1) Novartis imported goods from South Korea that were shipped on the M/V Heung-A Bangkok owned by Heung-A Shipping Corporation. Upon arrival, the goods were found to be wet and damaged.
2) Despite Heung-A having a charter agreement with the company that loaded the goods on its ship, the court ruled that Heung-A remained responsible as the carrier for the goods.
3) As a common carrier, Heung-A is required to exercise extraordinary diligence in transporting goods and is presumed liable for any loss or damage unless it can prove it exercised such diligence.
1) Novartis imported goods from South Korea that were shipped on the M/V Heung-A Bangkok owned by Heung-A Shipping Corporation. Upon arrival, the goods were found to be wet and damaged.
2) Despite Heung-A having a charter agreement with the company that loaded the goods on its ship, the court ruled that Heung-A remained responsible as the carrier for the goods.
3) As a common carrier, Heung-A is required to exercise extraordinary diligence in transporting goods and is presumed liable for any loss or damage unless it can prove it exercised such diligence.
1) Novartis imported goods from South Korea that were shipped on the M/V Heung-A Bangkok owned by Heung-A Shipping Corporation. Upon arrival, the goods were found to be wet and damaged.
2) Despite Heung-A having a charter agreement with the company that loaded the goods on its ship, the court ruled that Heung-A remained responsible as the carrier for the goods.
3) As a common carrier, Heung-A is required to exercise extraordinary diligence in transporting goods and is presumed liable for any loss or damage unless it can prove it exercised such diligence.
July 23, 2014 EFFECT OF CHARTER PARTY Facts: Novartis Consumer Health Philippines, Inc. (NOVARTIS) imported from Jinsuk Trading Co. Ltd., (JINSUK) in South Korea, 19 pallets of 200 rolls of Ovaltine Power 18 Glaminated plastic packaging material. In order to ship the goods to the Philippines, JINSUK engaged the services of Protop Shipping Corporation (PROTOP), a freight forwarder likewise based in South Korea, to forward the goods to their consignee, NOVARTIS. Based on Bill of Lading issued by PROTOP, the cargo was on freight prepaid basis and on "shippers load and count" which means that the "container [was] packed with cargo by one shipper where the quantity, description and condition of the cargo is the sole responsibility of the shipper." Likewise stated in the bill of lading is the name Sagawa Express Phils., Inc., (SAGAWA) designated as the entity in the Philippines which will obtain the delivery contract. PROTOP shipped the cargo through Dongnama Shipping Co. Ltd. (DONGNAMA) which in turn loaded the same on M/V Heung-A Bangkok V-019 owned and operated by Heung-A Shipping Corporation, (HEUNG-A). Wallem Philippines Shipping, Inc. (WALLEM) is the ship agent of HEUNG-A in the Philippines. NOVARTIS insured the shipment with Philam Insurance Company, Inc. (PHILAM, now Chartis Philippines Insurance, Inc.) under All Risk Marine Open Insurance Policy against all loss, damage, liability, or expense before, during transit and even after the discharge of the shipment from the carrying vessel until its complete delivery to the consignees premises. The shipment reached NOVARTIS premises and was thereupon inspected by the companys Senior Laboratory Technician. Caparoso found the container van locked with its load intact. After opening the same, she inspected its contents and discovered that the boxes of the shipment were wet and damp. Caparoso rejected the entire shipment. All 17 pallets of the 184 cartons/rolls contained in the sea van were found wet/water damaged. NOVARTIS demanded indemnification for the lost/damaged shipment from PROTOP, SAGAWA, ATI and STEPHANIE but was denied. Insurance claims were, thus, filed with PHILAM which paid the insured value of the shipment. PHILAM sent a demand letter to WALLEM for reimbursement of the insurance claims paid to NOVARTIS. When WALLEM ignored the demand, PHILAM impleaded it as additional defendant in an Amended Complaint. PROTOP, SAGAWA, ATI, STEPHANIE, WALLEM and HEUNG-A denied liability for the lost/damaged shipment. RTC ruled that the damage to the shipment occurred onboard the vessel while in transit from Korea to the Philippines. The RTC discounted the slot charter agreement between HEUNG-A and DONGNAMA, and held that it did not bind the consignee who was not a party thereto. The RTC further observed that HEUNG-A failed to present evidence showing that it exercised the diligence required of a common carrier in ensuring the safety of the shipment. CA agreed with the RTC that PROTOP, HEUNG-A and WALLEM are liable for the damaged shipment. The fact that HEUNG-A was not a party to the bill of lading did not negate the existence of a contract of carriage between HEUNG-A and/or WALLEM and NOVARTIS. A bill of
lading is not indispensable for the creation of a contract of carriage. By agreeing
to transport the goods contained in the sea van provided by DONGNAMA, HEUNG-A impliedly entered into a contract of carriage with NOVARTIS with whom the goods were consigned. Hence, it assumed the obligations of a common carrier to observe extraordinary diligence in the vigilance over the goods transported by it. Further the Slot Charter Agreement did not change HEUNG-As character as a common carrier. Issue: Whether or not HEUNG-A remained responsible as the carrier, hence, answerable for the damages incurred by the goods received for transportation. Ruling: Yes. A charter party has been defined as a contract by which an entire ship, orsome principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A charter party has two types. First, it could be a contract of affreightment whereby the use of shipping space on vessels is leased in part or as a whole, to carry goods for others. The charter-party provides for the hire of vessel only, either for a determinate period of time (time charter) or for a single or consecutive voyage (voyage charter). The ship owner supplies the ships stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. The voyage remains under the responsibility of the carrier and it is answerable for the loss of goods received for transportation. The charterer is free from liability to third persons in respect of the ship. Second, charter by demise or bareboat charter under which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. The charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated and hence liable for damages or loss sustained by the goods transported. Clearly then, despite its contract of affreightment with DONGNAMA, HEUNG-A remained responsible as the carrier, hence, answerable for the damages incurred by the goods received for transportation. "Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render service with the greatest skill and foresight and to use all 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 requires." Common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence." Further, under Article 1742 of the Civil Code, even if the loss, destruction, or deterioration of the goods should be caused by the faulty nature of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.