Keng Hua Paper Products Co. Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondent, a shipping company, received seventy-six bales of "unsorted waste paper" for shipment to petitioner, Keng Hua Paper Products Co., in Manila. A bill of lading was issued. Upon discharge at the Manila International Container Port, petitioner failed to discharge the shipment within the "free time" period. The shipment remained in the container for 481 days, incurring demurrage charges amounting to P67,340.00. Petitioner refused to pay, citing an alleged overshipment of ten metric tons more than what it purchased from the shipper, Ho Kee Waste Paper, as per its Letter of Credit No. 824858 and Invoice No. H-15/82. Petitioner argued that accepting the shipment would violate Central Bank rules and regulations, customs and tariff laws, and that the cause of action should be against the shipper, not the carrier. Procedural History: The Regional Trial Court (RTC) of Manila, Branch 21, ruled in favor of the plaintiff (private respondent), ordering petitioner to pay P67,340.00 as demurrage charges with legal interest, and attorney's fees. The Court of Appeals (CA) affirmed the RTC decision in toto. Petitioner appealed to the Supreme Court. The Petition: Petitioner assails the CA decision, raising issues on whether it accepted the bill of lading, the propriety of the demurrage award, the justification for refusing the alleged overshipment, and the computation of legal interest.
Issue(s)
Whether petitioner accepted the bill of lading and is bound by its terms. Whether the award of P67,340.00 in demurrage charges was proper. Whether petitioner was correct in refusing to accept the alleged overshipment. Whether the award of legal interest from the date of extrajudicial demand was proper.
Ruling
The Supreme Court affirmed petitioner's liability for demurrage charges but modified the computation of legal interest and deleted the award of attorney's fees. The Court held that petitioner was bound by the bill of lading, and its remedy for the alleged overshipment lay against the shipper, not the carrier.
Ratio Decidendi
On whether petitioner accepted the bill of lading and is bound by its terms: The Court held that petitioner was bound by the bill of lading. A bill of lading serves as a receipt for the goods and a contract of carriage. Its acceptance, even without signature, constitutes acceptance of its terms and conditions, provided the acceptor has actual or constructive notice. Petitioner admitted receiving the bill of lading immediately after the shipment's arrival and did not object to its terms for six months. This prolonged inaction created a clear inference of acceptance. The "Notice of Refused or On Hand Freight" sent by the private respondent did not negate acceptance but rather highlighted petitioner's failure to object. The Court emphasized that the contract of carriage, as embodied in the bill of lading, is independent of the contract of sale and the letter of credit. Any discrepancy between the bill of lading and the letter of credit does not affect the carrier's obligation, as the carrier is not privy to the letter of credit and has no knowledge of the contents of the container under a "Shipper's Load And Count" arrangement. Petitioner's apprehension of violating laws due to the alleged overshipment was a mere apprehension and did not render performance legally impossible under Article 1266 of the Civil Code. Furthermore, the issue of non-acceptance of the bill of lading was raised for the first time on appeal, which is generally barred by estoppel. On whether the award of P67,340.00 in demurrage charges was proper: The Court found the P67,340.00 demurrage charge to be a factual conclusion of the lower courts, supported by evidence. The apparent discrepancy in demands made by the private respondent was explained by the variance in dates. The initial demand of P37,800.00 was made on April 24, 1983, but due to the continued refusal of petitioner to take delivery, additional demurrage charges accrued, bringing the total to P67,340.00 by November 22, 1983. The testimony of Counsel Sofronio Larcia corroborated that the shipment incurred additional demurrage charges due to the prolonged detention. On whether petitioner was correct in refusing to accept the alleged overshipment: The Court ruled that petitioner was not correct in refusing the shipment based on the alleged overshipment. The bill of lading represents the contract of carriage, which is separate from the contract of sale and the letter of credit. The carrier is not expected to verify the accuracy of the bill of lading against the commercial invoice or letter of credit. The "Shipper's Load And Count" arrangement meant the shipper was solely responsible for loading, and the carrier was unaware of the contents. Therefore, petitioner's remedy for any discrepancy or overshipment lay against the seller/shipper, not against the carrier. On whether the award of legal interest from the date of extrajudicial demand was proper: The Court agreed with petitioner that legal interest should not be computed from the date of extrajudicial demand. For obligations not constituting a loan or forbearance of money, interest at 6% per annum may be imposed at the court's discretion, but only when the claim is established with reasonable certainty. Since the demurrage amount increased over time and was unliquidated until the trial court's judgment, the claim could not be deemed established with reasonable certainty at the time of extrajudicial demands. Therefore, the 6% legal interest should be computed from September 28, 1990 (the date of the RTC decision), and the 12% legal interest should apply from the time the judgment became final and executory until full satisfaction, as per Eastern Shipping Lines, Inc. v. Court of Appeals. The award of attorney's fees was deleted for lack of stated justification in the trial court's decision.
Main Doctrine
A bill of lading, when delivered and accepted, constitutes the contract of carriage, and the consignee is bound by its terms and conditions, including liability for demurrage charges, even if there is a discrepancy between the shipment amount and the letter of credit, as the carrier is not privy to the letter of credit arrangements and the consignee's remedy for overshipment lies against the shipper.