Case Summary (G.R. No. 132284)
Factual Background
Between 1979 and 1980, goods of Telengtan Brothers & Sons, Inc. were shipped from U.S. ports to Manila in container vans aboard vessels of United States Lines, Inc. The Far East Conference tariff in effect fixed a ten-day free period for delivery of containerized cargo, after which demurrage charges accrued. Upon arrival, the container vans containing goods under seven Bills of Lading were stripped and the contents deposited in bonded warehouses. The removals were effected pursuant to permission granted by the Bureau of Customs.
Trial Court Proceedings
United States Lines, Inc. sued Telengtan Brothers & Sons, Inc. for unpaid demurrage, alleging P94,000.00 due. Telengtan denied liability and filed a compulsory counterclaim seeking P123,738.04 for damages allegedly arising from respondent’s stripping of containers and warehousing of goods. The Regional Trial Court found for United States Lines, assessed demurrage of P99,408.00 with legal interest from filing, awarded attorney’s fees equal to twenty percent of the total sum due, and granted exemplary damages of P80,000.00. The trial court dismissed the counterclaim.
Court of Appeals’ Decision
The CA affirmed the trial court in toto. The appellate court agreed that demurrage was lawfully collectible under the Bills of Lading and that Telengtan was estopped from denying knowledge of demurrage because it had previously paid such charges. The CA also accepted the trial court’s finding that the stripping and warehousing of the goods were authorized by the Bureau of Customs and that Telengtan failed to take delivery within the ten-day free period. The CA upheld the dismissal of the counterclaim and the awards of interest, attorney’s fees, and exemplary damages. The CA likewise endorsed the trial court’s instruction to recompute the judgment as of the date of payment in accordance with Article 1250 of the Civil Code.
Issues on Review
On certiorari under Rule 45, Telengtan challenged the CA on three principal grounds: that the courts below erred in holding it liable for demurrage; that the counterclaim was wrongly dismissed; and that the award and recomputation under Article 1250 of the Civil Code were improper. Telengtan further argued that the CA erred in finding that it, rather than United States Lines, was at fault for non-withdrawal of cargo.
Supreme Court Ruling
The Supreme Court affirmed the decision of the Court of Appeals with one modification. The Court sustained the rulings that (a) Telengtan was liable for demurrage, (b) the counterclaim was properly dismissed, and (c) exemplary damages and attorney’s fees were properly awarded. The Supreme Court deleted the trial court’s and CA’s order that the judgment be recomputed as of the date of payment pursuant to Article 1250 of the Civil Code.
Legal Reasoning on Liability for Demurrage
The Court found that the contractual terms embodied in the Bills of Lading, as well as established jurisprudential interpretations, permitted the lawful collection of demurrage. The Bills of Lading were issued on a House/House Containers–Shippers Load, Stowage and Count basis, which placed on the shipper and consignee the responsibility to load, stow and count, and to take prompt delivery. The Court emphasized Section 17 of the Regular Long Form Inward Bill of Lading, incorporated by reference, which relieved the carrier of responsibility once the goods were received by customs or other authorities or when the consignee failed to take possession promptly; it expressly authorized the carrier to send goods to store or warehouse at the consignee’s risk and expense. The containers were stripped and the goods warehoused by authority of the Bureau of Customs; that authorization negated any suggestion of bad faith by United States Lines. The record showed prior occasions where Telengtan paid demurrage, supporting the trial court’s finding of estoppel against Telengtan’s later denial of knowledge or agreement. The Court treated the question of fault as one of fact; it declined to overturn the concurrent findings of the trial court and the Court of Appeals absent arbitrariness, and found those factual findings supported by the record.
Legal Reasoning on Article 1250 and Recalculation of Judgment
The Court concluded that respondent failed to prove the existence of an extraordinary inflation or deflation within the meaning of Article 1250 of the Civil Code for the period since the 1981 filing of the complaint. The Court reiterated that the party asserting extraor
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Case Syllabus (G.R. No. 132284)
Parties and Procedural Posture
- TELENGTAN BROTHERS & SONS, INC. was the petitioner and a domestic corporation doing business as La Suerte Cigar & Cigarette Factory.
- UNITED STATES LINES, INC. was the respondent and a foreign corporation engaged in overseas shipping.
- The case reached the Supreme Court by a petition for review on certiorari under Rule 45, Rules of Court.
- The petition sought review of the Court of Appeals decision dated January 8, 1998 which affirmed the Regional Trial Court, Branch 38, Manila judgment dated January 10, 1985.
- The trial court had found petitioner liable for demurrage and damages and had dismissed petitioner's counterclaim.
Key Facts
- Between 1979 and 1980, goods belonging to petitioner were shipped in container vans aboard respondent's vessels to Manila under several Bills of Lading.
- The Far East Conference Tariff No. 12 rendered Philippine containerized cargo from U.S. and Gulf Ports subject to a ten-day free period for withdrawal.
- Respondent alleged that petitioner failed to withdraw its goods within the ten-day free period and claimed demurrage totaling P94,000.00.
- Petitioner presented the relevant Bills of Lading for seven shipments and alleged that respondent had stripped containers and deposited the goods in bonded warehouses.
- Petitioner alleged that respondent demanded P123,738.04 before releasing the goods.
- The containers were stripped and the goods were warehoused by authority of the Bureau of Customs as evidenced by Exhibits "L" and "M".
Contractual Terms
- The Bills of Lading involved were on a "House/House Containers-Shippers Load, Stowage and Count" basis which placed loading and counting obligations on the shipper or consignee.
- Section 17 of the Regular Long Form Inward Bill of Lading provided that the carrier need not give notification of arrival and permitted delivery to customs, authorities, stevedores, or warehouses at the risk and expense of the goods.
- The Bills of Lading authorized the carrier to send goods to store or warehouse and to hold the shipper and consignee liable for loss, damage, fines, charges, or expenses incurred.
Procedural History
- Respondent filed suit on June 22, 1981, docketed as Civil Case No. R-81-1196 before the RTC, Branch 38, Manila.
- The RTC rendered judgment for respondent ordering payment of demurrage and other charges and dismissing petitioner's counterclaim.
- The Court of Appeals affirmed the RTC decision in its decision dated January 8, 1998.
- Petitioner elevated the case to the Supreme Court by the present Rule 45 petition.
Issues Presented
- Whether petitioner was liable to respondent for demurrage for failure to withdraw cargo within the ten-day free period.
- Whether petitioner's counterclaim for damages arising from removal and warehousing of goods should have prevailed.
- Whether the RTC and CA erred in ordering recomputation of the judgment under Article 1250 of the Civil Code.
- Whether exemplary damages and attorney's fees awarded to respondent were proper.
Parties' Contentions
- Petitioner contended that it never executed any agreement to be bound by demurrage and that respondent made no proper legal demand for payment.
- Petitioner maintained that documentary evidence and written admissions proved respondent's failure to deliver and justified the counterclaim for P123,738.04.
- Respondent contended that the Bills of Lading and judicial interpretation of their provisions authorized collection of demurrage.
- Respondent also relied on prior receipts showing past demurrage payments by petitioner to invoke estoppel against petitioner's present denial.
Trial Court Ruling
- The RTC found petitioner liable for demurrage in the amount of P99,408.00 and ordered interest at the legal rate from filing of the complaint until full payment.
- The RTC awarded att