MAGELLAN MANUFACTURING MARKETING

CORPORATION
vs. CA, ORIENT OVERSEAS CONTAINER LINES and
F.E. ZUELLIG, INC.
G.R. No. 95529
August 22, 1991
Doctrn!"
The holding in most jurisdictions has been that a shipper
who receies 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 hae
accepted it as correctl" stating the contract and to hae
assented to its terms
Facts"
#lainti!!$appellant %agellan %anu!acturers %ar&eting
'orp. (%%%') entered into a contract with 'hoju 'o. o!
*o&ohama, +apan, on %a" 2,, 19-,, to e.port 1/0,,,,
anahaw !ans !or and in consideration o! 12/,22,.,,. A
letter o! credit was issued to plainti!! %%%' b" the bu"er
as pa"ment. +ames 'u, the president o! %%%' then
contracted 2.3. 4uellig, a shipping agent, through its
solicitor, one %r. 5ing, to ship the anahaw !ans through
the other appellee, 6rient 6erseas 'ontainer 7ines, 8nc.,
(66'7) speci!"ing that he needed an on$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,.,, coered 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 priate
respondents be ordered to pa" whateer petitioner was
not able to earn !rom 'hoju 'o., 7td. The lower court
decided the case in !aor o! priate respondents. 8t
dismissed the complaint on the ground that petitioner had
gien 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"
1. =hether or not there was transshipment A *3;
2. =hether or not the bill o! lading which re!lected
the transshipment against the letter o! credit is
consented b" %%%' A *3;
Rato"
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
cone"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
cone"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"
priate 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 delier 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
proided that these are not contrar" to law,
morals, good customs, public order and
public polic". A bill o! lading usuall"
becomes e!!ectie upon its delier" 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 conclusie as to it, and it cannot
now be heard to den" haing assented thereto. 9ased
!rom the records, +ames 'u himsel!, in his capacit" as
president o! %%%', personall" receied 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 hae been receied on
board the essel which is to carr" the goods,
whereas a receied !or shipment bill o!
lading is one in which it is stated that the
goods hae been receied !or shipment with
or without speci!"ing the essel b" which the
goods are to be shipped. Receied !or
shipment bills o! lading are issued wheneer
conditions are not normal and there is
insu!!icienc" o! shipping space.
An on board bill o! lading is issued when the
goods hae been actuall" placed aboard the
ship with eer" 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
!aor 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, een assuming that b" a
liberal treatment o! the certi!ication it could hae the e!!ect
o! conerting the receied !or shipment bill o! lading into
an on board o! bill o! lading, as petitioner would hae us
beliee, such an e!!ect ma" be achieed 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 retroactiel", 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.
$%" M%&anna' Lo# O. D&aca(n)