Telengtan v. United States Lines
REITERATIONFacts
The Antecedents: Petitioner Telengtan Brothers & Sons, Inc. (Telengtan), doing business as La Suerte Cigar & Cigarette Factory, was sued by respondent United States Lines, Inc. (U.S. Lines) for demurrage and damages. The suit arose from goods belonging to Telengtan, shipped in containers aboard U.S. Lines' vessels from U.S. ports between 1979 and 1980. Telengtan allegedly failed to withdraw its goods from the containers within the 10-day free period, incurring a total demurrage of ₱94,000.00. Procedural History: The Regional Trial Court (RTC) of Manila found Telengtan liable for demurrage in the amount of P99,408.00, with legal interest, attorney's fees (20% of the total sum due), and exemplary damages of P80,000.00. The RTC dismissed Telengtan's counterclaim for damages allegedly suffered by its goods when U.S. Lines removed them from container vans and stored them in warehouses without consent. The RTC ruled that Telengtan was estopped from denying liability for demurrage due to past payments and that the warehousing charges were necessary expenses covered by the bill of lading, attributing bad faith to Telengtan's inaction. The Court of Appeals (CA) affirmed the RTC decision in toto. The Petition: Telengtan filed a petition for review on certiorari, arguing that the CA erred in holding it liable for demurrage, dismissing its counterclaim, and awarding exemplary damages and attorney's fees. Specifically, Telengtan contended that it was not at fault for not withdrawing its cargo and that the CA erred in ordering the recomputation of the award based on Article 1250 of the Civil Code.
Issue(s)
Whether petitioner Telengtan Brothers & Sons, Inc. is liable for demurrage charges. Whether petitioner Telengtan Brothers & Sons, Inc. is entitled to its counterclaim for damages. Whether the award of exemplary damages and attorney's fees is proper. Whether the recomputation of the judgment award in accordance with Article 1250 of the Civil Code is proper.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals with modification. It held Telengtan liable for demurrage but deleted the order for recomputation of the judgment award in accordance with Article 1250 of the Civil Code.
Ratio Decidendi
On the liability for demurrage: The Court sustained the CA's finding that petitioner Telengtan was at fault for not withdrawing its cargo from the container vans within the 10-day free period. The Court emphasized that it is incumbent upon the carrier to advise the consignee of the arrival of goods, but sound business practice dictates that the consignee, upon notification, should immediately get the cargo. Telengtan's argument that it was not informed of the intention to deliver goods to a warehouse was dismissed, as it failed to take necessary steps to inquire for the respondent's address. Past conduct, evidenced by Exhibits "H" and "I", showed Telengtan's practice of not getting cargo immediately, leading to the conclusion that it was used to paying demurrage charges, thus placing it in estoppel. The Court reiterated that the container vans were stripped of cargo with prior authorization from the Bureau of Customs, which relieved the respondent of its obligations under the Bill of Lading (B/L) when the goods were stored in bonded warehouses. Section 17 of the Regular Long Form Inward B/L clearly states that if the consignee does not take possession or delivery of the goods as soon as they are at its disposal for removal, the goods shall be at its own risk and expense, and the carrier may store them, always at the risk and expense of the goods. On the counterclaim for damages: The Court found no necessity to discuss the prescription of the counterclaim as it affirmed the trial court's finding that the warehousing charges were necessary expenses covered by the terms of the bill of lading, for which the consignee was responsible. The Court noted that the respondent had obtained authority from the Bureau of Customs to remove the goods from the vans and deposit them in warehouses, demonstrating bona fides. This authority relieved the respondent of its obligations under the B/Ls. The Court also found that Telengtan was guilty of bad faith by its inaction, as it failed to take delivery of the shipment despite receiving notice of arrival, thereby preventing the carrier from taking on other shipments and leaving port. Such unbusiness-like delay indicated no intention of taking delivery except at its own convenience. On the award of exemplary damages and attorney's fees: The Court affirmed the trial court's award of attorney's fees and exemplary damages, as these were granted by the lower courts based on their findings of bad faith and the need to deter similar conduct. The trial court found Telengtan's inaction to be indicative of bad faith, justifying the award. On the recomputation under Article 1250 of the Civil Code: The Court found the trial court's decision, as affirmed by the CA, to be erroneous regarding the recomputation of the judgment award in accordance with Article 1250 of the Civil Code. The Court held that there was no extraordinary inflation within the meaning of Article 1250. Respondent failed to prove the occurrence of extraordinary inflation since filing the complaint in 1981, with the record bereft of any evidence, documentary or testimonial, to support such a claim. The Court reiterated that extraordinary inflation cannot be assumed and must be proven. Even if the price index rose, this increase, without more, does not constitute "extraordinary inflation" as contemplated by the Civil Code. Furthermore, absent an official pronouncement by competent authorities of the existence of extraordinary inflation, its effects are not to be applied. The Court also noted that Article 1250 requires an "agreement to the contrary" for the value of the currency at the time of payment to be the basis, and neither the trial court, CA, nor respondent pointed to any such provision in the B/Ls.
Main Doctrine
A consignee who fails to withdraw cargo from container vans within the stipulated free period is liable for demurrage charges, even if the carrier deposits the goods in a warehouse with Bureau of Customs authority, as such action is necessitated by the consignee's inaction. Furthermore, the application of Article 1250 of the Civil Code on extraordinary inflation requires proof of an unusual increase or decrease in the purchasing power of the currency beyond common fluctuation and must be reasonably unforeseen or beyond the parties' contemplation, absent which, payment is based on the currency value at the time of the obligation's establishment.