Transpo Cases 2.docx

Federal Phoenix Assurance v. Fortune Sea Carrier G.R. No. 188118, November 21 2015

Ricky Rey shall be under the orders and complete control of Northern Transport.

Facts: On March 9, 1994, Fortune Sea agreed to lease its vessel M/V Ricky Rey to Northern Mindanao Transport Co., Inc. (Northern Transport). The Time Charter Party agreement executed by the parties provides that the vessel shall be leased to Northern Transport for 90 days to carry bags of cement to different ports of destination. Later on, the parties extended the period of lease for another 90 days. Sometime in June 1994, Northern Transport ordered 2,069 bales of abaca fibers to be shipped on board M/V Ricky Rey by shipper Manila Hemp Trading Corporation, for delivery to consignee Newtech Pulp Inc. (Newtech) in Iligan City. The shipment was covered by Bill of Lading No. 1 and was insured by petitioner Federal Phoenix Assurance Co.,. Ltd. (Federal Phoenix) Upon arrival of M/V Ricky Rey at the Iligan City port on June 16, 1994, the stevedores started to discharge the abaca shipment the following clay. At about 3:00 p.m., however, on June 18, 1994, the stevedores noticed smoke coming out of the cargo haul where the bales of abaca where located. Immediately, the lire was put off" by the Iligan City Fire Department. Upon investigation, it was discovered that 60 bales of abaca were damaged. As a result of the losses, Newtech filed an insurance claim with Federal Phoenix. After evaluation, Federal Phoenix paid Newtech for the losses it incurred due to the damaged and undelivered bales of abaca. Upon payment. Federal Phoenix was subrogated to the rights of Newtech and pursued its claim against Fortune Sea. Despite several demands to Fortune Sea, however. Federal Phoenix's claims were not settled. As a result, Federal Phoenix filed a Complaint9 for Sum of Money against Fortune Sea before the RTC of Makati. For its defense, Fortune Sea insisted that it was acting as a private carrier at the time the incident occurred. It alleged that the Time Charter Party agreement executed by the parties expressly provided that M/V

Issue: Whether or not the CA erred in declaring that Fortune Sea was converted into a private carrier by virtue of the charter party agreement it entered into with Northern Transport. Held:

This Court rules in the affirmative.

Time and again, this Court have ruled that "[i]n determining the nature of a contract, courts are not bound by the title or name given by the parties. The decisive factor in evaluating an agreement is the intention of the parties, as shown, not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately alter executing the agreement." As correctly observed by the CA, the Time Charter Party agreement executed by Fortune Sea and Northern Transport clearly shows that the charter includes both the vessel and its crew thereby making Northern Transport the owner pro hac vice of M/V Ricky Rey during the whole period of the voyage, to wit: A perspicacious scrutiny of the Time Charter Party disclosed the following provisions evincing that Northern Transport became the owner pro hac vice of M/V Ricky Rey during the whole period of the voyage-— "VI. OTHER TERMS AND CONDITIONS: F. Upon delivery of the vessel(s) and during the period of the charter, SECOND PARTY (Northern Transport) assumes operational control for the dispatch and direction of voyage of the vessel(s). H. The Master to prosecute all voyages with the utmost despatch and to render customary assistance with the vessel(s) crew. The Master to be

under the orders of the SECOND PARTY (Northern Transport) as regards employment of the other arrangements. N. The SECOND PARTY (Northern Transport) to furnish MASTER with all instructions and sailing directions and the Master and Engineer to keep full and correct logs accessible to the SECOND PARTY (Northern Transport) or their Supercargo.

To Our mind, the Time Charier Part[y] unequivocally established that appellant Fortune Sea had completely and exclusively relinquished possession, command and navigation of M/V Ricky Rey to Northern Transport.15 (Citation omitted) Conformably, M/V Ricky Rey was converted into a private carrier notwithstanding the existence of the Time Charter Party agreement with Northern Transport since the said agreement was not limited to the ship only but extends even to the control of its crew. Despite the denomination as Time Charter by the parties, their agreement undoubtedly reflected that their intention was to enter into a Bareboat Charter Agreement. Moreover, the CA likewise correctly ruled that the testimony of Captain Alfredo Canon (Capt. Canon) of M/V Ricky Rey confirmed that when the whole vessel was leased to Northern Transport, the entire command and control over its navigation was likewise transferred to it. The testimonies of Capt. Canon undoubtedly show that Northern Transport eflectively subjected not only the ship but including its crew under its own exclusive control. Moreover, although the master and crew of the vessel were those of the shipowner, records show that at the time of the execution of the charter party, Fortune Sea had completely relinquished possession, command, and navigation of M/V Ricky Rey to Northern Transport. As such, the master and all the crew of the ship were all made subject to the direct control and supervision of the charterer. In fact, the instructions on the voyage and other relative directions or orders were handed out by Northern Transport. Thus, the CA correctly ruled that the nature of the vessel's charter is one of bareboat or demise charter.

MIC. Loadstar elevated the matter to the Court of Appeals, which affirmed the RTC’s decision in toto. Issue: Whether or not Loadstar is a common carrier. Held: Yes. x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. Loadstar Shipping v. Court of Appeals GR 131621, 28 September 1999 Facts: Loadstar Shipping Co. Inc. received on board its M/V “Cherokee” goods, amounting to P6,067,178, which were insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks including “total loss by total loss of the vessel.” The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4 million. On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor. MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo. The trial court rendered judgment in favor of

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine. These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."14 ["A general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce is a common carrier." Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier,

especially where, as in this case, it was shown that the vessel was also carrying passengers.

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: 1) Whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof? - Yes 2) 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:

MOF Company v. Shin Yang G.R. 172822, December 18, 2009 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.

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.

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. 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.