Case Summary (G.R. No. 95529)
Facts of the Case
On May 20, 1980, MMMC contracted with Choju Co. from Yokohama, Japan, to export 136,000 anahaw fans, issuing a letter of credit for $23,220. A shipping agent, F.E. Zuellig, was hired to manage transportation through Orient Overseas Container Lines. Despite MMMC’s payment for freight and an issuance of a bill of lading, the shipment was rejected by Choju Co. due to an alleged failure to comply with the letter of credit’s terms, specifically regarding transshipment and documentation requirements.
Procedural History
Following the buyer's refusal to accept the fans, MMMC filed a complaint seeking damages based on F.E. Zuellig’s alleged failure to meet contractual obligations, while the respondents counter-claimed for freight and demurrage charges amounting to P298,150.93. The trial court dismissed MMMC's complaint while holding it liable for a reduced amount of P52,102.45, which MMMC subsequently appealed.
Legal Issues
MMMC argues that the private respondents violated the terms of the shipping agreement by allowing transshipment and failing to secure an on-board bill of lading, which the letter of credit explicitly prohibited. The central questions revolve around whether transshipment occurred and if MMMC can be held liable for the charges incurred.
Issue of Transshipment
The Court of Appeals upheld the trial court's finding that there was indeed transshipment, rejecting MMMC’s claim that the transfer of goods from one vessel to another (both owned by the same company) did not constitute transshipment under maritime law. The court elucidated that transshipment is determined by the physical transfer of cargo, regardless of vessel ownership.
Bill of Lading as a Contract
The bill of lading serves as both a receipt and a contract, binding the parties to its terms. The court emphasized that MMMC, having signed the bill of lading, was bound by its contents. The acceptance of the bill without objection raises the presumption of knowledge and agreement to its terms, significantly impairing MMMC's argument of any alleged mistake by the private respondents.
Parol Evidence Rule
The judgment highlighted the existence of the parol evidence rule, which maintains that a written contract cannot be contradicted by prior or contemporaneous oral agreements. MMMC’s attempts to present evidence suggesting a mistake in the documentation were deemed inadmissible due to procedural concerns, reinforcing the contract’s integrity.
Liability for Demurrage and Charges
The appellate court acknowledged that while MMMC was liable for certain charges, it rejec
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Case Citation
- Jurisprudence: 278 Phil. 118
- G.R. No. 95529
- Date of Decision: August 22, 1991
- Second Division
Parties Involved
- Petitioner: Magellan Manufacturing Marketing Corporation (MMMC)
- Respondents: Court of Appeals, Orient Overseas Container Lines, Inc. (OOCL), F.E. Zuellig, Inc.
Procedural Background
- The petitioner seeks a review of the decision of the Court of Appeals which affirmed in part the trial court's decision. The trial court dismissed the complaint filed by the petitioner and granted a counterclaim in favor of the respondents.
Factual Background
- On May 20, 1980, MMMC entered into a contract with Choju Co. of Yokohama, Japan, to export 136,000 anahaw fans for $23,220.00, secured by a letter of credit.
- MMMC contracted F.E. Zuellig for shipping through OOCL, requesting an on-board bill of lading with no transhipment allowed.
- On June 30, 1980, MMMC paid freight charges and received a bill of lading but later learned that the buyer refused payment due to the absence of an on-board bill of lading and the transhipment of goods.
- The goods were shipped back to Manila, leading to a demand from the respondents for payment of P246,043.43, which the petitioner contested by abandoning the cargo and seeking damages.