G.R. No. 110581 September 21, 1994
TELENGTAN BROTHERS & SONS, INC. (LA SUERTE CIGAR & CIGARETTE), petitioner, vs. THE COURT OF APPEALS, KAWASAKI KISHEN KAISHA, LTD. and SMITH, BELL & CO., INC., respondents.

FACTS

Petitioner, as consignee, imported containerized cargo shipped via respondent carrier K-Line. The shipment arrived in Manila on two separate vessels. The shipping agent, Smith, Bell & Co., released the delivery permit upon payment of freight. However, the Bureau of Customs initially refused to process the entry because the manifest for the first arriving vessel listed only 10 containers, while the bill of lading covered 12. The shipping agent’s subsequent amendment of the manifest caused a delay. By the time the manifest was approved on July 3, 1979, the stipulated “free time” for claiming the cargo had allegedly expired, and demurrage charges began to accrue.
Petitioner paid substantial demurrage under protest to secure its goods, arguing the delay was not its fault but caused by the carrier’s manifest error and later by arrastre equipment breakdowns at the port. Petitioner filed an action for specific performance and refund, claiming the demurrage charges were unjustly collected. The trial court and the Court of Appeals ruled against the petitioner, prompting this petition for review.

ISSUE

Whether the petitioner is liable for the demurrage charges levied by the carrier for the entire period of delay.

RULING

The Supreme Court ruled that petitioner is liable only for a limited period of demurrage and is entitled to a refund. The legal logic is anchored on the principle that a consignee’s liability for demurrage commences only from the time it is able to effect withdrawal of the cargo. The Court found that the petitioner could not have possibly withdrawn the goods before July 3, 1979, as the Bureau of Customs only approved the amended manifest on that date. Therefore, the “free time” should be reckoned from July 3, not from the vessel’s arrival. The delay from the arrival date until July 3 was attributable to the carrier’s error in the manifest, for which the consignee cannot be penalized.
Furthermore, for the period after July 13, the Court found the delay was due to the arrastre operator’s equipment failure, a risk borne by the carrier under the bill of lading which placed responsibility for discharge and delivery on the carrier. Consequently, petitioner’s demurrage liability is confined only to the period from July 3 to July 13, 1979. Recomputing the charges based on the contract rates for this period, the Court found petitioner had overpaid. The decision of the Court of Appeals was set aside, and respondents were ordered to refund the overpayment of P39,360.00 to the petitioner.