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623 Phil. 424


[ G.R. No. 172822, December 18, 2009 ]




The necessity of proving lies with the person who sues.

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. Petitioner now comes to us by way of Petition for Review on Certiorari[1] under Rule 45 praying for the reversal of the Court of Appeals' (CA) judgment that dismissed its action for sum of money for insufficiency of evidence.

Factual Antecedents

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila secondhand cars and other articles on board the vessel Hanjin Busan 0238W. The bill of lading covering the shipment, i.e., Bill of Lading No. HJSCPUSI14168303,[2] which was prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage Corp. (Shin Yang) as the consignee and indicated that payment was on a "Freight Collect" basis, i.e., that the consignee/receiver of the goods would be the one to pay for the freight and other charges in the total amount of P57,646.00.[3]

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc. (MOF), Hanjin's exclusive general agent in the Philippines, repeatedly demanded the payment of ocean freight, documentation fee and terminal handling charges from Shin Yang. The latter, however, 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.

Thus, on March 19, 2003, MOF filed a case for sum of money before the Metropolitan Trial Court of Pasay City (MeTC Pasay) which was docketed as Civil Case No. 206-03 and raffled to Branch 48. MOF alleged that Shin Yang, a regular client, 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. Yet, 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 P57,646.00 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 No. HJSCPUSI14168303 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.

Ruling of the Metropolitan Trial Court

On June 16, 2004, the MeTC of Pasay City, Branch 48 rendered its Decision[4] in favor of MOF. It ruled that Shin Yang cannot disclaim being a party to the contract of affreightment because:

x x x it would appear that defendant has business transactions with plaintiff. This is evident from defendant's letters dated 09 May 2002 and 13 May 2002 (Exhibits "1" and "2", defendant's Position Paper) where it requested for the release of refund of container deposits x x x. [In] the mind of the Court, by analogy, a written contract need not be necessary; a mutual understanding [would suffice]. Further, plaintiff would have not included the name of the defendant in the bill of lading, had there been no prior agreement to that effect.

In sum, plaintiff has sufficiently proved its cause of action against the defendant and the latter is obliged to honor its agreement with plaintiff despite the absence of a written contract.[5]

The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against the defendant, ordering the latter to pay plaintiff as follows:

  1. P57,646.00 plus legal interest from the date of demand until fully paid,
  2. P10,000.00 as and for attorney's fees and
  3. the cost of suit.

Ruling of the Regional Trial Court

The Regional Trial Court (RTC) of Pasay City, Branch 108 affirmed in toto the Decision of the MeTC. It held that:

MOF and Shin Yang entered into a contract of affreightment which Black's Law Dictionary defined as a contract with the ship owner to hire his ship or part of it, for the carriage of goods and generally take the form either of a charter party or a bill of lading.

The bill of lading contain[s] the information embodied in the contract.

Article 652 of the Code of Commerce provides that the charter party must be in writing; however, Article 653 says: "If the cargo should be received without charter party having been signed, the contract shall be understood as executed in accordance with what appears in the bill of lading, the sole evidence of title with regard to the cargo for determining the rights and obligations of the ship agent, of the captain and of the charterer". Thus, the Supreme Court opined in the Market Developers, Inc. (MADE) vs. Honorable Intermediate Appellate Court and Gaudioso Uy, G.R. No. 74978, September 8, 1989, this kind of contract may be oral. In another case, Compania Maritima vs. Insurance Company of North America, 12 SCRA 213 the contract of affreightment by telephone was recognized where the oral agreement was later confirmed by a formal booking.

x x x x

Defendant is liable to pay the sum of P57,646.00, with interest until fully paid, attorney's fees of P10,000.00 [and] cost of suit.

Considering all the foregoing, this Court affirms in toto the decision of the Court a quo.


Ruling of the Court of Appeals

Seeing the matter in a different light, the CA dismissed MOF's complaint and refused to award any form of damages or attorney's fees. It opined that MOF failed to substantiate its claim that Shin Yang had a hand in the importation of the articles to the Philippines or that it gave its consent to be a consignee of the subject goods. In its March 22, 2006 Decision,[8] the CA said:

This Court is persuaded [that except] for the Bill of Lading, respondent has not presented any other evidence to bolster its claim that petitioner has entered [into] an agreement of affreightment with respondent, be it verbal or written. It is noted that the Bill of Lading was prepared by Hanjin Shipping, not the petitioner. Hanjin is the principal while respondent is the former's agent. (p. 43, rollo)

The conclusion of the court a quo, which was upheld by the RTC Pasay City, Branch 108 xxx is purely speculative and conjectural. A court cannot rely on speculations, conjectures or guesswork, but must depend upon competent proof and on the basis of the best evidence obtainable under the circumstances. Litigation cannot be properly resolved by suppositions, deductions or even presumptions, with no basis in evidence, for the truth must have to be determined by the hard rules of admissibility and proof (Lagon vs. Hooven Comalco Industries, Inc. 349 SCRA 363).

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 (Belgian Overseas Chartering and Shipping N.V. vs. Phil. First Insurance Co., Inc., 383 SCRA 23), x x x if the same is not accepted, it is as if one party does not accept the contract. Said the Supreme Court:

"A bill of lading delivered and accepted constitutes the contract of carriage[,] even though not signed, because the acceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the contract and of all its terms and conditions of which the acceptor has actual or constructive notice" (Keng Hua Paper Products Co., Inc. vs. CA, 286 SCRA 257).

In the present case, petitioner did not only [refuse to] accept the bill of lading, but it likewise disown[ed] the shipment x x x. [Neither did it] authorize Halla Trading Company or anyone to ship or export the same on its behalf.

It is settled that a contract is upheld as long as there is proof of consent, subject matter and cause (Sta. Clara Homeowner's Association vs. Gaston, 374 SCRA 396). In the case at bar, there is not even any iota of evidence to show that petitioner had given its consent.

"He who alleges a fact has the burden of proving it and a mere allegation is not evidence" (Luxuria Homes Inc. vs. CA, 302 SCRA 315).

The 40-footer van contains goods of substantial value. It is highly improbable for petitioner not to pay the charges, which is very minimal compared with the value of the goods, in order that it could work on the release thereof.

For failure to substantiate its claim by preponderance of evidence, respondent has not established its case against petitioner.[9]

Petitioners filed a motion for reconsideration but it was denied in a Resolution[10] dated May 25, 2006. Hence, this petition for review on certiorari.

Petitioner's Arguments

In assailing the CA's Decision, MOF argues that the factual findings of both the MeTC and RTC are entitled to great weight and respect and should have bound the CA. It stresses that the appellate court has no justifiable reason to disturb the lower courts' judgments because their conclusions are well-supported by the evidence on record.

MOF further argues that the CA erred in labeling the findings of the lower courts as purely `speculative and conjectural'. According to MOF, the bill of lading, which expressly stated Shin Yang as the consignee, is the best evidence of the latter's actual participation in the transportation of the goods. Such document, validly entered, stands as the law among the shipper, carrier and the consignee, who are all bound by the terms stated therein. Besides, a carrier's valid claim after it fulfilled its obligation cannot just be rejected by the named consignee upon a simple denial that it ever consented to be a party in a contract of affreightment, or that it ever participated in the preparation of the bill of lading. As against Shin Yang's bare denials, the bill of lading is the sufficient preponderance of evidence required to prove MOF's claim. MOF maintains that Shin Yang was the one that supplied all the details in the bill of lading and acquiesced to be named consignee of the shipment on a `Freight Collect' basis.

Lastly, MOF claims that even if Shin Yang never gave its consent, it cannot avoid its obligation to pay, because it never objected to being named as the consignee in the bill of lading and that it only protested when the shipment arrived in the Philippines, presumably due to a botched transaction between it and Halla Trading Co. Furthermore, Shin Yang's letters asking for the refund of container deposits highlight the fact that it was aware of the shipment and that it undertook preparations for the intended release of the shipment.

Respondent's Arguments

Echoing the CA decision, Shin Yang insists that MOF has no evidence to prove that it consented to take part in the contract of affreightment. Shin Yang argues that MOF miserably failed to present any evidence to prove that it was the one that made preparations for the subject shipment, or that it is an `actual shipping practice' that forwarders/consolidators as consignees are the ones that provide carriers details and information on the bills of lading.

Shin Yang contends that a bill of lading is essentially a contract between the shipper and the carrier and ordinarily, the shipper is the one liable for the freight charges. A consignee, on the other hand, is initially a stranger to the bill of lading and can be liable only when the bill of lading specifies that the charges are to be paid by the consignee. This liability arises from either a) the contract of agency between the shipper/consignor and the consignee; or b) the consignee's availment of the stipulation pour autrui drawn up by and between the shipper/ consignor and carrier upon the consignee's demand that the goods be delivered to it. 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.


The issue for resolution is whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof. Corollarily, whether respondent 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.

Our Ruling

Since the CA and the trial courts arrived at different conclusions, we are constrained to depart from the general rule that only errors of law may be raised in a Petition for Review on Certiorari under Rule 45 of the Rules of Court and will review the evidence presented.[11]

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.[12]

In Keng Hua Paper Products Co., Inc. v. Court of Appeals,[13] we held that once the bill of lading is received by the consignee who does not object to any terms or stipulations contained therein, it constitutes as an acceptance of the contract and of all of its terms and conditions, of which the acceptor has actual or constructive notice.

In Mendoza v. Philippine Air Lines, Inc.,[14] the consignee sued the carrier for damages but nevertheless claimed that he was never a party to the contract of transportation and was a complete stranger thereto. In debunking Mendoza's contention, we held that:

x x x First, he insists that the articles of the Code of Commerce should be applied; that he invokes the provisions of said Code governing the obligations of a common carrier to make prompt delivery of goods given to it under a contract of transportation. Later, as already said, he says that he was never a party to the contract of transportation and was a complete stranger to it, and that he is now suing on a tort or a violation of his rights as a stranger (culpa aquiliana). If he does not invoke the contract of carriage entered into with the defendant company, then he would hardly have any leg to stand on. His right to prompt delivery of the can of film at the Pili Air Port stems and is derived from the contract of carriage under which contract, the PAL undertook to carry the can of film safely and to deliver it to him promptly. Take away or ignore that contract and the obligation to carry and to deliver and right to prompt delivery disappear. Common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation. Said rights and obligations are created by a specific contract entered into by the parties. In the present case, the findings of the trial court which as already stated, are accepted by the parties and which we must accept are to the effect that the LVN Pictures Inc. and Jose Mendoza on one side, and the defendant company on the other, entered into a contract of transportation (p. 29, Rec. on Appeal). One interpretation of said finding is that the LVN Pictures Inc. through previous agreement with Mendoza acted as the latter's agent. When he negotiated with the LVN Pictures Inc. to rent the film 'Himala ng Birhen' and show it during the Naga town fiesta, he most probably authorized and enjoined the Picture Company to ship the film for him on the PAL on September 17th. Another interpretation is that even if the LVN Pictures Inc. as consignor of its own initiative, and acting independently of Mendoza for the time being, made Mendoza a consignee. [Mendoza made himself a party to the contract of transportaion when he appeared at the Pili Air Port armed with the copy of the Air Way Bill (Exh. 1) demanding the delivery of the shipment to him.] The very citation made by appellant in his memorandum supports this view. Speaking of the possibility of a conflict between the order of the shipper on the one hand and the order of the consignee on the other, as when the shipper orders the shipping company to return or retain the goods shipped while the consignee demands their delivery, Malagarriga in his book Codigo de Comercio Comentado, Vol. 1, p. 400, citing a decision of the Argentina Court of Appeals on commercial matters, cited by Tolentino in Vol. II of his book entitled 'Commentaries and Jurisprudence on the Commercial Laws of the Philippines' p. 209, says that the right of the shipper to countermand the shipment terminates when the consignee or legitimate holder of the bill of lading appears with such bill of lading before the carrier and makes himself a party to the contract. Prior to that time he is a stranger to the contract.

Still another view of this phase of the case is that contemplated in Art. 1257, paragraph 2, of the old Civil Code (now Art. 1311, second paragraph) which reads thus:

`Should the contract contain any stipulation in favor of a third person, he may demand its fulfillment provided he has given notice of his acceptance to the person bound before the stipulation has been revoked.'

Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier contains the stipulations of delivery to Mendoza as consignee. His demand for the delivery of the can of film to him at the Pili Air Port may be regarded as a notice of his acceptance of the stipulation of the delivery in his favor contained in the contract of carriage and delivery. In this case he also made himself a party to the contract, or at least has come to court to enforce it. His cause of action must necessarily be founded on its breach.[15] (Emphasis Ours)

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.[16]

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.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated March 22, 2006 dismissing petitioner's complaint and the Resolution dated May 25, 2006 denying the motion for reconsideration are AFFIRMED.


Carpio,* (Chairperson), Leonardo-De Castro,** Brion, and Abad, JJ., concur.

* Per Special Order No. 775 dated November 3, 2009.

** Additional member per Special Order No. 776 dated November 3, 2009.

[1] Rollo, pp. 9-38.

[2] Id. at 79.

[3] Id. at 80.

[4] Id. at 90-94; penned by Judge Estrellita M. Paas.

[5] Id. at 93.

[6] Id. at 94.

[7] Id. at 103-104; penned by Judge Priscilla C. Mijares.

[8] Id. at 40-45; penned by Associate Justice Eliezer R. De Los Santos and concurred in by Associate Justices Jose C. Reyes, Jr. and Arturo G. Tayag.

[9] Id. at 43-44.

[10] Id. at 48.

[11] Wallem Phils. Shipping Inc. v. Prudential Guarantee & Assurance Inc., 445 Phil. 136, 149 (2003).

[12] See Sea-Land Service v. Intermediate Appellate Court, 237 Phil. 531, 535-536 (1987).

[13] 349 Phil. 925, 933 (1998).

[14] 90 Phil. 836, 846 (1952).

[15] Id. at 845-847.

[16] Civil Code of the Philippines, Article 1311, 2nd paragraph: If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.

[17] Acabal v. Acabal, 494 Phil. 528, 541 (2005).

[18] New Testament Church of God v. Court of Appeals, 316 Phil. 330, 333 (1995).

[19] Condes v. Court of Appeals, G.R. No. 161304, July 27, 2007, 528 SCRA 339, 352.

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