Telengtan Brothers & Sons, Inc. v. United States Lines, Inc.

Facts:

Petitioner Telengtan is a domestic corporation doing business under the name and style La Suerte Cigar & Cigarette Factory, while respondent U.S. Lines is a foreign corporation engaged in the business of overseas shipping. During the period material, the provisions of the Far East Conference Tariff No. 12 were specifically made applicable to Philippine containerized cargo from the U.S. and Gulf Ports, effective with vessels arriving at Philippine ports on and after December 15, 1978. After that date, consignees who fail to take delivery of their containerized cargo within the 10-day free period are liable to pay demurrage charges.

On June 22, 1981, respondent U.S. Lines filed a suit against petitioner Telengtan seeking payment of demurrage charges plus interest and damages. Docketed as Civil Case No. R-81-1196 of the Regional Trial Court of Manila and raffled to Branch 38 thereof, the complaint alleged that between the years 1979 and 1980, goods belonging to petitioner loaded on containers aboard its (respondent’s) vessels arrived in Manila from U.S. ports. After the 10-day free period, petitioner still failed to withdraw its goods from the containers wherein the goods had been shipped. Continuing, respondent U.S. Lines alleged that petitioner incurred on all those shipments a demurrage in the total amount of ₱94,000.00 which the latter refused to pay despite repeated demands.

Telengtan disclaims liability for the demanded demurrage, alleging that it has never entered into a contract nor signed an agreement to be bound by any rule on demurrage. It likewise maintains that, absent an obligation to pay respondent who made no proper or legal demands in the first place, there is justifiable reason to refuse payment of the latter’s unwarranted claims. By way of counterclaim, petitioner states that, upon arrival of the conveying vessels, it presented the Bills of Lading (B/Ls) and all other pertinent documents covering seven (7) shipments and demanded from respondent delivery of all the goods covered by the aforesaid B/Ls, only to be informed that respondent had already unloaded the goods from the container vans, stripped them of their contents which contents were then stored in warehouses. Petitioner further states that respondent had refused to deliver the goods covered by the B/Ls and required petitioner to pay the amount of ₱123,738.04 before the goods can be released.

The Trial Court found that [petitioner] liable to [respondent] for demurrage incurred in the amount of P99,408.00 which sum will bear interest at the legal rate from the date of the filing of the complaint till full payment thereof plus attorney’s fees in the amount of 20% of the total sum due, all of which shall be recomputed as of the date of payment in accordance with the provisions of Article 1250 of the Civil Code. Exemplary damages in the amount of P80,000.00 are also granted. The counterclaim is dismissed. Costs against [petitioner].

Contrary to [petitioner’s] contentions, both the provisions of the contract between the parties, in this case the bill of lading, and the interpretation given by the higher courts to these provisions are to the effect that demurrage may be lawfully collected.

On the other hand, [petitioner] claims that [respondent] company owes them the far larger sum of P123,738.04 by way of damages allegedly suffered by their goods when [respondent] company removed these goods from its cargo vans and deposited them in bonded warehouses without its consent. It is not disputed that [respondent] company did not [sic] in fact remove these goods belonging to [petitioner] from its vans and deposited them in warehouses. However, this was done by authority of the Bureau of Customs and for that purpose, [respondent] addressed a letter-request to the Collector of Customs, for permission to remove the goods of defendant from its vans.

The Court finds that the charges for warehousing were necessary expenses covered by the terms of the bill of lading which the consignee was responsible for. There is therefore now no necessity of discussing whether or not the counterclaim of [petitioner] had prescribed or not. Neither is there any question of bad faith on the part of [respondent]. When it requested for authority to remove [petitioner’s] consigned goods from its vans and deposited them in warehouses, [respondent] had already given consignee sufficient time to take delivery of the shipment. This, [petitioner] chose not to do. Instead, it sat pat by the telephone calling without making any positive effort to check up on the shipment or arrange for its delivery to its factory. Once arrived at the port, the shipment was available to consignee for its proper delivery and receipt and the carrier discharged of its responsibility therefor. Rather, by its inaction, [petitioner] was guilty of bad faith. Once it had received the notice of arrival of the carrier in port, it was incumbent on consignee to put wheels in motion in order that the shipment could be delivered to it. The inaction of [petitioner] would only indicate that it had no intention of taking delivery except at its own convenience thus preventing carrier from taking on other shipments and from leaving port. Such unexplained and unbusiness-like delay smacks highly of bad faith on the part of [petitioner] rather than of the [respondent].

Issues:

Whether or not the CA erred in concluding that it [petitioner] was the one at fault in not withdrawing its cargo from the container vans in which the goods were originally shipped despite documentary evidence and written admissions of private respondent to the contrary; and in affirming the trial court’s order for the recomputation of the judgment award in accordance with Article 1250 of the Civil Code contrary to existing jurisprudence and without any evidence at all to support it.

Held:

It is undisputed that the goods subject of petitioner’s counterclaim and covered by seven B/Ls were loaded for shipment to Manila on respondent’s vessels in container vans on a "House/House Containers-Shippers Load, Stowage and Count" basis. This shipping arrangement means that the shipping company’s container vans are to be brought to the shipper for loading of its goods; that from the shipper’s warehouse, the goods in container vans are brought to the shipping company for shipment; that the shipping company, upon arrival of its ship at the port of destination, is to deliver the container vans to the consignee’s compound or warehouse; and that the shipper (consignee) is supposed to load, stow and count the goods from the container van. Likewise undisputed is the fact that the container vans containing the goods covered by 3 of the aforesaid B/Ls, particularly were delivered to a warehouse, stripped of their contents and the contents deposited thereat.

The Court sustain the CA’s stance faulting the petitioner for not taking delivery of its cargo from the container vans within the 10-day free period, an inaction which led respondent to deposit the same in warehouse/s.

It may be that, when the relevant facts are undisputed, the question of whether or not the conclusion deduced therefrom by the CA is correct is a question of law properly cognizable by this Court. However, it has also been held that all doubts as to the correctness of such conclusions will be resolved in favor of the disposing court. So it must be in this case.

As it were, however, the conclusion of the CA on who contextually is the erring party was not exactly drawn from a vacuum, supported as such conclusion is by the records of the case. What the CA wrote with some measure of logic commends itself for concurrence:

However, ... We find that [petitioner] was the one at fault in not withdrawing its cargo from the containers wherein the goods were shipped within the ten (10)-day free period. Had it done so, then there would not have been any need of depositing the cargo in a warehouse.

It is incumbent upon the carrier to immediately advise the consignee of the arrival of the goods for if it does not, it continues to be liable for the same until the consignee has had reasonable opportunity to remove them.

Sound business practice dictates that the consignee, upon notification of the arrival of the goods, should immediately get the cargo from the carrier especially since it has need of it. xxx.

It is agreed that when possession of the goods is received or taken by the customs or other authorities or by any operator of any lighter, craft, ... or other facilities whether selected by the carrier or master, shipper of consignee, whether public or private, such authority or person shall be considered as having received possession and delivery of the goods solely as agent of and on behalf of the shipper and consignee, .... Also if the consignee does not take possession or delivery of the goods as soon as the goods are at the disposal of the consignee for removal, the goods shall be at their own risk and expense, delivery shall be considered complete and the carrier may, subject to carrier's liens, send the goods to store, warehouse, put them on lighters or other craft, put them in possession of authorities, dump, permit to lie where landed or otherwise dispose of them, always at the risk and expense of the goods, and the shipper and consignee shall pay and indemnify the carrier for any loss, damage, fine, charge or expense whatsoever suffered or incurred in so dealing with or disposing of the goods, or by reason of the consignee's failure or delay in taking possession and delivery as provided herein.

On the second issue raised, the Court finds as erroneous the trial court’s decision, as affirmed by the CA, for the recomputation of the judgment award as of the date of payment in accordance with Article 1250 of the Civil Code.

In calling for the application of the aforementioned provision, respondent urged that judicial notice be taken of the succeeding devaluations of the peso vis-à-vis the US dollar since the time the proceedings began in 1981. According to respondent, the computation of the amount thus due from the petitioner should factor in such peso devaluations.

Article 1250 of the Civil Code states:

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.

Extraordinary inflation or deflation, as the case may be, exists when there is an unusual increase or decrease in the purchasing power of the Philippine peso which is beyond the common fluctuation in the value of said currency, and such increase or decrease could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation.Extraordinary inflation can never be assumed; he who alleges the existence of such phenomenon must prove the same.

The Court holds that there has been no extraordinary inflation within the meaning of Article 1250 of the Civil Code. Accordingly, there is no plausible reason for ordering the payment of an obligation in an amount different from what has been agreed upon because of the purported supervention of extraordinary inflation.

As it were, respondent was unable to prove the occurrence of extraordinary inflation since it filed its complaint in 1981. Indeed, the record is bereft of any evidence, documentary or testimonial, that inflation, nay, an extraordinary one, existed. Even if the price index of goods and services may have risen during the intervening period, this increase, without more, cannot be considered as resulting to "extraordinary inflation" as to justify the application of Article 1250.

Lest it be overlooked, Article 1250 of the Code, as couched, clearly provides that the value of the peso at the time of the establishment of the obligation shall control and be the basis of payment of the contractual obligation, unless there is "agreement to the contrary." It is only when there is a contrary agreement that extraordinary inflation will make the value of the currency at the time of payment, not at the time of the establishment of obligation, the basis for payment.23 The Court, in Mobil Oil Philippines, Inc. vs. Court of Appeals and Fernando A. Pedrosa formulated the same rule in the following wise:

In other words, an agreement is needed for the effects of an extraordinary inflation to be taken into account to alter the value of the currency at the time of the establishment of the obligation which, as a rule, is always the determinative element, to be varied by agreement that would find reason only in the supervention of extraordinary inflation or deflation.

To be sure, neither the trial court, the CA nor respondent has pointed to any provision of the covering B/Ls whence respondent sourced its contractual right under the premises where the defining "agreement to the contrary" is set forth. Needless to stress, the Court sees no need to speculate as to the existence of such agreement, the burden of proof on this regard being on respondent.