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MOF COMPANY v. SHIN YANG BROKERAGE CORPORATION

FACTS:

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped secondhand cars and other articles to Manila via the vessel Hanjin Busan 0238W. The bill of lading for the shipment, Bill of Lading No. HJSCPUSI14168303, prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin), named Shin Yang Brokerage Corp. (Shin Yang) as the consignee with the payment terms marked as "Freight Collect," indicating that the consignee was responsible for paying the freight and other charges amounting to PHP 57,646.00. After the shipment arrived in Manila on October 29, 2001, petitioner MOF Company, Inc. (MOF), the exclusive general agent of Hanjin in the Philippines, demanded payment of the charges from Shin Yang. Shin Yang refused to pay, arguing that it did not authorize the shipment, was merely a consolidator, did not receive the original bill of lading, and did not consent to its inclusion in the bill of lading.

On March 19, 2003, MOF filed a case for the collection of the sum of money before the Metropolitan Trial Court of Pasay City (MeTC Pasay), asserting that Shin Yang was a regular client who had caused the shipment, assured payment upon arrival, and was obligated under the "Freight Collect" arrangement stated in the bill of lading. MOF sought payment of PHP 57,646.00 plus damages and attorney's fees. Shin Yang, in defense, denied liability, claimed it was not involved in the shipment, and argued that MOF provided no evidence that it had agreed to pay the shipping charges or that it had authorized its name to be included in the bill of lading.

ISSUES:

  1. Whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof.

  2. Whether the respondent, who was not an agent of the shipper and 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.

RULING:

  1. 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.

  2. The respondent is not liable to pay the corresponding freight and handling charges because MOF failed to meet the required quantum of proof that Shin Yang (the respondent) authorized the shipment, received the bill of lading, or demanded the release of the cargo.

PRINCIPLES:

  1. A consignee can be bound by the stipulations of a bill of lading if there is a) a relationship of agency between the shipper or consignor and the consignee, or b) the consignee demands fulfillment of the stipulation of the bill of lading which was drawn up in its favor.

  2. 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.

  3. The burden of proof lies upon the party who asserts a fact, not upon the party who denies it.

  4. In civil cases, the party having the burden of proof must establish their case by preponderance of evidence.

  5. The right of the shipper to countermand the shipment terminates when the consignee or legitimate holder of the bill of lading appears and makes themselves a party to the contract.

  6. A third person may demand the fulfillment of a stipulation in a contract if they have given notice of their acceptance to the person bound before the stipulation has been revoked (Article 1311, second paragraph, of the Civil Code).