MOF Company v.
Shin Yang In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading, Co.
Facts:
 Halla shipped to Manila secondhand cars and other articles on board the vessel Hanjin Busan.
 The bill of lading was prepared by the carrier Hanjin where Shin Yang was named as the
consignee and indicated that payment was on a "Freight Collect" basis (meaning the
consignee/receiver of the goods would be the one to pay for the freight and other charges).
 When the shipment arrived in Manila MOF, Hanjin’s exclusive general agent in the Philippines,
demanded the payment from Shin Yang.
 Shin Yang refused to pay the freight and other charges. Shin Yang is saying that it is not the
ultimate consignee but merely the consolidator/forwarder.
 Shin Yang contends that the fact that its name was mentioned as the consignee of the cargoes
did not make it automatically liable for the freightage because it never benefited from the
shipment.
 It never claimed or accepted the goods, it was not the shipper’s agent, it was not aware of its
designation as consignee and the original bill of lading was never endorsed to it.
Issue:
Whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof?
- Yes
Whether Shin Yang, who was not an agent of the shipper and who did not make any demand for the
fulfillment of the stipulations of the bill of lading drawn in its favor, is liable to pay the corresponding
freight and handling charges? - No
Held: While it is true that a bill of lading serves two (2) functions: first, it is a receipt for the goods shipped;
second, it is a contract by which three parties, namely, the shipper, the carrier and the consignee who
undertake specific responsibilities and assume stipulated obligations.
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.
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. 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, which means evidence which is of greater weight, or more convincing than that which is offered
in opposition to it. 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
ACE NAVIGATION CO., INC. vs. FGU INSURANCE CORPORATION and PIONEER
INSURANCE AND SURETY CORPORATION
FACTS:
On July 19, 1990, CARDIA shipped on board the vessel M/V Pakarti Tiga at Shanghai Port China, 8,260
metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila and delivered
to its consignee, HEINDRICH. The subject shipment was insured with respondents, FGU and PIONEER,
against all risks for the amount of P18, 048,421.00.
The subject vessel is owned by PAKARTI which it chartered to SHINWA. Representing itself as owner of
the vessel, SHINWA entered into a charter party contract with SKY, an agent of KEE YEH, which further
chartered it to REGENCY. Thus, it was REGENCY that directly dealt with consignee HEINDRICH, and
accordingly, issued Clean Bill of Lading No. SM-1.
On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However, upon
inspection of HEINDRICH and petitioner ACENAV, agent of CARDIA, it was found that out of the 165,200
bags of cement, 43,905 bags were in bad order and condition. Unable to collect the sustained damages in
the amount of P1,423,454.60 from the shipper, CARDIA, and the charterer, REGENCY, the respondents,
as co-insurers of the cargo, each paid the consignee, HEINDRICH, the amounts of P427,036.40 and
P284,690.94, respectively, and consequently became subrogated to all the rights and causes of action
accruing to HEINDRICH.
On August 8, 1991, respondents filed a complaint for damages against ACENAV and other defendants.
ACENAV claimed that, not being privy to the bill of lading, it was not a real party-in-interest from whom
the respondents can demand compensation. It further denied being the local ship agent of the vessel or
REGENCY and claimed to be the agent of the shipper, CARDIA.
The RTC dismissed the complaint.
The CA found PAKARTI, SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the
respondents' claim plus interest at the rate of 6% from the date of the filing of the complaint, with the
remaining 30% to be shouldered solidarily by CARDIA and its agent, ACENAV plus interest at the rate of
6% from the date of the filing of the complaint.
ISSUE: Whether or not ACENAV may be held liable to the respondents for 30% of their claim.
HELD:
A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent, describing the freight
so as to identify it, stating the name of the consignor, the terms of the
contract for carriage, and agreeing or directing that the freight to be delivered to the order or assigns of a
specified person at a specified place."
It operates both as a receipt and as a contract. As a receipt, it recites the date and place of shipment, describes
the goods as to quantity, weight, dimensions, identification marks and condition, quality, and value. As a
contract, it names the contracting parties, which include the consignee, fixes the route, destination, and
freight rates or charges, and stipulates the rights and obligations assumed by the parties. As such, it shall
only be binding upon the parties who make them, their assigns and heirs.
In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI;
and (c) the consignee HEINDRICH. However, by virtue of their relationship with PAKARTI under separate
charter arrangements, SHINWA, KEE YEH and its agent SKY likewise became parties to the bill of lading.
In the same vein, ACENAV, as admitted agent of CARDIA, also became a party to the said contract of
carriage.
The respondents, however, maintain that ACENAV is a ship agent and not a mere agent of CARDIA, as
found by both the CA and the RTC.
The Court disagrees.
Article 586 of the Code of Commerce provides:
ART. 586. The ship-owner and the ship agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves
that the amount claimed was invested therein.
By ship agent is understood the person entrusted with the provisioning of a vessel, or who represents her in
the port in which she may be found.
Records show that the obligation of ACENAV was limited to informing the consignee HEINDRICH of the
arrival of the vessel in order for the latter to immediately take possession of the goods. No evidence was
offered to establish that ACENAV had a hand in the provisioning of the vessel or that it represented the
carrier, its charterers, or the vessel at any time during the unloading of the goods. Clearly, ACENAV's
participation was simply to assume responsibility over the cargo when they were unloaded from the vessel.
Hence, no reversible error was committed by the courts a quo in holding that ACENAV was not a ship agent
within the meaning and context of Article 586 of the Code of Commerce, but a mere agent of CARDIA, the
shipper.
Accordingly, the Court finds that the CA erred in ordering ACENAV jointly and severally liable with
CARDIA to pay 30% of the respondents' claim.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are hereby REVERSED. The
complaint against petitioner Ace Navigation Co., Inc. is hereby DISMISSED.
Saludo Jr. v. Hon. Court of Appeals
FACTS:
The petitioners in this case, together with Pomierski and Son Funeral Home of Chicago brought the remains
of petioners’ mother to Continental Mortuary Air Services which booked the shipment of the remains from
Chicago to San Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine
Airlines (PAL). The remains were taken to the Chicago Airport, but it turned out that there were two bodies
in the said airport. Somehow the two bodies were switched, and the remains of plaintiff’s mother was
shipped to Mexico instead.
The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival.
Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was
affirmed by the court.
ISSUES:
1. Whether or not the delay in the delivery of the casketed remains of petitioners’ mother was due
to the fault of respondent airline companies.
2. Whether or not the one-day delay in the delivery of the same constitutes contractual breach as
would entitle petitioners to damages.
HELD:
1. Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of
the common carrier begins from the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they are temporarily unloaded or stored
in transit, unless the shipper or owner exercises the right of stoppage in transit, and terminates
only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or
such other person entitled to receive them. And, there is delivery to the carrier when the goods
are ready for and have been placed in the exclusive possession, custody and control of the carrier
for the purpose of their immediate transportation and the carrier has accepted them. Where such
 a delivery has thus been accepted by the carrier, the liability of the common carrier commences
eo instanti.
Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed
by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence
there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact
of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods
in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of
fault of the carrier under Article 1735 be invoked.
2. The contention that there was contractual breach on the part of private respondents is founded
on the postulation that there was ambiguity in the terms of the airway bill, hence petitioners'
insistence on the application of the rules on interpretation of contracts and documents. We find
no such ambiguity. The terms are clear enough as to preclude the necessity to probe beyond the
apparent intendment of the contractual provisions.
In any event, the contract has provided for such a situation by explicitly stating that the above condition
remains effective "notwithstanding that the same (fixed time for completion of carriage, specified aircraft,
or any particular route or schedule) may be stated on the face hereof." While petitioners hinge private
respondents' culpability on the fact that the carrier "certifies goods described below were received for
carriage," they may have overlooked that the statement on the face of the airway bill properly and completely
reads —
Carrier certifies goods described below were received for carriage subject to the Conditions on the reverse
hereof the goods then being in apparent good order and condition except as noted hereon. (Emphasis ours.)
Transportation Case Digest: Sweet Lines, Inc. v. Teves (1978)
Lessons Applicable: Contract of Adhesion (Transportation)
Laws Applicable:
FACTS:
 Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of
Cebu
 Since many passengers were bound for Surigao, M/S "Sweet Hope would not be proceeding to
Bohol
 They went to the proper brancg office and was relocated to M/S "Sweet Town" where they
were forced to agree "to hide at the cargo section to avoid inspection of the officers of the
Philippine Coastguard." and they were exposed to the scorching heat of the sun and the dust
coming from the ship's cargo of corn grits and their tickets were not honored so they had to
purchase a new one
 They sued Sweet Lines for damages and for breach of contract of carriage before the Court of
First Instance of Misamis Oriental who dismissed the compalitn for improper venue
 A motion was premised on the condition printed at the back of the tickets -dismissed
 instant petition for prohibition for preliminary injunction
ISSUE: W/N a common carrier engaged in inter-island shipping stipulate thru condition printed at the back
of passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed
only in a particular province or city
HELD: NO.petition for prohibition is DISMISSED. Restraining order LIFTED and SET ASIDE
 contract of adhesion
o not that kind of a contract where the parties sit down to deliberate, discuss and agree
specifically on all its terms, but rather, one which respondents took no part at all in
preparing
o just imposed upon them when they paid for the fare for the freight they wanted to
ship
 We find and hold that Condition No. 14 printed at the back of the passage tickets should be held
as void and unenforceable for the following reasons
o circumstances obligation in the inter-island ship
 will prejudice rights and interests of innumerable passengers in different
s of the country who, under Condition No. 14, will have to file suits
against petitioner only in the City of Cebu
o subversive of public policy on transfers of venue of actions
 philosophy underlying the provisions on transfer of venue of actions is the
convenience of the plaintiffs as well as his witnesses and to promote 21
the ends of justice
Shewaram vs, Philippine Airlines
(17 SCRA 606, (1966)
Facts: A PAL ticket, on the reverse side, stated in fine print that if the value of baggage is not stated, and
the baggage is lost, the maximum liability of PAL is P100.00 if value in excess of P100.00 is stated, PAL
will charge extra because PAL is being held liable for an amount exceeding P100.00. Shewaram, a Hindu
from Davao, boarded a PAL plane for Manila. Among his baggage was a camera with P800.00 and it was
lost. PAL offered to pay P100.00. Shewaram wanted full payment of P800.00.
Issue: Whether the limited liability rule shall apply in the case at bar?
Held: The limited liability rule shall not apply. Since this is a stipulation on qualified liability, which
operates to reduce the liability of the carrier, the carrier and the shipper must agree thereupon. Otherwise,
the carrier will be liable for full. PAL is fully liable (for full) because Shewaran did not agree to the
stipulation on the ticket, as manifested by the fact that Shewaram did not sign the ticket. Ticket should have
been signed.
SHEWARAM VS. PHILIPPINE AIRLINES Facts:
Parmanand Shewaram, a Hindu from Davao, boarded a PAL plane bound for Manila from Zamboanga. He
checked in 3 baggages: a suitcase and 2 other bags. PAL’s personnel mistagged his baggage to “Iligan”
instead of “Manila.”
The baggage was said to be tampered when it was found.
Among his baggage was a camera with P800.00 and it was lost. PAL offered to pay P100.00. Shewaram
wanted full payment of P800.00.
A PAL ticket, on the reverse side, stated in fine print:
“The liability, if any, for loss or damage to checked baggage or for delay in the delivery thereof is limited
to its value and, unless the passenger declares in advance a higher valuation and pay an additional charge
therefor, the value shall be conclusively deemed not to exceed P100.00 for each ticket.”
PAL maintains that in view of the failure of the Shewaram to declare a higher value for his luggage, and
pay the freight on the basis of said declared value when he checked such luggage at the Zamboanga City
airport, pursuant to the abovequoted condition, appellee can not demand payment from the appellant of an
amount in excess of P100.00.
Issue: Whether the limited liability rule shall apply in the case at bar?
Held:
NO. The limited liability rule shall not apply. Since this is a stipulation on qualified liability, which operates
to reduce the liability of the carrier, the carrier and the shipper must agree thereupon. Otherwise, the carrier
will be liable for full.
PAL is fully liable (for full) because Shewaran did not agree to the stipulation on the ticket, as manifested
by the fact that Shewaram did not sign the ticket.
Ticket should have been signed. Article 1750 of the New Civil Code which provides as follows: A contract
fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of
the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed
upon. In accordance with the above-quoted provision of Article 1750 of the New Civil Code, the pecuniary
liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however, that
the contract must be "reasonable and just under the circumstances and has been fairly and freely agreed
upon."
NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF APPEALS and DEVELOPMENT
INSURANCE AND SURETY CORPORATION
Facts:
National Development Company (NDC) appointed Maritime Company of the Philippines (MCP) as its
agent to manage and operate its vessel, ‘Dona Nati’, for and in behalf of its account. In 1964, while en route
to Japan from San Francisco, Dona Nati collided with a Japanese vessel, ‘SS Yasushima Maru’, causing its
cargo to be damaged and lost. The private respondent, as insurer to the consigners, paid almost
Php400,000.00 for said lost and damaged cargo. Hence, the private respondent instituted an action to recover
from NDC.
Issue:
Which laws govern the loss and destruction of goods due to collision of vessels outside Philippine waters?
Ruling:
In a previously decided case, it was held that the law of the country to which the goods are to be transported
governs the liability of the common carrier in case of their loss, destruction or deterioration pursuant to
Article 1753 of the Civil Code. It is immaterial that the collision actually occurred in foreign waters, such
as Ise Bay, Japan.
It appears, however, that collision falls among matters not specifically regulated by the Civil Code, hence,
we apply Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision
of vessels.