KENG HUA PAPER PRODUCTS CO. INC., petitioner v. COURT OF APPEALS, Regional Trial Court of Manila, Br.

21 and Sea-Land Service, Inc., respondents [1998] -Land Service Inc. (SLSI) is a foreign shipping company licensed to do business in the Phil.

terminal for shipment to Keng Hua Paper Products (Keng Hua for short) in Manila. SLSI issued a bill of lading. la International Container Port. Notices of arrival were sent to Keng Hua but they failed to retrieve the shipment from the container during the free time or grace period w/c lasted until Jul. 29, 1982. It remained there until Nov. 22, 1983 when shipment was unloaded from container. A total of 481 days. -day period amounting to P67,340.00. However, oblig remained unpaid w/c prompted SLSI to institute civil action for collection & damages.

1. it only purchased 50 tons of waste paper from Hong Kong shipper, Ho Kee Waste Paper as proven in a letter of credit issued by Equitable Banking Corp. and the remaining balance was only 10 tons whereas the shipment SLSI was asking Keng Hua to accept was 20 metric tons or twice that of the shipment it was expecting. 2. Accepting the shipment would violate Central Bank rules & regulations & custom & tariff laws. 3. SLSI has no cause of action since it was not Keng Hua that hired SLSI. Cause of action should be against Ho Kee w/c contracted SLSIs services. 4. They informed SLSI about the wrong shipment thru a letter dated Jan. 24, 1983. e, atty.s fees & expenses of litigation. Appealed to CA.

Issues & Ratio: 1. WON Keng Hua accepted the bill of lading sent by SLSI. YES a. Its a receipt for the goods shipped. b. A contract by w/c the shipper (Ho Kee), carrier (SLSI) & consignee (Keng Hua) undertake specific responsibilities & assume stipulated oblig. ce of a bill of lading, w/ full knowledge of its contents, gives rise to the presumption that the same was a perfected & binding contract. d that the bill of lading was a valid & perfected contract among the 3 parties. Sec. 17 of the bill of lading provided that the shipper & consignee were liable for the payment of demurrage charges for failure to discharge the shipment beyond the grace period, thus making Keng Hua liable.

a. There was only physical acceptance but in reality, it did not really accept the terms & conditions printed in the bill of lading. It invokes the Notice of Refused or On Hand Freight it received from SLSI w/c they claim acknowledges their refusal to accept the shipment. b. It sent a letter to SLSI stressing that acceptance of the bill of lading would be tantamount to smuggling since it only imported 10k kg 1 Demurrage allowance/compensation for the delay/detention of a vessel. Its a particular sum deemed fair by the parties as compensation for delays. Its the true measure of damages in all cases of mer e detention, for that allowance has reference to the ships expenses, wear & tear, and common employment. (Justice Story, The Apollon) and not 20,313 kg. This can make them susceptible to legal sanctions for violation of Central Bank laws. c. The demurrage was a consequence of Ho Kees mistake. a admits that it received the bill of lading. It had the chance to examine the document but it did not object or dissent from any term or stipulation. Its letter to SLSI saying that it cant accept the shipment was only sent 6 mos after it received the bill of lading. One can infer that it has accepted the terms & conditions of the bill of lading due to its inaction for a long time. ht does not prove anything but Keng Huas prolonged failure to object to the bill of lading. It actually supports the finding that the bill of lading was impliedly accepted by petitioner. nt likewise invoke its fear of violating the law. Mere apprehension of violating said laws w/o clear demonstration that taking delivery of shipment has become legally impossible cant defeat its contractual oblig & liability under the bill of lading. raised this issue for the first time before the SC. Such cant be entertained since an issue raised for the first time on appeal & not raised timely in the lower court proceedings is barred by estoppel. prolonged failure to receive & discharge cargo from SLSIs vessel constitutes a violation of the terms of the bill of lading. 2. WON there is a conflict WRT the amount of demurrage charges demanded by SLSI. NO The discrepancy between the amount demanded by SLSIs loss & prevention manager (P50,260.00) and its counsel (P37,800.00) can be explained by the fact that these 2 demands were made at different times. Necessarily, the longer the cargo nremained unclaimed, the higher the demurrage. CA affirmed P67,340.00 finding of RTC and such is binding on the SC. 3. WON the bill of lading is separate from the other letter of credit arrangements. YES tter of credit w/c must be kept perpetually separated from each other: a. contract of sale bet. Buyer & seller b. contract of buyer w/issuing bank c. letter of credit proper wherein bank promises to pay seller pursuant to terms & conditions stated eded when buyer & seller are in different countries such as in this case. This contract of carriage must be treated independently of the other contracts as well. Any discrepancy on the amount of goods described in the contract of sale & letter of credit will not affect the validity & enforceability of the contract of carriage as embodied in the bill of lading. Meaning, even if the

contract of sale & letter of credit stipulated 10 metric tons of waste paper, the contract of carriage stipulating 20 metric tons of such will still be valid & enforceable by virtue of the independence of these contracts. SI arising from the contract of carriage. Besides, SLSI had no knowledge of the contents of the container since it was the shipper who was responsible for loading the container. Keng Huas remedy in case of overshipment lies against the shipper (Ho Kee), not against SLSI. 4. WON interest ran only from the time Keng Hua received the complaint by summons. YES. e demurrage claim of P67,340.00 thus interest cant run from date of extrajudicial demands since during those times, no demand for interest was made. ation not constituting loan/forbearance of money is breached, interest on amt of damages may be imposed at courts discretion at rate of 6% per annum. Where demand is established w/reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (CC Art. 1169). But when certainty cant be established at the time the demand is made, interest shall begin to run only from the date the judgment of the court is made. Actual base for computation of leg interest shall be on the amount finally adjudged. ill of lading didnt specify amount of demurrage, total amount demanded cant be deemed to have been established w/reasonable certainty until trial court rendered its judgment. Holding: CA affirmed w/modification. 1. Legal interest of 6% per annum shall be computed from Sept. 28, 1990 until its full payment before finality of judgment. 2. Interest rate adjusted to 12% per annum from finality of judgment until full satisfaction. 3. Attorneys fees deleted since no reason was stated for awarding such. Its basis being improperly left to speculation & conjecture makes it tantamount to a conclusion w/o premise.