SAMAR MINING vs. NORDEUTSCHER

This Transpo Law case arose from an importation made by SAMAR MINING. The cargo was 1 crate of Optima Welded Wedge Wire. The freight-in ship was named M/S Schwabenstein, a German cargo ship owned by NORDEUTSCHER.  Which was represented in the Philippines by its agent CF SHARP.  The shipment was covered by a bill of lading duly issued to consignee SAMAR MINING.  

I hope I made it clear, the consignee in this case is the shipper himself SAMAR MINING.  The cargo was aboard a German vessel. The carrier here or the ship-owner of course  is a German company,  which is NORDEUTSCHER. And wait,  there’s a 3^rd party here. The shipper Samar Mining had availed of the services of a bonded warehouse called AMCYL beforehand. 

So upon arrival of the vessel at the port of Manila, importation was unloaded and delivered in good order and condition to the bonded warehouse AMCYL as was agreed upon.  The goods however was never delivered to and received by consignee Samar at the port of destination which is Davao.

Wait let me get that straight. You see the following are the pertinent ports as provided in the Bill of Lading:

1. Port of Loading – GERMANY
2. Port of Discharge from Ship – MANILA
3. Port of Destination (Discharge of Goods) - DAVAO  

So as plainly indicated on the face of the Bill, vessel  M/S Schwabenstein is to transport the goods only up to Manila.  Thereafter, the goods are to be TRANSHIPPED by the carrier to the port of destination. So what on earth is NORDEUTSCHER thinking?

So there you go, letters of complaint therefore were sent to  NORDEUTSCHER, which failed to elicit the desired response.   SAMAR therefore filed a formal complaint for claims of damage against NORDEUTSCHER, its local agent CF SHARP, and warehouse AMCYL as 3^rd party defendant .  

The lower court CFI of Manila favored SAMAR, but however stated that  NORDEUTSCHER may recoup whatever they may pay Samar by enforcing the judgment against 3^rd Party Defendant AMCYL.  

So what is the ISSUE here:

The issue is whether appellants NORDS, SHARP, and AMCYL were liable for the loss of goods under the bill of lading.

HELD:

The answer is NO.  SC said the Bill of Lading operates both as a:  1. RECEIPT for the goods on board and 2. A CONTRACT to transport and deliver the same as stipulated therein.

Geez what happened?  Say what?

Let’s take a look at the Bill of Lading then.

You see,  in Section 1 of Paragraph 3 of the Bill of Lading the parties stipulated that:

“The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged, transshipped or forwarded. “

Question, was this a valid stipulation? The court said it’s VALID.  We are talking about what is not on carriers actual custody you see.  Therefore the carrier may be exempt from liability for loss or damage, for how can you oblige someone with something that is not in their actual custody?

Here’s an illustration I prepared to make it more clear to you:

Here’s the original deal. The 2 parties SAMAR and NORDEUTSCHER had a meeting of minds, the agreement was to transport and deliver the cargo from Germany to Davao. That is the intent. Manila is just a point of reference between Germany and Davao. And that a TRANSHIPMENT was bound to happen. Either NORDEUTSCHER reloads it from the warehouse into another ship they own which happen to be in the Manila port or hire another ship of local ownership to deliver the goods to the consignee in Davao.  So the bill of lading is very clear, we could infer from it that the shipper-consignee had no wish to obligate itself to handle any booking of further shipment other than the one starting from Germany. It is leaving it all to the carrier’s discretion. All it wanted to do was start the shipment in Germany and wait for the end of shipment in Davao.

If you look at my diagram you can see bold lines and broken lines right? The bold lines is where the carrier  NORDEUTSCHER has actual custody of the goods. And therefore must exercise extra-ordinary diligence as required by law. The broken lines are the moments it has no actual custody and control. And this does not require any kind of diligence, pursuant to what had been stipulated in the bill of lading. Right? So why oblige someone of something he has no control of?

And what the SC had decided upon is the part in the middle where the broken lines landed on the warehouse awaiting transshipment.  This is where this decision was based. SC said there was ACTUAL CONSTRUCTIVE DELIVERY during that time. The goods were discharged from the ship to the warehouse. Therefore the liability now shifts from the carrier to the warehouse. Meaning it is no longer in their custody and control. Therefore the requisite to exercise extra-ordinary diligence ceases, and they are no longer liable for loss or destruction of the goods. Why? Well basically by virtue of the above stipulation. (Section 1 of Paragraph 3 of the Bill of Lading).

Gets? 

MARTINI vs. MACONDRAY

Pardon my 'UN-BAR-LIKE' penmanship. This is my desperate 10 minute case digest at the backseat of my car. If push comes to shove where all else been taken into account and matters must be confronted, means I'll have to rely on this piece of crap in the recitation coming within an hour. Look at that, it's not even done due to time constraint. It need not be. The ruling is in my head.

Alright here we go, plaintif G. MARTINI Ltd.  is a Trading Company, alright?  MACONDRAY & Co., respondent in this case  is an Australian Steamship Company.. meaning we have a common carrier here which is a shipping company.   Martini had to transport 219 packages of chemical products from Manila to Japan. So, port of loading –Manila, port of destination – Kobe, Japan.  

It was a Friday morning when Martini applied to Macondray for a space on the steamship called Eastern. (Please be noted, steamships are obsolete, they are propelled by coal energy, like the RMS Titanic remember?  They heap coal at the inner bottom of the ship to produce steam to run the ship’s engine. The shipping industry have evolved since the early 19th century so practically it’s of no use today.  This is ahmm.. this case is dated 1916 so there you are, that explains everything,  this case actually happened 4 years after the sinking of the Titanic).

So the ship captain received the Shipping Order (don’t pay too much attention to it, its not the Bill of Lading,  its ahm.. its just a slip issued by the company which mainly constitutes extending authority to the one in-charge of the ship to receive the cargo aboard, it’s more like a job order or something) Once the Shipping Order is issued, shipment starts to be loaded, and then the ship issues something what you call a Mate’s Receipt to the shipper, which in this case is Martini. The thing was, the receipt did not reach Martini’s hand till Monday night.  BTW - The receipt had a stamp on its face that said “ON DECK AT SHIPPER’S RISK”. Which confirmed the ship captain had decided to merely carry it on deck rather than under the hatches as was requested. 

But beforehand the day of his application on Friday, Martini expressed desire to the Macondray company if he could obtain the Bill of Lading on Saturday morning in order that he might negotiate them at the bank. So a request was made by Martini to Macondray for the delivery of the Bill of Lading on that day. But to effectuate this, Martini was required to enter into a written obligation, something you call a Letter of Guarantee.   So in other words we established 3 things here. 1. That it isn’t Martini who was paying for the shipment but the bank. 2. That the cargo is being loaded on the ship while Martini was simultaneously taking care of shipment and bank documents. 3.  Saturday during the 1900s unlike today was a bank day. (Geez I didn’t know that, so Saturday is still work huh? bummer)  

So in conformity with the purpose of this document the Bills of Lading were  issued, and the negotiable copies were on the same day negotiated at the bank by plaintiff Martini for 90% of the invoice value of the goods. So this means it didn't actually reached Saturday when Martini got what he asked for, he got it even earlier, So clearly these are two parties that comply right away to each other's documentary need. But of course there's a defect somewhere, had there not then we're not looking at a legal case here.  

Now here comes the controversy.  The Bills of Lading were issued right? Right just in time when the shipper needed it.  But the thing was, the Bills of Lading contained on their face the conspicuously stenciled words “ON DECK AT SHIPPER’S RISK.” 

So Martini upon seeing the words  all at once called the attention of S. Codina, the Martini employee whose primary duty was to attend to all shipments of merchandise and cargo related documents. 

And so through Codina, Martini sent Macondray a letter  stating the following :            

“It is the prevailing practice that, whenever a cargo is being carried on deck, ship owners  or agents give advice of it to shippers previous to shipment taking place, and obtain their consent to it. If we had been advised of it, shipment would not have been effected by us. We regret very much this occurrence, but you will understand that in view of your having acted in this case on your own responsibility, we shall have to hold you amenable for any consequences that may be caused from your action.” (hadnt it occured to you.. Old English sounds and even looks more compelling especially when it's used in law)

So Macondray called Codina by phone saying they:

“..could not accept the cargo  for transportation otherwise (meaning under the hatches) than on deck and that if Martini were dissatisfied, the cargo could be discharged from the ship.”

You must understand, the content of cargo were CHEMICALS. I dunno but maybe having found out from the Shipping Order and from ocular inspection that such cargo constitute hazardous material. So carrying it under hatches renders a greater risk on the ship itself than on deck on open air, should it cause fire or anything else for that matter.

So it's clear, Macondray opted to observe ORDINARY DILIGENCE (Diligence of a Good Father of a Family) with regard to the Martini cargo, other than the usual EXTRA-ORDINARY DILIGENCE basically required of all common carriers. 

Well there is substantial conformity with respect to the time of the conversation by telephone and the nature of the message which Macondray & Co. intended to convey. But in conclusion, it seems clear enough that, although Martini would have greatly preferred for the cargo to be carried under the hatches, they nevertheless consented for it to go on deck.

So the goods were embarked at Manila on the steamship Eastern and were carried to Kobe on the deck of that ship. Upon arrival at the port of destination they found out that the chemicals which comprised the shipment had suffered damage from the effects of both fresh and salt water.

Therefore an action was instituted by Martini to recover the amount of the damage (I think I should add here ‘thereby occasioned’ so It’d look something like I’m in the 1912 or somethin’…. I’M THE KING OF THE WOORRLD!!) 

The Court of First Instance of Manila’s judgment was rendered in favor of Martini for the sum of P34,997.56, with interest from 24 March 1917, and costs of the proceeding.

ISSUE:

Do you think Macondray should be held liable?

HELD:

NO. (I'm pasting from BerneGuerrero's Haystack now)

1. Damage was caused by water
The damage was caused by water, either falling in the form of rain or splashing aboard by the action of wind and waves.

2. Paragraph 19 of the several bills of lading issued for transportation of the cargo
Paragraph 19 of the several bills of lading issued for transportation of the cargo reads “(19) Goodssigned for on this bill of lading as carried on deck are entirely at shipper’s risk, whether carried on deck or under hatches, and the steamer is not liable for any loss or damage from any cause whatever.“

3. Shipper ordinarily produce mate’s receipt to agents of ship’s company
Ordinarily the shipper is supposed to produce the mate’s receipt to the agents of the ship’s company, who thereupon issue the bill of lading to the shipper. When, however, the shipper desires to procure the bill of lading before he obtains the mate’s receipt, it is customary for him to enter into a written obligation, binding himself, among other things, to abide by the terms of the mate’s receipt. Herein,

4. Contents of the “Letter of Guarantee”
The “Letter of Guarantee” dated 16 September 1916, is of the tenor “In consideration of your signing us clean B/L for the undermentioned cargo per above steamer to be shipped on or under deck at ship’s option, for Kobe without production of the mate’s receipt, we hereby guarantee to hold you free from any responsibility by your doing so, and for any expense should the whole or part of the cargo be shut out, or otherwise, and to hand you said mate’s receipt as soon as it reaches us and to abide by all clauses and notations on the same.”

5. Martini did nothing to discharge cargo
In order to get the cargo off certain formalities were necessary which could not be accomplished, as for instance, the return of the mate’s receipt (which had not yet come to Martini’s hands), the securing of a permit from the customs authorities, and the securing of an order of discharge from the steamship company. In view of the fact that Martini did nothing whatever looking towards the discharge of the cargo, not even so much as to notify Macondray that the cargo must come off, the proof relative to the practicability of discharge is inconclusive. If Martini had promptly informed Macondray of their resolve to have the cargo discharged, and the latter had nevertheless permitted the ship to sail without discharging it, there would have been some ground for Martini’s contention that its consent had not been given for the goods to be carried on deck. Needless to say the Court attached no weight to the statement of Codina that he was unable to get Macondray by telephone in order to communicate directions for the discharge of the cargo. 

(The rest you can get it from there, here's the link, just hunt it down)
https://berneguerrero.files.wordpress.com/2012/08/2004hs198_transpo.pdf

PLDT stockholder GAMBOA vs. Finance Secretary TEVES

I hope I don’t strike you as an Erudite, like a person who is learned. I AM NOT. Not even a Divergent. I'm a Dauntless. And I don't like long thinking. So I try to quickly grasp everything about anything in one sitting, and sadly mostly in an overview.  Even when I write I think it manifests it self a bit recklessly even though how much I wanted to hide it. And I'm not a writer perse. I’m just a blogger who writes at least good that’s all, and say what he feels to at least within a threshold of what is generally ethical. Anyone can do that.

And I’m not the nerdy type either, although I'm a geek most of the time co'z I'm a little bit techie and internet savvy, but I got my share of bad grades as well. I procrastinate relying on my push-comes-to-shove 'mutant' learning abilities, I only study during exams, and I’m an excellent crammer. Like it all ferociously crumple up inside my head in so short a time and sort of automatically downloads it self when I need it, only inevitably some in disarray.  I’m not the studious type even. Although I could read a book in one sitting, if the facts interests me. And it’s only just this year after so many years of having 20/20 vision that the doctors slid a pair of glasses on me and they never even were thick glasses but just take-off-in-a-normal-day reading glasses.  I'm far-sited.  So, don't feel intimidated okay? Who knows, we might be after all kindred spirits.

Truth is I should’ve taken the bar what 5 or 6 years ago? So in a bird's eye-view technically that would make me certified failure.  I should’ve been done with this sooner had I come to my senses earlier when I was a bit not older that this is really what I wanted.  And right now I feel like I’m slowly inching, dragging towards the finish line like a boring itchy worm. I hope I get there somehow, or at least. And who knows come to think of it, chances are you might be someone that's actually better than me, in so many ways than one when we actually get there. Oh do we digress? :) Sorry. Alright here it goes.

This is a CORPO case. Corpo meaning corporation. It is also somehow tackled in Transportation Law when it comes to discussing the foreign ownership issue of a public utility.  The law particularly invoked in this case is Sec. 11 of Art. 12 of the 1987 Constitution, which provides the limitation of foreign ownership of capital stocks to not more than 40%.

The exact provision states:

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens;..  

So meaning.. adhering to this well settled principle, the remaining 40% may be foreign owned. This is ah... the bone of contention here is the word "CAPITAL" in this constitutional provision.

The action in this corporate drama started when above petitioner Wilson Gamboa, a Filipino  PLDT stockholder  filed a petition to nullify the sale of shares of stocks of PTIC, (that's  Philippine Telecommunications Investment Corporation) by the government, who effected the sale through IPC, (the Inter-Agency Privatization Council.) The transfer of the ownership of  the shares was done through a conditional sale via a public bidding. And the sale was awarded to MPAH, (Metro Pacific Assets Holdings, Inc.), an affiliate of First Pacific Company Limited (First Pacific), which is a Hong Kong-based investment management and holding company. In other words, were talking about a foreign company purchaser here.

Let me give you a rundown on the history of this case so you can understand it fully:

In (1928) : The Philippine legislature enacted Legislative Act No. 3436 which granted PLDT franchise and the right to engage in telecommunication business  alright? (grabe buhay na pala PLDT noon? pano sila nagcocommunicate?  dalawang lata na may tale?... oh well I guess its understandable, the brilliant dude Alex Graham Bell invented the telephone in around 1876? The invention must have probably evolved when it reached Philippine soil, although I just wonder if our predecessors were able to utilize the earliest model, the one that you stuck this thing in your ear and the other one in your mouth and say 'greetings!' Lol)

Alright, in (1969): GTE (not the VW GTE hybrid car ah) General Telephone Electronics, (the one that merged with Bell Atlantic. GTE is the parent company that spearheaded subsidiaries like Verizon and the Canadian company Telus? Yeah like the BPO outsourcing company.. you know that building you see across the Araneta Coliseum?) GTE is an American firm and during that time was one of the major PLDT stockholders. So what happened was it sold the 26% of its Outstanding Common Shares to PTIC. Outstanding Common Shares, meaning were talking about the whole shares of stocks of PLDT okay?. (Parang... kase the whole PLDT shares wasn't owned individually but severally like most of the stocks right? Like a conglomerate.) And the 26% OComS which was owned by the Americans was sold to a Filipino company which is PTIC,  (Philippine Telecommunications Investment Corporation,  which I think was majorly owned by the Cojuancos.)

Now in (1977): PHI (Prime Holdings Inc. ) was incorporated which I think was surreptitiously created since it subsequently became owner  of  111 thousand shares of PTIC by virtue of a Deed of Assignment executed by PTIC then stockholder Ramon Cojuanco. (I think this was during the time of Marcos when a lot of clandestine transfer of ownership were being effected, but of course the anti-Marcoses saw all that). 

So in (1986): after the EDSA Revolution. The PCGG was created and it sequestered this 111 Thousand shares which was later declared by court as government owned. The 111 Thousand shares by the way comprises 46% of the Outstanding Capital Stock of PTIC. OCapS meaning like were talking about Total Capital Shares of Stocks meaning may be owned within the individual shares of companies that comprised the PLDT stockholder companies. Gets? Now here comes the foreign company that started the issue entering the picture..

In (1999): First Pacific a Hong Kong based investment management and holding company acquired the remaining 54% Outstanding Capital Stocks of PTIC...  so were talking about OCapS here alright? as opposed to OComS. This acquisition simply means a foreign company had just bought himself in and became a player as one of the stockholders of PLDT through PTIC stocks. Crystal?

Now (2006): We now all know that 46% of OCapS of PTIC is now government owned right?  PCGG sequestered the assets remember?   Now, the government wanted to dispose these shares in order to privatize it, so through the IPC (Inter-Agency Privatization Council) it announced a public bidding where thereafter only 2 bidders submitted a bid.  Parallax Ventures and PAN ASIA.  Parallax won with a  bid of P25 Billion.

Now watch out here comes that foreign company First Pacific once again. As a PLDT stockholder and one of the stock players, it entered the picture once again eyeing that remaining 46%  PTIC shares... in other words foreign owned First Pacific wanted to own PTIC by 100% alright? So what it did was it announced that it will exercise its Right of First Refusal as a PTIC stockholder (it has a right because it owned the 54% PTIC shares of stocks remember?) and it offered to buy the remaining 46% by matching the bid price of Parallax.

But in (2007): First Pacific failed to do so and therefore not complying with the deadline. So it was opted out by the government seller.  But since the company was insistent First Pacific thru its subsidiary company MPAH entered into a conditional sale with the government and purchased the 46% for P25 Billion which resulted to an increase of First Pacific's stock ownership, rendering PTIC as wholly foreign owned. (Kaya pag magtatayo ka ng kompanya, magtayo ka ng subsidiary di ba? or affiliates through acquired assets.. to do the dirty work :))

Now this is primarily the reason for this petition. PLDT stock holder Wilson Gamboa saw all that and he now questions the sale between the government and MPAH (First Pacific) alleging that the sale resulted to an Indirect Sale which violated the 40% foreign capital ownership limitation of Sec. 11 of Art. 12 of the 1987 Constitutional provision.

Finance Secretary Margarito Teves who was the prime respondent in this case together with the then PCGG Commissioner Abcede defended the sale and alleged that First Pacific's intended acquisition of government's 111 Thousand PTIC shares resulting in 100% ownership of PTIC WILL NOT VIOLATE the 40% constitutional limit on foreign ownership   of public utility since PTIC holds only 13% of the total OUTSTANDING COMMON SHARES of PLDT. (OComS remember?)

ISSUE:

Whether the term CAPITAL in Sec. 11 Art. 12 of  Consti refer to the total common shares only, or to the total outstanding capital stocks of PLDT.

RULING:

The petition is PARTLY MERITORIOUS.

The Court said that it is not a trier of facts. That factual questions raised by petitioner are generally beyond the court jurisdiction. So adhering to this well settled principle. the court said it will confine its resolution solely on the threshold of purely legal matter on the interpretation of the term 'CAPITAL'. So it was a question of law after all. (After all the hoopla and bombardization of facts Lol.)

The Court partly granted the petition and held that the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock entitled to vote in the election of directors of a public utility, i.e., to the total common shares in PLDT.

Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to common shares. 

However, if the preferred shares also have the right to vote in the election of directors, then the term “capital” shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock that can vote in the election of directors.