MAGELLAN MANUFACTURING MARKETING CORPORATION vs. CA, ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG, INC. G.R.

No. 95529 August 22, 1991

1. 2.

=hether or not there was transshipment A *3; =hether or not the bill o! lading which re!lected the transshipment against the letter o! credit is consented b" %%%' A *3;

Doctr n!" The holding in most jurisdictions has been that a shipper who recei es a bill o! lading without objection a!ter an opportunit" to inspect it, and permits the carrier to act on it b" proceeding with the shipment is presumed to ha e accepted it as correctl" stating the contract and to ha e assented to its terms Facts" #lainti!!$appellant %agellan %anu!acturers %ar&eting 'orp. (%%%') entered into a contract with 'hoju 'o. o! *o&ohama, +apan, on %a" 2,, 19-,, to e.port 1/0,,,, anahaw !ans !or and in consideration o! 12/,22,.,,. A letter o! credit was issued to plainti!! %%%' b" the bu"er as pa"ment. +ames 'u, the president o! %%%' then contracted 2.3. 4uellig, a shipping agent, through its solicitor, one %r. 5ing, to ship the anahaw !ans through the other appellee, 6rient 6 erseas 'ontainer 7ines, 8nc., (66'7) speci!"ing that he needed an on$board bill o! lading and that transhipment is not allowed under the letter o! credit. Appellant %%%' paid 2.3. 4uellig the !reight charges and secured a cop" o! the bill o! lading which was presented to Allied 9an& on +une /,, 19-,. The ban& then credited the amount o! :;12/,22,.,, co ered b" the letter o! credit to appellant<s account. =hen appellant<s president +ames 'u, went bac& to the ban& later, he was in!ormed that the pa"ment was re!used b" the bu"er because there was no on$board bill o! lading, and there was a transhipment o! goods. The anahaw !ans were shipped bac& to %anila b" appellees, !or which the latter demanded !rom appellant pa"ment o! #2>0,,>/.>/ as a result o! the re!usal o! the bu"er to accept, and upon appellant?s re@uest. Appellant abandoned the whole cargo and as&ed appellees !or damages. The petitioner !iled the complaint pra"ing that pri ate respondents be ordered to pa" whate er petitioner was not able to earn !rom 'hoju 'o., 7td. The lower court decided the case in !a or o! pri ate respondents. 8t dismissed the complaint on the ground that petitioner had gi en its consent to the contents o! the bill o! lading where it is clearl" indicated that there will be transshipment. 6n appeal to the respondent court, the !inding o! the lower (court) that petitioner agreed to a transhipment o! the goods was a!!irmed. Iss#!s"

Rat o" 1. Transhipment, in maritime law, is de!ined as Bthe act o! ta&ing cargo out o! one ship and loading it in another,B or Bthe trans!er o! goods !rom the essel stipulated in the contract o! a!!reightment to another essel be!ore the place o! destination named in the contract has been reached,B or Bthe trans!er !or !urther transportation !rom one ship or con e"ance to another.B 'learl", either in its ordinar" or its strictl" legal acceptation, there is transhipment whether or not the same person, !irm or entit" owns the essels. 8n other words, the !act o! transhipment is not dependent upon the ownership o! the transporting ships or con e"ances or in the change o! carriers, as the petitioner seems to suggest, but rather on the !act o! actual ph"sical trans!er o! cargo !rom one essel to another. 8t appears on the !ace o! the bill o! lading the entr" BCong 5ongB in the blan& space labeled BTranshipment,B which can onl" mean that transhipment actuall" too& place. This !act is !urther bolstered b" the certi!ication issued b" pri ate respondent 2.3. 4uellig, 8nc. dated +ul" 19, 19-,, although it care!ull" used the term Btrans!erB instead o! transhipment. No amount o! semantic juggling can mas& the !act that transhipment in truth occurred in this case.

2. 8t is a long standing jurisprudential rule that a bill o! lading operates both as a receipt and as a contract. 8t is a receipt !or the goods shipped and a contract to transport and deli er the same as therein stipulated. As a contract, it names the parties, which includes the consignee, !i.es the route, destination, and !reight rates or charges, and stipulates the rights and obligations assumed b" the parties. 9eing a contract, it is the law between the parties who are bound b" its terms and conditions

pro ided that these are not contrar" to law, morals, good customs, public order and public polic". A bill o! lading usuall" becomes e!!ecti e upon its deli er" to and acceptance b" the shipper. 8t is presumed that the stipulations o! the bill were, in the absence o! !raud, concealment or improper conduct, &nown to the shipper, and he is generall" bound b" his acceptance whether he reads the bill or not. The petitioner had !ull &nowledge o!, and actuall" consented to, the terms and conditions o! the bill o! lading thereb" ma&ing the same conclusi e as to it, and it cannot now be heard to den" ha ing assented thereto. 9ased !rom the records, +ames 'u himsel!, in his capacit" as president o! %%%', personall" recei ed and signed the bill o! lading. There is no better wa" to signi!" consent than b" oluntar" signing the document which embodies the agreement. An on board bill o! lading is one in which it is stated that the goods ha e been recei ed on board the essel which is to carr" the goods, whereas a recei ed !or shipment bill o! lading is one in which it is stated that the goods ha e been recei ed !or shipment with or without speci!"ing the essel b" which the goods are to be shipped. Recei ed !or shipment bills o! lading are issued whene er conditions are not normal and there is insu!!icienc" o! shipping space. An on board bill o! lading is issued when the goods ha e been actuall" placed aboard the ship with e er" reasonable e.pectation that the shipment is as good as on its wa". 8t is, there!ore, understandable that a part" to a maritime contract would re@uire an on board bill o! lading because o! its apparent guarant" o! certaint" o! shipping as well as the seaworthiness o! the essel which is to carr" the goods. The certi!ication o! 2.3. 4uellig, 8nc. can @uali!" the bill o! lading, as originall" issued, into an on board bill o! lading as re@uired b" the terms o! the letter o! credit issued in !a or o! petitioner. The certi!ication was issued onl" on +ul" 19, 19-,, wa" be"ond the e.pir" date o! +une /,, 19-, speci!ied in the letter o! credit !or the presentation o! an on board bill o! lading. Thus, e en assuming that b" a liberal treatment o! the certi!ication it could ha e the e!!ect o! con erting the recei ed !or shipment bill o! lading into an on board o! bill o! lading, as petitioner would ha e us belie e, such an e!!ect ma" be achie ed onl" as o! the date o! its issuance, that is, on +ul" 19, 19-, and onwards.

The !act remains, though, that on the crucial date o! +une /,, 19-, no on board bill o! lading was presented b" petitioner in compliance with the terms o! the letter o! credit and this de!ault conse@uentl" negates its entitlement to the proceeds thereo!. ;aid certi!ication, i! allowed to operate retroacti el", would render illusor" the guarant" a!!orded b" an on board bill o! lading, that is, reasonable certaint" o! shipping the loaded cargo aboard the essel speci!ied, not to mention that it would indubitabl" be stretching the concept o! substantial compliance too !ar.

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