claim with the
PHILAM and the latter was subrogated to all the rights and claim to NOVARTIS. PHILAM filed a complaint for
damages against the parties of the shipment. HEUNG-A denied the liability by arguing that it is not the carrier in so
far as NOVARTIS is concerned and asserted that its only obligation was to provide DONGNAMA a space on board
his ship.

The trial court ruled declaring that HEUNG-A as the common carrier and held it liable. The ruling was affirmed by
the appellate court.

ISSUES: Whether HEUNG-A is the common carrier that should be liable to the damage sustained by shipment

RULING: YES. HEUNG-A is the common carrier. HEUNG-A’s slot charter arrangement with DONGNAMA is a
charter party arrangement.

A charter party has been defined in Planters Products, Inc. v. Court of Appeals 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; 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.

A charter party has two types. First, it could be a contract of affreightment whereby the use of shipping space on
vessels is leased in part or as a whole, to carry goods for others. The charter-party provides for the hire of vessel
only, either for a determinate period of time (time charter) or for a single or consecutive voyage (voyage charter).
The shipowner supplies the ship’s stores, pay for the wages of the master and the crew, and defray the expenses for
the maintenance of the ship.37 The voyage remains under the responsibility of the carrier and it is answerable for the
loss of goods received for transportation. The charterer is free from liability to third persons in respect of the ship.
Second, charter by demise or bareboat charter under 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. The charterer mans the vessel with his own people and becomes, in effect, the owner for
the voyage or service stipulated and hence liable for damages or loss sustained by the goods transported.

Clearly then, despite its contract of affreightment with DONGNAMA, HEUNG-A remained responsible as the
carrier, hence, answerable for the damages incurred by the goods received for transportation. "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.

"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. Further, under Article 1742 of the Civil Code, even if the loss,
destruction, or deterioration of the goods should be caused by the faulty nature of the containers, the common carrier
must exercise due diligence to forestall or lessen the loss.

Here, HEUNG-A failed to rebut this prima facie presumption when it failed to give adequate explanation as to how
the shipment inside the container van was handled, stored and preserved to forestall or prevent any damage or loss
while the same was in its possession, custody and control.

PROTOP is solidarily liable with HEUNG-A for the lost/damaged shipment in view of the bill of lading the former
issued to NOVARTIS. "A bill of lading is a written acknowledgement of the receipt of goods and an agreement to
transport and to deliver them at a specified place to a person named or on his or her order. It 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. PROTOP breached its contract with NOVARTIS when it failed to deliver the goods in the same
quantity, quality and description as stated.

The CA did not err in applying the provisions of the COGSA specifically, the rule on Package Liability Limitation.

Under Article 1753 of the Civil Code, the law of the country to which the goods are to be transported shall govern
the liability of the common carrier for their loss, destruction or deterioration. Since the subject shipment was being
transported from South Korea to the Philippines, the Civil Code provisions shall apply. In all matters not regulated
by the Civil Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and
by special laws,44 such as the COGSA.

While the Civil Code contains provisions making the common carrier liable for loss/damage to the goods
transported, it failed to outline the manner of determining the amount of such liability. Article372 of the Code of
Commerce fills in this gap, thus:

Article 372. The value of the goods which the carrier must pay in cases if loss or misplacement shall be determined
in accordance with that declared in the bill of lading, the shipper not being allowed to present proof that among the
goods declared therein there were articles of greater value and money.

Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation shall be especially
bound infavor of the shipper, although with respect to railroads said liability shall be subordinated to the provisions
of the laws of concession with respect to the property, and to what this Code established as to the manner and form
of effecting seizures and attachments against said companies.
In case, however, of the shipper’s failure to declare the value of the goods in the bill of lading, Section 4, paragraph
5 of the COGSA provides:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection
with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in
case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency,
unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill
of lading. This declaration, if embodied in the bill of lading shall be prima facie evidence, but shall be conclusive on
the carrier.

Hence, when there is a loss/damage to goods covered by contracts of carriage from a foreign port to a Philippine
port and in the absence a shipper’s declaration of the value of the goods in the bill of lading, as in the present case,
the foregoing provisions of the COGSA shall apply. The CA, therefore, did not err in ruling that HEUNG-A,
WALLEM and PROTOP’s liability is limited to $500 per package or pallet.

8. COMPAÑIA MARITIMA V. INSURANCE CO. OF NORTH AMERICA

DOCTRINE: Where the shipper delivered the cargo to the carrier and the latter took possession thereof by placing
it on a lighter or barge manned by its authorized employees, it is held that there existed a complete contract of
carriage the consummation of which had already begun.
 
FACTS: On October, 1952: Macleod and Company of the Philippines (Macleod) contracted by telephone the
services of the Compañia Maritima (CM), a shipping corporation, for shipment of 2,645 bales of hemp from the
Macleod's Sasa private pier at Davao City to Manila, subsequent transhipment to Boston, Massachusetts, U.S.A. on
board the S.S. Steel Navigator.
 
This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch office in Sasa
and handcarried to CM's branch office in Davao in compliance with which the CM sent to Macleod's private wharf
LCT Nos. 1023 and 1025 on which the loading of the hemp was completed on October 29, 1952.
 
The 2 lighters were manned each by a patron and an assistant patron. The patrons of both barges issued the
corresponding carrier's receipts and that issued by the patron of Barge No. 1025 reads in part: Received in behalf of
S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF PHILIPPINES, Sasa
Davao, for transhipment at Manila onto S.S. Steel Navigator.
 
On the early hours of October 30, LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of hemp loaded
therein Macleod promptly notified the carrier's main office in Manila and its branch in Davao advising it of its
liability. The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing,
reconditioning, and redrying.
 
The total loss adds up to P60,421.02 All abaca shipments of Macleod were insured with the Insurance Company of
North America against all losses and damages Macleod filed a claim for the loss it suffered with the insurance
company and was paid P64,018.55 subrogation agreement between Macleod and the insurance company wherein the
Macleod assigned its rights over the insured and damaged cargo. Failing to recover from the carrier P60,421.02, the
insurance company instituted the present action. CA affirmed the decision of RTC ordering CM to pay the insurance
company.
 
ISSUE: Whether there was a contract of carriage between Compania Maritima and Macleod?
RULING: YES. The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and
deliver, and if actually no goods are received there can be no such contract. The liability and responsibility of the
carrier under a contract for the carriage of goods commence on their actual delivery to, or receipt by, the carrier or
an authorized agent, or delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the custom to
deliver in that way.
 
Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper,
then it can be said with certainty that the relation of shipper and carrier has been established. As regards the form of
the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise
rights and obligations, there should be no limitations as to form The bill of lading is not essential. Even where it is
provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance
are sufficient to bind the carrier marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight
conditions of various buoyancy compartments.

9. KOREAN AIRLINES CO., LTD. vs. CA and JUANITO C. LAPUZ

DOCTRINE: The evidence presented by Lapuz shows that he had indeed checked in at the departure counter,
passed through customs and immigration, boarded the shuttle bus and proceeded to the ramp of KAL’s aircraft. In
fact, his baggage had already been loaded in KAL’s aircraft, to be flown with him to Jeddah. The contract to
carriage between him and KAL had already been perfected when he was summarily and insolently prevented from
boarding the aircraft.

FACTS: Juanito C. Lapuz, an automotive electrician, was contracted for employment in Jeddah, Saudi Arabia, for a
period of one year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz was supposed to leave on
November 8, 1980, via Korean Airlines. He was wait-listed. When two of such passengers did not appear, Lapuz
and Perico were given the two unclaimed seats. Lapuz was allowed to check in with one suitcase and one shoulder
bag at the check-in counter of KAL.

He passed through the customs and immigration sections for routine check-up and was cleared for departure. When
he was at the third or fourth rung of the stairs, a KAL officer pointed to him and shouted "Down! Down!" He was
thus barred from taking the flight. When he later asked for another booking, his ticket was canceled by KAL.
Consequently, he was unable to report for his work in Saudi Arabia within the stipulated 2-week period and so lost
his employment.

KAL alleged that Pan Pacific Recruiting Services Inc. coordinated with KAL for the departure of 30 contract
workers, of whom only 21 were confirmed and 9 were wait-listed passengers. The agent of Pan Pacific, after being
informed that there was a possibility of having one or two seats becoming available, gave priority to Perico, who
was one of the supervisors of the hiring company in Saudi Arabia. However, only one seat became available and so,
pursuant to the earlier agreement that Perico was to be given priority, he alone was allowed to board. KAL was held
liable by the lower court.

ISSUE: Whether CA erred in concluding that petitioner committed a breach of contract of carriage notwithstanding
lack of proper, competent evidence of such contract

RULING: No. The status of Lapuz as standby passenger was changed to that of a confirmed passenger when his
name was entered in the passenger manifest of KAL for its Flight No. KE 903. His clearance through immigration
and customs clearly shows that he had indeed been confirmed as a passenger of KAL in that flight. KAL thus
committed a breach of the contract of carriage between them when it failed to bring Lapuz to his destination. The
evidence presented by Lapuz shows that he had indeed checked in at the departure counter, passed through customs
and immigration, boarded the shuttle bus and proceeded to the ramp of KAL's aircraft. In fact, his baggage had
already been loaded in KAL's aircraft, to be flown with him to Jeddah. The contract of carriage between him and
KAL had already been perfected when he was summarily and insolently prevented from boarding the aircraft.
 10. DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN vs.
COURT OF APPEALS, et al.

DOCTRINE: By contract of carriage, the carrier assumes the express obligation to transport the passenger to his
destination safely and observe extraordinary diligence with a due regard for all the circumstances, and any injury
that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.

FACTS: Private respondents filed a complaint for damages against petitioners for the death of Pedrito Cudiamat as
a result of a vehicular accident which occurred on March 25, 1985 at Marivic, Sapid, Mankayan, Benguet. Petitioner
Lardizabal was driving a passenger bus belonging to petitioner corporation in a reckless and imprudent manner and
without due regard to traffic rules and regulations and safety to persons and property, it ran over its passenger,
Pedrito Cudiamat. Petitioners alleged that they had observed and continued to observe the extraordinary diligence
and that it was the victim’s own carelessness and negligence which gave rise to the subject incident. RTC
pronounced that Pedrito Cudiamat was negligent, which negligence was the proximate cause of his death. However,
Court of Appeals set aside the decision of the lower court, and ordered petitioners to pay private respondents
damages due to negligence.

ISSUE:Whether the CA erred in reversing the decision of the trial court and in finding petitioners negligent and
liable for the damages claimed.

RULING: No. The testimonies of the witnesses show that that the bus was at full stop when the victim boarded the
same. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly
accelerated forward and was run over by the rear right tires of the vehicle. Under such circumstances, it cannot be
said that the deceased was guilty of negligence.

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving slowly.
An ordinarily prudent person would have made the attempt board the moving conveyance under the same or similar
circumstances. The fact that passengers board and alight from slowly moving vehicle is a matter of common
experience both the driver and conductor in this case could not have been unaware of such an ordinary practice.

Common carriers, from the nature of their business and reasons of public policy, are bound to observe extraordinary
diligence for the safety of the passengers transported by the according to all the circumstances of each case. A
common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the
utmost diligence very cautious persons, with a due regard for all the circumstances.

It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought by
the passenger. By contract of carriage, the carrier assumes the express obligation to transport the passenger to his
destination safely and observe extraordinary diligence with a due regard for all the circumstances, and any injury
that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.