Republic of the Philippines Respondents explained that it is a standard maritime practice, when

SUPREME COURT immediate delivery is of the essence, for the shipper to request or
Manila instruct the carrier to deliver the goods to the buyer upon arrival at
SECOND DIVISION the port of destination without requiring presentation of the bill of
G.R. No. 125524, August 25, 1999 lading as that usually takes time. As proof thereof, respondents
BENITO MACAM doing business under the name and style BEN- apprised the trial court that for the duration of their two-year
MAC ENTERPRISES, petitioner, business relationship with petitioner concerning similar shipments
vs. to GPC deliveries were effected without presentation of the bills of
COURT OF APPEALS, CHINA OCEAN SHIPPING CO., and/or WALLEM lading.4 Respondents advanced next that the refusal of PAKISTAN
PHILIPPINES SHIPPING, INC.,respondents. BANK to pay the letters of credit to SOLIDBANK was due to the
latter's failure to submit a Certificate of Quantity and Quality.
BELLOSILLO, J.: Respondents counterclaimed for attorney's fees and costs of suit.
On 4 April 1989 petitioner Benito Macam, doing business under the
name and style Ben-Mac Enterprises, shipped on board the On 14 May 1993 the trial court ordered respondents to pay, jointly
vessel Nen Jiang, owned and operated by respondent China Ocean and severally, the following amounts: (1) P546,033.42 plus legal
Shipping Co., through local agent respondent Wallem Philippines interest from 6 April 1989 until full payment; (2) P10,000.00 as
Shipping, Inc. (hereinafter WALLEM), 3,500 boxes of watermelons attorney's fees; and, (3) the costs. The counterclaims were dismissed
valued at US$5,950.00 covered by Bill of Lading No. HKG 99012 and for lack of merit.5 The trial court opined that respondents breached
exported through Letter of Credit No. HK 1031/30 issued by National the provision in the bill of lading requiring that "one of the Bills of
Bank of Pakistan, Hongkong (hereinafter PAKISTAN BANK) and 1,611 Lading must be surrendered duly endorsed in exchange for the
boxes of fresh mangoes with a value of US$14,273.46 covered by Bill goods or delivery order," when they released the shipment to GPC
of Lading No. HKG 99013 and exported through Letter of Credit No. without presentation of the bills of lading and the bank guarantee
HK 1032/30 also issued by PAKISTAN BANK. The Bills of Lading that should have been issued by PAKISTAN BANK in lieu of the bills
contained the following pertinent provision: "One of the Bills of of lading. The trial court added that the shipment should not have
Lading must be surrendered duly endorsed in exchange for the been released to GPC at all since the instruction contained in the
goods or delivery order.1 The shipment was bound for Hongkong telex was to arrange delivery to the respective consignees and not to
with PAKISTAN BANK as consignee and Great Prospect Company of any party. The trial court observed that the only role of GPC in the
Kowloon, Hongkong (hereinafter GPC) as notify party. transaction as notify party was precisely to be notified of the arrival
of the cargoes in Hongkong so it could in turn duly advise the
On 6 April 1989, per letter of credit requirement, copies of the bills consignee.
of lading and commercial invoices were submitted to petitioner's
depository bank, Consolidated Banking Corporation (hereinafter Respondent Court of Appeals appreciated the evidence in a different
SOLIDBANK), which paid petitioner in advance the total value of the manner. According to it, as established by previous similar
shipment of US$20,223.46.1 transactions between the parties, shipped cargoes were sometimes
âwphi1.nêt actually delivered not to the consignee but to notify party GPC
Upon arrival in Hongkong, the shipment was delivered by without need of the bills of lading or bank guarantee.6 Moreover,
respondent WALLEM directly to GPC, not to PAKISTAN BANK, and the bills of lading were viewed by respondent court to have been
without the required bill of lading having been surrendered. properly superseded by the telex instruction and to implement the
Subsequently, GPC failed to pay PAKISTAN BANK such that the latter, instruction, the delivery of the shipment must be to GPC, the real
still in possession of the original bills of lading, refused to pay importer/buyer of the goods as shown by the export invoices,7 and
petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid not to PAKISTAN BANK since the latter could very well present the
petitioner the value of the shipment, it demanded payment from bills of lading in its possession; likewise, if it were the PAKISTAN
respondent WALLEM through five (5) letters but was refused. BANK to which the cargoes were to be strictly delivered it would no
Petitioner was thus allegedly constrained to return the amount longer be proper to require a bank guarantee. Respondent court
involved to SOLIDBANK, then demanded payment from respondent noted that besides, GPC was listed as a consignee in the telex. It
WALLEM in writing but to no avail. observed further that the demand letter of petitioner to
respondents never complained of misdelivery of goods. Lastly,
On 25 September 1991 petitioner sought collection of the value of respondent court found that petitioner's claim of having reimbursed
the shipment of US$20,223.46 or its equivalent of P546,033.42 from the amount involved to SOLIDBANK was unsubstantiated. Thus, on
respondents before the Regional Trial Court of Manila, based on 13 March 1996 respondent court set aside the decision of the trial
delivery of the shipment to GPC without presentation of the bills of court and dismissed the complaint together with the
lading and bank guarantee. counterclaims.8 On 5 July 1996 reconsideration was denied.9

Respondents contended that the shipment was delivered to GPC Petitioner submits that the fact that the shipment was not delivered
without presentation of the bills of lading and bank guarantee per to the consignee as stated in the bill of lading or to a party
request of petitioner himself because the shipment consisted of designated or named by the consignee constitutes a misdelivery
perishable goods. The telex dated 5 April 1989 conveying such thereof. Moreover, petitioner argues that from the text of the telex,
request read — assuming there was such an instruction, the delivery of the shipment
AS PER SHPR'S REQUEST KINDLY ARRANGE DELIVERY OF A/M SHIPT without the required bill of lading or bank guarantee should be
TO RESPECTIVE CNEES WITHOUT PRESENTATION OF OB/L2 and bank made only to the designated consignee, referring to PAKISTAN
guarantee since for prepaid shipt ofrt charges already fully paid our BANK.
end . . . .3

1
We are not persuaded. The submission of petitioner that "the fact "for prepaid shipment charges already fully paid." Petitioner was
that the shipment was not delivered to the consignee as stated in named therein as shipper and GPC as consignee with respect to Bill
the Bill of Lading or to a party designated or named by the consignee of Lading Nos. HKG 99012 and HKG 99013. Petitioner disputes the
constitutes a misdelivery thereof" is a deviation from his cause of existence of such instruction and claims that this evidence is self-
action before the trial court. It is clear from the allegation in his serving.
complaint that it does not deal with misdelivery of the cargoes but From the testimony of petitioner, we gather that he has been
of delivery to GPC without the required bills of lading and bank transacting with GPC as buyer/importer for around two (2) or three
guarantee — (3) years already. When mangoes and watermelons are in season,
6. The goods arrived in Hongkong and were released by the his shipment to GPC using the facilities of respondents is twice or
defendant Wallem directly to the buyer/notify party, Great Prospect thrice a week. The goods are released to GPC. It has been the
Company and not to the consignee, the National Bank of Pakistan, practice of petitioner to request the shipping lines to immediately
Hongkong, without the required bills of lading and bank guarantee release perishable cargoes such as watermelons and fresh mangoes
for the release of the shipment issued by the consignee of the goods through telephone calls by himself or his "people." In transactions
. . . .10 covered by a letter of credit, bank guarantee is normally required by
the shipping lines prior to releasing the goods. But for buyers using
Even going back to an event that transpired prior to the filing of the telegraphic transfers, petitioner dispenses with the bank guarantee
present case or when petitioner wrote respondent WALLEM because the goods are already fully paid. In his several years of
demanding payment of the value of the cargoes, misdelivery of the business relationship with GPC and respondents, there was not a
cargoes did not come into the picture — single instance when the bill of lading was first presented before the
release of the cargoes. He admitted the existence of the telex of 3
We are writing you on behalf of our client, Ben-Mac Enterprises who July 1989 containing his request to deliver the shipment to the
informed us that Bills of Lading No. 99012 and 99013 with a total consignee without presentation of the bill of lading15 but not the
value of US$20,223.46 were released to Great Prospect, Hongkong telex of 5 April 1989 because he could not remember having made
without the necessary bank guarantee. We were further informed such request.
that the consignee of the goods, National Bank of Pakistan,
Hongkong, did not release or endorse the original bills of lading. As a Consider pertinent portions of petitioner's testimony —
result thereof, neither the consignee, National Bank of Pakistan, Q: Are you aware of any document which would indicate or show
Hongkong, nor the importer, Great Prospect Company, Hongkong, that your request to the defendant Wallem for the immediate
paid our client for the goods . . . .11 release of your fresh fruits, perishable goods, to Great Prospect
without the presentation of the original Bill of Lading?
At any rate, we shall dwell on petitioner's submission only as a A: Yes, by telegraphic transfer, which means that it is fully paid. And
prelude to our discussion on the imputed liability of respondents I requested immediate release of the cargo because there was
concerning the shipped goods. Article 1736 of the Civil Code immediate payment.
provides — Q: And you are referring, therefore, to this copy Telex release that
you mentioned where your Company's name appears Ben-Mac?
Art. 1736. The extraordinary responsibility of the common carriers Atty. Hernandez: Just for the record, Your Honor, the witness is
lasts from the time the goods are unconditionally placed in the showing a Bill of Lading referring to SKG (sic) 93023 and 93026 with
possession of, and received by the carrier for transportation until Great Prospect Company.
the same are delivered, actually or constructively, by the carrier to Atty. Ventura:
the consignee, or to the person who has a right to receive them, Q: Is that the telegraphic transfer?
without prejudice to the provisions of article 1738.12 A: Yes, actually, all the shippers partially request for the immediate
release of the goods when they are perishable. I thought Wallem
We emphasize that the extraordinary responsibility of the common Shipping Lines is not neophyte in the business. As far as LC is
carriers lasts until actual or constructive delivery of the cargoes to concerned, Bank guarantee is needed for the immediate release of
the consignee or to the person who has a right to receive them. the goods . . . .15
PAKISTAN BANK was indicated in the bills of lading as consignee Q: Mr. Witness, you testified that if is the practice of the shipper of
whereas GPC was the notify party. However, in the export invoices the perishable goods to ask the shipping lines to release
GPC was clearly named as buyer/importer. Petitioner also referred immediately the shipment. Is that correct?
to GPC as such in his demand letter to respondent WALLEM and in A: Yes, sir.
his complaint before the trial court. This premise draws us to Q: Now, it is also the practice of the shipper to allow the shipping
conclude that the delivery of the cargoes to GPC as buyer/importer lines to release the perishable goods to the importer of goods
which, conformably with Art. 1736 had, other than the consignee, without a Bill of Lading or Bank guarantee?
the right to receive them14 was proper. A: No, it cannot be without the Bank Guarantee.
Atty. Hernandez:
The real issue is whether respondents are liable to petitioner for Q: Can you tell us an instance when you will allow the release of the
releasing the goods to GPC without the bills of lading or bank perishable goods by the shipping lines to the importer without the
guarantee. Bank guarantee and without the Bill of Lading?
A: As far as telegraphic transfer is concerned.
Respondents submitted in evidence a telex dated 5 April 1989 as Q: Can you explain (to) this Honorable Court what telegraphic
basis for delivering the cargoes to GPC without the bills of lading and transfer is?
bank guarantee. The telex instructed delivery of various shipments A: Telegraphic transfer, it means advance payment that I am already
to the respective consignees without need of presenting the bill of fully paid . . . .
lading and bank guarantee per the respective shipper's request since
2
Q: Mr. Macam, with regard to Wallem and to Great Prospect, would Apart from the foregoing obstacles to the success of petitioner's
you know and can you recall that any of your shipment was released cause, petitioner failed to substantiate his claim that he returned to
to Great Prospect by Wallem through telegraphic transfer? SOLIDBANK the full amount of the value of the cargoes. It is not far-
A: I could not recall but there were so many instances sir. fetched to entertain the notion, as did respondent court, that he
Q: Mr. Witness, do you confirm before this Court that in previous merely accommodated SOLIDBANK in order to recover the cost of
shipments of your goods through Wallem, you requested Wallem to the shipped cargoes from respondents. We note that it was
release immediately your perishable goods to the buyer? SOLIDBANK which initially demanded payment from respondents
A: Yes, that is the request of the shippers of the perishable goods . . . through five (5) letters. SOLIDBANK must have realized the absence
.16 of privity of contract between itself and respondents. That is why
Q: Now, Mr. Macam, if you request the Shipping Lines for the petitioner conveniently took the cudgels for the bank.
release of your goods immediately even without the presentation of
OBL, how do you course it? In view of petitioner's utter failure to establish the liability of
A: Usually, I call up the Shipping Lines, sir . . . .17 respondents over the cargoes, no reversible error was committed by
Q: You also testified you made this request through phone calls. respondent court in ruling against him.
Who of you talked whenever you made such phone call?
A: Mostly I let my people to call, sir. (sic) WHEREFORE, the petition is DENIED. The decision of respondent
Q: So everytime you made a shipment on perishable goods you let Court of Appeals of 13 March 1996 dismissing the complaint of
your people to call? (sic) petitioner Benito Macam and the counterclaims of respondents
A: Not everytime, sir. China Ocean Shipping Co. and/or Wallem Philippines Shipping, Inc.,
Q: You did not make this request in writing? as well as its resolution of 5 July 1996 denying reconsideration, is
A: No, sir. I think I have no written request with Wallem . . . .18 AFFIRMED.1âwphi1.nêt
SO ORDERED.
Against petitioner's claim of "not remembering" having made a Mendoza, Quisumbing and Buena, JJ., concur.
request for delivery of subject cargoes to GPC without presentation
of the bills of lading and bank guarantee as reflected in the telex of 5
April 1989 are damaging disclosures in his testimony. He declared
that it was his practice to ask the shipping lines to immediately
release shipment of perishable goods through telephone calls by
himself or his "people." He no longer required presentation of a bill
of lading nor of a bank guarantee as a condition to releasing the
goods in case he was already fully paid. Thus, taking into account
that subject shipment consisted of perishable goods and SOLIDBANK
pre-paid the full amount of the value thereof, it is not hard to
believe the claim of respondent WALLEM that petitioner indeed
requested the release of the goods to GPC without presentation of
the bills of lading and bank guarantee.

The instruction in the telex of 5 April 1989 was "to deliver the
shipment to respective consignees." And so petitioner argues that,
assuming there was such an instruction, the consignee referred to
was PAKISTAN BANK. We find the argument too simplistic.
Respondent court analyzed the telex in its entirety and correctly
arrived at the conclusion that the consignee referred to was not
PAKISTAN BANK but GPC —

There is no mistake that the originals of the two (2) subject Bills of
Lading are still in the possession of the Pakistani Bank. The appealed
decision affirms this fact. Conformably, to implement the said telex
instruction, the delivery of the shipment must be to GPC, the notify
party or real importer/buyer of the goods and not the Pakistani Bank
since the latter can very well present the original Bills of Lading in its
possession. Likewise, if it were the Pakistani Bank to whom the
cargoes were to be strictly delivered, it will no longer be proper to
require a bank guarantee as a substitute for the Bill of Lading. To
construe otherwise will render meaningless the telex instruction.
After all, the cargoes consist of perishable fresh fruits and
immediate delivery thereof to the buyer/importer is essentially a
factor to reckon with. Besides, GPC is listed as one among the
several consignees in the telex (Exhibit 5-B) and the instruction in
the telex was to arrange delivery of A/M shipment (not any party) to
respective consignees without presentation of OB/L and bank
guarantee . . . .20