G.R. No. 110581. September 21, 1994
TELENGTAN BROTHERS & SONS, INC. (LA SUERTE CIGAR & CIGARETTE FACTORY), PETITIONER, VS. THE COURT OF APPEALS, KAWASAKI KISHEN KAISHA, LTD. AND SMITH, BELL & CO., INC., RESPONDENTS.
MENDOZA, J.:
This is a petition for review of the decision of the Court of
Appeals,[1]
in CA-G.R. CV No. 09514, affirming with modification the decision of the
Regional Trial Court in a case for specific performance brought by petitioner.
Private respondent Kawasaki Kishen Kaisha, Ltd. (K-Line) is a
foreign shipping company doing business in the Philippines, its shipping agent
being respondent the Smith, Bell & Co., Inc. It is a member of the Far East Conference, the body which fixes
rates by agreement of its member-ship owners. The conference is registered with the U.S. Federal Maritime Commission.[2]
On May 8, 1979, the Van Reekum Paper, Inc. entered into a
contract of affreightment with the K-Line for the shipment of 468 rolls of
container board liners from Savannah, Georgia to Manila. The shipment was consigned to herein
petitioner La Suerte Cigar & Cigarette Factory. The contract of affreightment was embodied in Bill of Lading No.
602 issued by the carrier to the shipper. The expenses of loading and unloading were for the account of the
consignee.
The shipment was packed in 12 container vans and loaded on board
the carrier’s vessel, SS Verrazano Bridge. At
Tokyo, Japan, the cargo was transhipped on two vessels of the K-Line. Ten container vans were loaded on the SS Far East Friendship, while two were loaded on the SS Hangang Glory.
Shortly thereafter, the consignee (herein petitioner) received
from the shipper photocopies of the bill of lading, consular invoice and
packing list, as well as notice of the estimated time of arrival of the cargo.
On June 11, 1979, the SS Far East Friendship arrived at the port of Manila. Aside from the regular advertisements in the
shipping section of the Bulletin Today announcing
the arrival of its vessels, petitioner was notified in writing of the ship’s
arrival, together with information that container demurrage at the rate of
P4.00 per linear foot per day for the first 5 days and P8.00 per linear foot
per day after the 5th day would be charged unless the consignee took delivery
of the cargo within ten days.
On June 21, 1979, the other vessel SS Hangang Glory, carrying
petitioner’s two other vans, arrived and was discharged of its contents the
next day. On the same day the shipping
agent Smith, Bell & Co. released the Delivery Permit for twelve (12)
containers to the broker upon payment of freight charges on the bill of lading.
The next day, June 22, 1979, the Island Brokerage Co. presented,
in behalf of petitioner, the shipping documents to the Customs Marine Division
of the Bureau of Customs. But the
latter refused to act on them because the manifest of the SS Far
East Friendship covered only 10 containers, whereas the bill of lading covered
12 containers.
The broker, therefore, sent back the manifest to the shipping agent
with the request that the manifest be amended. Smith, Bell & Co. refused on the ground that an amendment, as
requested, would violate § 1005 of the Tariff and Customs Code relating to
unmanifested cargo. Later, however, it
agreed to add a footnote reading “Two container vans carried by the SS Hangang
Glory to complete the shipment of twelve containers under the bill of
lading.”
On June 29, 1979 the manifest was picked up from the office of
respondent shipping agent by an employee of the IBC and filed with the Bureau
of Customs. The manifest was approved
for release on July 3, 1979. IBC wrote
Smith, Bell & Co. to make of record that entry of the shipment had been
delayed by the error in the manifest.
On July 11, 1979, when the IBC tried to secure the release of the
cargo, it was informed by private respondents’ collection agent, the CBCS
Guaranteed Fast Collection Services, that the free time for removing the
containers from the container yard had expired on June 26, 1979, in the case of
the SS Far East Friendship,
and on July 9, in the case of the SS Hangang
Glory,[3] and that demurrage charges had begun
to run on June 27, 1979 with respect to the 10 containers on the SS Far East Friendship and on July 10, 1979 with respect to
the 2 containers shipped on board the SS Hangang
Glory.
On July 13, 1979, petitioner, paid P47,680.00 representing the
total demurrage charges on all the containers, but it was not able to obtain
its goods. On July 16, 1979 it was able
to obtain the release of two containers and on July 17, 1979 of one more
container. It was able to obtain only a
partial release of the cargo because of the breakdown of the arrastre’s
equipment at the container yard.
This matter was reported by IBC in letters of complaint sent to
the Philippine Ports Authority. In
addition, on July 16, 1979, petitioner sent a letter dated July 12, 1979 (Exh.
I) to Smith, Bell & Co., requesting reconsideration of the demurrage
charges, on the ground that the delay in claiming the goods was due to the
alleged late arrival of the shipping documents, the delay caused by the
amendment of the manifest, and the fact that two of the containers arrived
separately from the other ten containers.
On July 19, 1979 petitioner paid additional charges in the amount
of P20,160.00 for the period July 14-19, 1979 to secure the release of its cargo, but still petitioner
was unable to get any cargo from the remaining nine container vans. It was only the next day, July 20, 1979,
that it was able to have two more containers released from the container yard,
bringing to five the total number of containers whose contents had been
delivered to it.
Subsequently, petitioner refused to pay any more demurrage
charges on the ground that there was no agreement for their payment in the bill
of lading and that the delay in the release of the cargo was not due to its
fault but to the breakdown of the equipment at the container yard. In all, petitioner had paid demurrage
charges from June 27 to July 19, 1979 in the total amount of P67,840.00,
computed as follows:
A. Container demurrage paid on July 13, 1979
1. Far East Friendship (Exh. H-1) June 27 – July 13 (17 days)
1st 5 days @
P4/day/foot
5 days x P4 x 40 ft. x
10ctnrs P 8,000.00
Next 12 days @
P8/day/foot
12 days x P8 x 40 ft. x
10 ctnrs. P38,400.00
—————
P46,400.00
2. Hangang Glory (Exh. H) July 10-July 13 (4 days)
1st 4
days:
4 days x P4 x 40 ft. x 2 ctnrs. P
1,280.00
————–
TOTAL PAID ON JULY
13 P47,680.00
(Exh. H-2)
B. Container demurrage paid on July 19, 1979
1. Far East Friendship
a. on 2 containers
released July 16
3 days x P8 x 40 ft.
x 2 ctnrs. P
1,920.00
(Exh. L-2)
b. on 1 container released July 17
4 days x P8 x 40 ft.
x 1 ctnr. P
1,280.00
(Exh. L-3)
c. remaining 7 containers as of July 19
6 days x P8 x 40 ft.
x 7 ctnrs.
P 13,440.00
(Exh. L-1)
2. Hangang Glory
a. 5th day (July 14)
1 day x P4.00 x 40
ft. x 2 ctnrs. P 320.00
b. July 15-19:
5 days x P8.00 x 40
ft. x 2 ctnrs. P 3,200.00
(Exh. L)
—————
TOTAL P20,160.00
(Exh. L-4)
—————
OVERALL TOTAL P67,840.00
========
On July 20, 1979 petitioner wrote private respondent for a refund
of the demurrage charges, but private respondent replied on July 25, 1979 that,
as member of the Far East Conference, it could not modify the rules or
authorize refunds of the stipulated tariffs.
Petitioner, therefore, filed this suit in the RTC for specific
performance to compel private respondent carrier, through its shipping agent,
the Smith, Bell & Co., to release 7 container vans consigned to it free of
charge and for a refund of P67,840.00 which it had paid, plus attorney’s fees
and other expenses of litigation. Petitioner also asked for the issuance of a writ of preliminary
injunction to restrain private respondents from charging additional demurrage.
In their amended answer, private respondents claimed that
collection of container charges was authorized by §§ 2, 23 and 29 of the bill
of lading and that they were not free to waive these charges because under the
United States Shipping Act of 1916 it was unlawful for any common carrier
engaged in transportation involving the foreign commerce of the United States
to charge or collect a greater or lesser compensation than the rates and
charges specified in its tariffs on file with the Federal Maritime Commission.
Private respondents alleged that petitioner knew that the
contract of carriage was subject to the Far East Conference rules and that the
publication of the notice of reimposition of container demurrage charges
published in the shipping section of the Bulletin
Today and Businessday newspapers from February 19
– February 25, 1979 was binding upon petitioner. They contended further that the collection of container
demurrage was an international practice which is widely accepted in ports all
over the world and that it was in conformity with Republic Act No. 1407,
otherwise known as the Philippine Overseas Shipping Act of 1955.
Thereafter, a writ was issued after petitioner had posted a bond
of P50,000.00 and the container vans were released to the petitioner. On March 19, 1986, however, the RTC
dismissed petitioner’s complaint. It
cited the bill of lading which provided:
23. The ocean carrier
shall have a lien on the goods, which shall survive delivery, for all freight,
dead freight, demurrage, damages, loss, charges, expenses and
any other sums whatsoever payable or chargeable to or for the account of the
Merchant under this bill of lading. . . .
It likewise invoked clause 29 of the bill of lading which
provided:
29. . . . The terms of the ocean carrier’s
applicable tariff, including tariffs covering intermodal transportation on file
with the Federal Maritime Commission and the Interstate Commission or any other
regulatory body which governs a portion of the carriage of goods, are
incorporated herein.
Rule 21 of the Far East Conference Tariff No. 28-FMC No. 12 Rules
and Regulations, referred to above, provides:
(D) Free Time, Demurrage, and Equipment Detention at Ports in the
Philippines.
Note: Philippine Customs Law prescribes all cargo discharged from
vessels to be given into custody of the Government Arrastre Contractor,
appointed by Philippine Customs who undertakes delivery to the consignee.
…
Demurrage charges on Containers with CY Cargo.
1. Free time will commence at 8:00 a.m. on the
first working calendar day following completion of discharge of the
vessel. It shall expire at 12:00 p.m.
(midnight) on the tenth working calendar day, excluding Saturdays, Sundays and holidays.
Work stoppage at a terminal due to labor dispute or other force
majeure as defined by the conference preventing delivery of cargo or containers
shall be excluded from the calculation of the free time for the period of the
work stoppage.
2. Demurrage charges
are incurred before the container leaves the carrier’s designated CY, and shall
be applicable on the container commencing the next working calendar day
following expiration of the allowable free time until the consignee has taken
delivery of the container or has fully stripped the container of its contents
in the carrier’s designated CY.
Demurrage charges shall be assessed hereunder:
Ordinary containers – P4.00 per linear foot of the container per
day for the first five days; P8.00 per linear foot of the container per day,
thereafter.
The RTC held that the bill of lading was the contract between the
parties and, therefore, petitioner was liable for demurrage charges. It rejected petitioner’s claim of force majeure. It held:
This Court cannot also accord faith and credit on the plaintiff’s
claim that the delay in the delivery of the containers was caused by the
breaking down of the equipment of the arrastre operator. Such claim was not supported with competent
evidence. Let us assume the fact that
the arrastre operator’s equipment broke down still plaintiff has to pay the
corresponding demurrage charges. The
possibility that the equipment would break down was not only foreseeable, but
actually, foreseen, and was not caso fortuito.[4]
The RTC, therefore, ordered:
WHEREFORE, finding the preponderance of evidence in favor of
the defendants and against the plaintiff, judgment is hereby rendered
dismissing the complaint with costs against it. Plaintiff is hereby ordered to pay defendants the sum of
P36,480.00 representing demurrage charges for the detention of the seven (7)
forty-footer container vans from July 20 to August 7, 1979, with legal interest
commencing on August 7, 1979 until fully paid. And plaintiff has to pay the sum of P10,000.00, by way of attorney’s
fees.
SO ORDERED.
On appeal, the case was affirmed with modification by the Court
of Appeals as follows:
WHEREFORE, modified as indicated above deleting the award of
attorney’s fees, the decision appealed from is hereby AFFIRMED in all other
respects.
Costs against plaintiff-appellant.
SO ORDERED.[5]
Hence, this petition for review in which it is contended:
1.
that no demurrage lies in the absence of any showing that the
vessels had been improperly detained or that loss or damage had been incurred
as a consequence of improper detention;
2.
that respondent Court’s finding that private respondent Smith
Bell had promptly and on the same day amended the defective manifest is
contrary to the evidence of record.
3. that respondent Court manifestly overlooked
undisputed evidence presented by petitioner showing that the breakdown in the
facilities and equipment of the arrastre operator further delayed petitioner’s
withdrawal of the cargo.[6]
Petitioner prays for a reversal of the decision of the Court of
Appeals and the refund to it of the demurrage charges paid by it, with
interest, as well as to pay attorney’s fees and expenses of litigation.
Our decision will be presently explained, but in brief it is
this: petitioner is liable for
demurrage for delay in removing its cargo from the containers but only for the
period July 3 to 13, 1979 with respect to ten containers and from July 10 to
July 13, 1979, in respect of two other containers.
First. With respect
to petitioner’s liability for demurrage, petitioner’s contention is that the
bill of lading does not provide for the payment of container demurrage, as
Clause 23 of the bill of lading only says “demurrage,” i.e.,
damages for the detention of vessels, and here there is no detention of
vessels. Petitioner invokes the ruling
in Magellan
Manufacturing Marketing Corp. v. Court of Appeals[7], where we
defined “demurrage” as follows:
Demurrage, in its strict sense, is the compensation provided for in
the contract of affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept
delivery. In a broad sense, every
improper detention of a vessel may be considered a demurrage. Liability for demurrage, using the word in
its strictly technical sense, exists only when expressly stipulate in the
contract. Using the term in [its
broader sense, damages in the] nature of demurrage are recoverable for a breach
of the implied obligation to load or unload the cargo with reasonable dispatch,
but only by the party to whom the duty is owed and only against one who is a
party to the shipping contract.
Whatever may be the merit of petitioner’s contention as to the
meaning of the word “demurrage” in clause 23 of the bill of lading,
the fact is that clause 29(a) also of the bill of lading, in relation to Rule
21 of the Far East Conference Tariff No. 28-FMC No. 12, as quoted above,
specifically provides for the payment by the consignee of demurrage for the
detention of containers and other equipment after the so-called “free
time.”
Now a bill of lading is both a receipt and a contract. As a contract, its terms and conditions are
conclusive on the parties, including the consignee. What we said in one case mutatis mutandis applies to this
case:
A bill of lading operates both as a receipt
and a contract. . . . . As a contract, it names the contracting
parties which include the consignee, fixes the route, destination,
freight rate or charges, and stipulates the rights and obligations assumed by
the parties . . . . By receiving the bill of lading, Davao Parts and Services,
Inc. assented to the terms of the consignment contained therein, and became
bound, thereby, so far as the conditions named are reasonable in the eyes of
the law. Since neither appellant nor
appellee alleges that any provision therein is contrary to law, morals, good
customs, public policy or public order – and indeed we found none – the
validity of the Bill of Lading must be sustained and the provisions therein
properly applies to resolve the conflict between the parties.[8]
As the Court of Appeals pointed out in its appealed decision, the
enforcement of the rules of the Far East Conference and the Federal Maritime
Commission is in accordance with Republic Act No. 1407, § 1 of which declares
that the Philippines, in common with other maritime nations, recognizes the
international character of shipping in foreign trade and existing international
practices in maritime transportation and that it is part of the national policy
to cooperate with other friendly nations in the maintenance and improvement of such
practices.
Petitioner’s argument that it is not bound by the bill of lading
issued by K-Line because it is a contract of adhesion, whose terms as set forth
at the back are in small prints and are hardly readable, is without merit. As we held in Servando v. Philippine Steam Navigation:[9]
While it may be true that petitioner had not signed the plane
ticket (Exh. 12), he is nevertheless bound by the provisions thereof. “Such provisions have been held to be a
part of the contract of carriage, and valid and binding upon the passenger
regardless of the latter’ s lack of knowledge or assent to the
regulation”. It is what is known
as a contract of “adhesion,” in regards to which it has been said
that contracts of adhesion wherein one party imposes a ready made form of
contract on the other, as the plane ticket in the case at bar, are contracts
not entirely prohibited. The one who
adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent. (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice
JBL Reyes, Lawyer’s Journal, Jan. 31, 1951, p. 49).
Second. With respect
to the period of petitioner’s liability, private respondents’ position is that
the “free time” expired on June 26, 1979 and demurrage began to toll
on June 27, 1979, with respect to 10 containers which were unloaded from the SS
Far
East Friendship, while with respect to the 2 containers which were unloaded
from the SS Hangang Glory, the free time expired on July 9,
1979 and demurrage began to run on July 10, 1979.
This contention is without merit. Petitioner cannot be held liable for demurrage starting June 27,
1979 on the 10 containers which arrived on the SS Far East Friendship because
the delay in obtaining release of the goods was not due to its fault. The evidence shows that because the manifest
issued by the respondent K-Line, through the Smith, Bell & Co., stated only
10 containers, whereas the bill of lading also issued by the K-Line showed
there were 12 containers, the Bureau of Customs refused to give an entry permit
to petitioner. For this reason,
petitioner’s broker, the IBC, had to see the respondents’ agent (Smith, Bell
& Co.) on June 22, 1979 but the latter did not immediately do something to
correct the manifest. Smith, Bell &
Co. was asked to “amend” the manifest, but it refused to do so on the
ground that this would violate the law. It was only on June 29, 1979 that it thought of adding instead a
footnote to indicate that two other container vans – to account for a total of
12 container vans consigned to petitioner – had been loaded on the other vessel
SS Hangang Glory.
It is not true that the necessary correction was made on June 22,
1979, the same day the manifest was presented to Smith, Bell & Co. There is nothing in the testimonies of
witnesses of either party to support the appellate court’s finding that the
footnote, explaining the apparent discrepancy between the bill of lading and
the manifest, was added on June 22, 1979 but that petitioner’s representative
did not return to pick up the manifest until June 29, 1979. To the contrary, it is more probable to
believe the petitioner’s claim that the manifest was corrected only on June 29,
1979 (by which time the “free time” had already expired), because
Smith, Bell & Co. did not immediately know what to do as it insisted it
could not amend the manifest and only thought of adding a footnote on June 29,
1979 upon the suggestion of the IBC.
Now June 29, 1979 was a Friday. Again it is probable that the corrected manifest was presented to the
Bureau of Customs only on Monday, July 2, 1979 and, therefore, it was only on
July 3 that it was approved. It was,
therefore, only from this date (July 3, 1979) that petitioner could have
claimed its cargo and charged for any delay in removing its cargo from the
containers. With respect to the other
two containers which arrived on the SS Hangang Glory, demurrage
was properly considered to have accrued on July 10, 1979 since the “free
time” expired on July 9.
The period of delay, however, for all the 12 containers must be
deemed to have stopped on July 13, 1979, because on this date petitioner paid
P47,680.00. If it was not able to get
its cargo from the container vans, it was because of the breakdown of the
shifters or cranes. This breakdown
cannot be blamed on petitioners since these were cranes of the arrastre service
operator. It would be unjust to charge
demurrage after July 13, 1979 since the delay in emptying the containers was
not due to the fault of the petitioner.
Indeed, there is no reason why petitioner should not get its
cargo after paying all demurrage charges due on July 13, 1979. If it paid P20,180.00 more in demurrage
charges after July 13, 1979 it was only because respondents would not release
the goods. Even then petitioner was
able to obtain the release of cargo from five container vans. Its trucks were unable to load anymore cargo
and returned to petitioner’s premises empty.
In sum, we hold that petitioner can be held liable for demurrage
only for the period July 3-13, 1979 and that in accordance with the stipulation
in its bill of lading, it is liable for demurrage only in the amount of
P28,480.00 computed as follows:
A. 10 containers ex Far East
Friendship (July 3-13, 1979)
1.
1st 5 days @ P4.00/day/foot
5 days x P4 x 40 ft. x
10 ctnrs. P 8,000
2. Next 6 days @
P8.00/day/foot
6 days x P8 x 40 ft.
x 10 ctnrs. P19,200 P27,200
B.
2 containers ex Hangang Glory (July 10-13, 1979)
1st 4 days @
P4.00/day/foot
4 days x P4 x 40 ft.
x 10 ctnrs. P 1,280
————
TOTAL DEMURRAGE DUE P28,480
=======
LESS: TOTAL PAID (P67,840)
OVERPAYMENT (P39,360)
As shown above there is an overpayment of P39,360.00 which should
be refunded to petitioner.
WHEREFORE, the decision appealed from is SET ASIDE and another one is RENDERED, ORDERING the private
respondents to pay to petitioner the sum of P39,360.00 by way of refund, with
legal interest.
SO ORDERED.
Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.
Puno, J., no part.
[1]
Per Cañizares-Nye, J., with
Puno, J., Chairman, and Torres Jr.,
J., concurring.
[2]
As respondent Smith, Bell & Co. explained in its letter dated July 25, 1979
(Exh. 8-Defendants) to petitioner: “K-Line, as [member] of the Far East Conference, operates under an
agreement approved by the U.S. Federal Maritime Commission, Washington, in
accordance with the provision of the U.S. Shipping Act of 1916, which requires
conference members to assess and collect all freight and other charges
stipulated in the tariff the conference has filed with the Commisssion.”
[3]
Under the rules filed with the Federal Maritime Commission, “Free
Time” commenced at 8:00 a.m. on the first working day (June 13, 1979 and
June 25, 1979 in the case of the SS Far
East Friendship and SS Hangang Glory respectively) following completion of discharge of the vessel,
and it expired on the 10th day, excluding Saturdays, Sundays, and holidays
(June 27, 1979 in the case of the SS Far
East Friendship and July
10, 1989 in the case of SS Hangang Glory). In
computing the free time, June 16, 23 and 30 and July 7 were excluded because
they fell on Saturday, June 17 and 24 and July 1 and 8 because they fell on
Sunday, while July 4, being Philippine-American Friendship Day, was a public
holiday.
[4]
Decision, p. 10; Rollo, p. 96
[5]
Decision, p. 13; Rollo, p. 54.
[6]
Petition, p. 9; Rollo, p. 19.
[7]
G.R. No. 99529, Aug. 22, 1991, 201 SCRA 102.
[8]
Phoenix Assurance Co., Ltd. v. United States Lines, No. L-24033, Feb.
22, 1968, 22 SCRA 674. (Emphasis ours,)
[9]
No. L-36481-2, Oct. 23, 1982, 117 SCRA 832.