Magellan Manufacturing v.

CA shipping as well as the seaworthiness of the vessel which

FACTS is to carry the goods.
 plaintiff-appellant Magellan Manufacturers Marketing Keng Hua v. CA
Corp. (MMMC) entered into a contract with Choju Co. of
Yokohama, Japan to export 136,000 anahaw fans Everett Steamship v. CA
 James Cu, MMMC then contracted F.E. Zuellig, a shipping
agent, through its solicitor, one Mr. King, to ship the Unsworth Transpo v. CA
anahaw fans
 The bank then credited the amount of US$23 ,220.00 National Union v. CA
covered by the letter of credit to appellant's account.
 when appellant's president James Cu, went back to the Provident Insurance v. CA
bank later, he was informed that the payment was refused
by the buyer allegedly because there was no on-board bill Bartolome v. Maranan
of lading, and there was a transshipment of goods
 the parties admitted that a shipment of 1,047 cartons of
136,000 pieces was loaded at Manila on board the MV
`Pacific Despatcher
ADR SHIPPING CASE:
RULING:
 An on board bill of lading is one in which it is stated that e Charter Party shows that there are only two parties to it, namely,
the goods have been received on board the vessel which is petitioner ADR and respondent Gallardo, without any mention of
to carry the goods, whereas a received for shipment bill of Stywood as the third-party beneficiary. The fact that Stywood, as
lading is one in which it is stated that the goods have been
buyer of the falcata logs, stands to benefit from the Charter Party
received for shipment with or without specifying the
does not, by itself, vest Stywood with the personality to take over the
vessel by which the goods are to be shipped. Received for
shipment bills of lading are issued whenever conditions charter agreement. That Stywood is a stranger to the Charter Party
are not normal and there is insufficiency of shipping space. becomes clear in view of the consistent findings of both courts below
29 that there is no evidence to support the claim concerning the alleged
 An on board bill of lading is issued when the goods have take-over agreement between Stywood and Gallardo.
been actually placed aboard the ship with every
The CA took notice of the fact that Stywood chartered a different
reasonable expectation that the shipment is as good as on
vessel, 27 the MV Adhiguna Dharma, in its February 11, 1988 Charter
its way. 30 It is, therefore, understandable that a party to
a maritime contract would require an on board bill of Party with ADR. Assuming that the alleged agreement is authentic,
lading because of its apparent guaranty of certainty of Stywood's authority, as therein provided, is limited to the use of the
Charter Vessel MV Pacific Breeze. It is, therefore, beyond Stywood's sdiligenceand vigilance with respect to the safety of the goods and
authority to use a vessel other than the MV Pacific Breeze. Further, the passengers they transport. Thus, common carriers are required
the ostensible agreement only empowers Stywood to take over the to render service with the greatest skill and foresight and 'to use all
February 5, 1988 Charter Party and not to enter into a new one. reasonable means to ascertain the nature and characteristics of the
goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature
PHILAMGEN CASE requires.'

A charter party has two types. First, it could be a contract of

affreightment whereby the use of shipping space on vessels is leased
PROTOP is solidarily liable with HEUNG-A for the lost/damaged
in part or as a whole, to carry goods for others. The charter-party
shipment in view of the bill of lading the former issued to NOVARTIS.
provides for the hire of vessel only, either for a determinate period
"A bill of lading is a written acknowledgement of the receipt of goods
of time (time charter) or for a single or consecutive voyage (voyage
and an agreement to transport and to deliver them at a specified
charter). The shipowner supplies the ship's stores, pay for the wages
place to a person named or on his or her order. It operates both as a
of the master and the crew, and defray the expenses for the
receipt and as a contract. It is a receipt for the goods shipped and a
maintenance of the ship. 37 The voyage remains under the
contract to transport and deliver the same as therein stipulated." 43
responsibility of the carrier and it is answerable for the loss of goods
PROTOP breached its contract with NOVARTIS when it failed to
received for transportation. The charterer is free from liability to third
deliver the goods in the same quantity, quality and description as
persons in respect of the ship.
stated in Bill of Lading No
Second, charter by demise or bareboat charter under which the
Hence, when there is a loss/damage to goods covered by contracts of
whole vessel is let to the charterer with a transfer to him of its entire
carriage from a foreign port to a Philippine port and in the absence a
command and possession and consequent control over its
shipper's declaration of the value of the goods in the bill of lading, as
navigation, including the master and the crew, who are his servants.
in the present case, the foregoing provisions of the COGSA shall
39 The charterer mans the vessel with his own people and becomes,
apply. The CA, therefore, did not err in ruling that HEUNG-A, WALLEM
in effect, the owner for the voyage or service stipulated and hence
and PROTOP's liability is limited to $500 per package or pallet
liable for damages or loss sustained by the goods transported
OANU v. CA
Clearly then, despite its contract of affreightment with DONGNAMA,
HEUNG-A remained responsible as the carrier, hence, answerable for Preliminarily, the thesis of petitioner that the aforestated fixture note
the damages incurred by the goods received for transportation. executed by Rafols and MADE was in derogation of the prohibition
"[C]ommon carriers, from the nature of their business and for against the subletting or sub-chartering of the vessel has been duly
reasons of public policy, are bound to observe extraordinary confuted by respondent court. It pointed out that Rafols did not, by
entering into said contract of transportation of the cement cargo, disappear; his rights and obligations vis-a-vis the lessor are not
thereby sublease the vessel. The possession, operation, and passed on to nor acquired by the sublessee.
management of the vessel was not transferred to MADE but
Herein petitioner, as owner of the vessel, has no lien on the cargo. A
remained with Rafols as the lessee or charterer. Rafols, as such
charter party may, among other classifications, be of two kinds: One
lessee, was the one who bound himself to transport, as he did
is where the owner agrees to carry a cargo which the charterer agrees
transport, the cargo of cement for a fixed price.
to provide, and the second is where there is an entire surrender by
the owner of the vessel to the charterer, who hires the vessel as one
hires a house, takes her empty, and provides the officers and
The act of the charterer in sub-chartering the vessel, in spite of a
provisions, and, in short, the entire outfit. In such a contract, the
categorical prohibition may be a violation of the contract, but the
charterer is substituted in place of the owner and becomes the owner
owner's right of recourse is against the original charterer, either for
for the voyage. 16 This second type is also known as a bareboat
rescission or fulfillment, with the payment of damages in either case.
charter or otherwise referred to as a demise of the vessel.
The obligation of contracts is limited to the parties making them and,
In a charter party of the second kind, not only the entire capacity of
ordinarily, only those who are parties to contracts are liable for their
the ship is let but the ship itself, and the possession is passed to the
breach. Parties to a contract cannot thereby impose any liability on
charterer. The entire control and management of it is given up to him.
one who, under its terms, is a stranger to the contract, and, in any
The general owner loses his lien for freight, but the lien itself is not
event, in order to bind a third person contractually, an expression of
destroyed, the charterer is substituted in his place, in whose favor
agent by such person is necessary
the lien continues to exist when goods are taken on freight. The
Also, herein petitioner is deemed to have ratified the supposed sub- general owner, however, has no remedy for the charter of his vessel
charter contract entered into by MADE and Rafols when he but his personal action on the covenants of the charter party. It is a
demanded the payment of the second freight installment as provided contract in which he trusts in the personal credit of the charterer.
in the agreement and, later, received the same by virtue of the
decision of the Court of First Instance of Cebu
Therefore, where the charter constitutes a demise of the ship and the
Now, even on petitioner's theory that there was a sublease, it must
charterer is the owner for the voyage, and that is the kind of charter
be stressed that in a sublease arrangement, the basic principles of
party involved in the instant case, the general owner has no lien on
which are applicable in the present case, there are two distinct leases
the cargo for the hire of the vessel, in the absence of an express
involved, that is, the principal lease and the sublease. There are two
provision therefor 19 as in the case at bar
juridical relationships which co-exist and are intimately related to
each other, but which are nonetheless distinct one from the other. In
such arrangement, the personality of the lessee qua lessee does not