Dynamic Logistics International Corp. v. Cheng Lie Navigation Co., Ltd.

FIRST DIVISION

[G.R. No. 198295. June 27, 2016.]

DYNAMIC LOGISTICS INTERNATIONAL CORPORATION, petitioner,vs. CHENG LIE NAVIGATION CO., LTD., THROUGH ITS ATTORNEY-IN-FACT EFREN B. CABOTEJA, GENERAL MANAGER OF ITS SHIP AGENT, ATIKO TRANS., INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJune 27, 2016which reads as follows: aDSIHc

"G.R. No. 198295 (Dynamic Logistics International Corporation v. Cheng Lie Navigation Co., Ltd., through its Attorney-In-Fact Efren B. Caboteja, General Manager of its Ship Agent, Atiko Trans., Inc.) — This a Petition for Review on Certiorari1 assailing the Decision 2 and Resolution 3 of the Court of Appeals (CA) Seventh Division in CA-G.R. CV No. 86793. The CA affirmed with modification the Decision 4 of the Regional Trial Court (RTC) of Manila, Branch 21, in Civil Case No. 03-106356.

THE ANTECEDENT FACTS

The facts as summarized by the CA are as follows:

[Respondent] Cheng Lie Navigation Co., Ltd. is a foreign corporation doing business in the Philippines, through its ship agent, Atiko Trans., Inc. which is a private domestic corporation organized under Philippine laws, and represented herein by its General Manager, Efren Caboteja, who similarly acted as its Attorney-in-Fact in the instant case. [Petitioner] Dynamic Logistic International Corporation, formerly Manu-Trading International Corporation, is likewise a domestic corporation organized under Philippine laws.

Sometime in June 2002, Maxwill (Asia) PTE Ltd., the shipper named in the Bill of Lading (BOL) No. HCMST-1601, loaded 11,710 bags of long-grain white rice encased in 25x20' containers at the port of Ho Chi Minh, Vietnam aboard [respondent's] vessel M/V Yong Cai, which port of destination is Manila, Philippines. [Petitioner] is the consignee indicated in the BOL covering the said shipment. Subsequently, [petitioner] was notified of the arrival of the said vessel in Manila but before the subject cargoes were delivered to it as consignee thereof, the same were seized and detained by authorities of the Bureau of Customs (BOC). The said Bureau ruled that the subject rice importation was an illegal importation for failure of the importer-consignee [petitioner] to secure the required authority or permit to import rice, which is issued by the National Food Authority (NFA) prior to its importation into the country. ATICcS

[Respondent] avers that since June 16, 2002, the confiscated containers containing the subject cargoes remained in the custody of the said Bureau. It contends that as a consequence thereof, it was not able to make use of the said containers for its business operations, thus, incurring demurrage costs of US$43,575.00 (calculated at 197 days), and incidental expenses of US$2,122.64, or a total loss in the amount of US$45,697.64. Converted to the Philippine peso exchange rate at that time, the said amount is equivalent to P2,421,974.92. Consequently, [respondent] made several verbal and written demands to pay the said amount of the loss to [petitioner] but these were all unheeded by the latter. [Respondent] followed it up with demand letters on January 10, 2003 and March 12, 2003, respectively. The failure of [respondent] to collect from [petitioner] the said amount resulted in the filing of the subject complaint.

xxx xxx xxx

In its answer, [petitioner], in essence, denies the material allegations in the complaint, and raises the affirmative defense of [respondent]'s lack of cause of action in filing the instant case. [Petitioner] assails the authority of Caboteja, [respondent's] Attorney-In-Fact, by claiming that the latter failed to show proof that he was authorized by [respondent] corporation to file the subject complaint in its behalf. Moreover, [petitioner] asserts that it did not hire [respondent] to make the shipment.

[Petitioner] argues that it is a third party and a stranger to the shipment transaction entered into between [respondent] and the shipper at Ho Chi Minh. It invokes the principle of relativity of contracts where only parties to it are bound by its terms and conditions without prejudicing a third person who is a stranger to the said contract. [Petitioner] maintains that [respondent] should only proceed against the shipper alone, and not against it who did not contract the shipment of the confiscated goods and the container vans containing the same. In its compulsory counterclaim, [petitioner] seeks payment of moral damages for its besmirched corporate reputation, exemplary damages, attorney's fees, and costs of the suit as a result of the filing of the complaint. 5

THE RULING OF THE RTC

The RTC had to resolve first the issue of whether Caboteja had the authority to file the complaint for sum of money and damages. 6 In this regard, it ruled that the Special Power of Attorney and the Secretary's Certificate of Atiko Trans., Inc. were both sufficient to affirm and ratify the filing of the Complaint. 7 Resolving the issue of whether petitioner herein was liable for the demurrage cost and incidental expenses in the amount of P2,421,974.92, and for damages, the trial court ruled that no proof had been adduced as to the true extent and amount of the damages incurred. 8 It held that the Bill of Lading did not contain any stipulation for the payment of demurrage charges or other expenses. 9 It held, too, that the undated Cash/Check Voucher could not serve as proof of payment if respondent had indeed incurred the additional or incidental expenses as claimed. 10 ETHIDa

The RTC instead applied Article 2224 11 of the Civil Code and awarded temperate damages as well as exemplary damages, litigation expenses, attorney's fees, and costs of suit in this wise:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Dynamic Logistics International Corporation to pay plaintiff Cheng Lie Navigation Co., Ltd., thru its Attorney-in-Fact, Efren B. Caboteja, as General Manager of its Ship Agent Atiko Trans., Inc. the amount of:

1. P500,000.00 as and by way of temperate damages;

2. P100,000.00 as and by way of exemplary damages;

3. P50,000.00 as and by way of litigation expenses;

4. P100,000.00 as and by way of attorney's fees; and

5. Costs of suit.

Defendant's counterclaims are hereby DISMISSED for lack of merit.

SO ORDERED. 12

THE RULING OF THE CA

Both parties interposed an appeal before the CA. 13 Respondent insisted that petitioner be made liable for demurrage costs and be ordered to pay P2,421,974.92. Petitioner, on the other hand, claimed that the trial court was correct in ruling that respondent had failed to prove any stipulation on demurrage charges and any payment of the incidental expenses to the BOC. 14 Petitioner asked the appellate court, therefore, to dismiss the appeal for lack of merit and to order respondent instead to pay petitioner P1 million as moral damages, P500,000 as exemplary damages and P150,000 as attorney's fees, as well as P2,500 per court hearing attended by counsel. 15

The CA rendered judgment, the dispositive portion of which reads:

WHEREFORE, premises considered, the appeal is DISMISSED. The impugned decision of the court a quo is hereby AFFIRMED WITH MODIFICATION that the award of attorney's fees is reduced to P50,000.00. Costs against defendant-appellant.

SO ORDERED. 16

Respondent filed its Motion for Reconsideration 17 of the Decision; and petitioner, its Comment/Opposition. 18 The motion was, however, denied for lack of merit. 19 TIADCc

Petitioner subsequently filed the present Petition, in which it contends that the CA committed a reversible error in affirming the award of damages. The former further argues that it cannot be at fault, since it merely relied in good faith on the opinion of the National Food Authority (NFA) that a permit or an authorization was no longer required. 20 Respondent in its Comment 21 states that petitioner is liable, because the latter failed to effect the release of the subject containers within the prescribed period. 22 Petitioner filed its Reply, 23 in which it reiterates that its reliance on the NFA's opinion that no permit was required is a valid defense. 24

OUR RULING

We are being asked to determine the propriety of the CA's affirmance with modification of the RTC's ruling with respect to petitioner's liability.

First, We uphold the trial court's findings, which were later affirmed by the CA, that the Bill of Lading did not contain any stipulation on the payment of demurrage charges or other expenses. 25

We have previously decreed that a bill of lading can function both as a receipt and as a contract, to wit:

It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. (Citation omitted and emphasis supplied) 26

A close inspection of the one-page Bill of Lading No. HCMST 1601, 27 which was offered in evidence, reveals that the charges, as well as the stipulation regarding the payment of those charges, were not indicated. As We have previously declared in Magellan Manufacturing v. CA:28

Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage. Liability for demurrage, using the word in its strictly technical sense, exists only when expressly stipulated in the contract. Using the term in its broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or of their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges. (Citation omitted and emphasis supplied) 29 cSEDTC

Hence, We find petitioner not liable for the demurrage costs and other expenses being claimed by respondent absent any evidence that the parties expressly bound themselves to that arrangement.

However, We agree with the CA in likewise affirming the RTC ruling that despite the absence of proof of a stipulation on demurrage costs and other expenses, petitioner can still be held liable for damages. As correctly stated by the RTC and subsequently affirmed by the CA, loss was incurred by respondent due to the failure of petitioner to comply with the latter's obligation as a consignee to load or unload the cargo with reasonable dispatch.

In its Answer 30 before the RTC, petitioner admitted that it was the consignee of the goods — but later claimed during trial that it was a licensed bonded warehouse — that had relied in good faith on Opinion No. 095, Series of 1994 dated 30 June 1994 issued by the Department of Justice (DOJ). Petitioner alleged that according to the DOJ Opinion, it was not required to secure a permit for the importation. 31 However, this issue was properly threshed out by the trial court, whose ruling was affirmed by the CA. According to the RTC, petitioner is not a firm registered with the Export Processing Zone Authority (EPZA) and its claim that being a bonded warehouse is akin to being an EPZA-registered firm has no legal basis. 32 To lend credence to the claim of petitioner, We also required it to furnish this Court with a clear legible copy of the DOJ Opinion No. 095. 33 But after being granted additional time, it manifested that it had failed to locate the document. 34 We therefore see no reason to reverse the assailed ruling absent any compelling reason.

Meanwhile, We modify the CA ruling insofar as We further decree the payment of interest of 6% per annum on all amounts awarded from the finality of this ruling until full payment in light of our ruling in Nacar v. Gallery Frames. 35

WHEREFORE, premises considered, the assailed ruling is AFFIRMED with MODIFICATION in that petitioner is likewise ordered to pay 6% interest per annum on all amounts awarded by the Court of Appeals from the finality of this judgment until full payment.

SO ORDERED."

Very truly yours,

(SGD.) EDGAR O. ARICHETADivision Clerk of Court

Footnotes

1. Rollo, pp. 25-44; dated 7 October 2011.

2. Id. at 10-21; dated 31 January 2011; penned by Associate Justice Amelita G. Tolentino and concurred in by Justices Normandie B. Pizarro and Ruben C. Ayson.

3. Id. at 22-23; dated 18 August 2011.

4. Id. at 227-234; dated 27 December 2005 and penned by Judge Amor A. Reyes.

5. Id. at 11-14.

6. Id. at 175.

7. Id.

8. Id. at 176.

9. Id.

10. Id.

11. Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty.

12. Id. at 234.

13. Appellant's Brief dated 15 August 2006 (rollo, pp. 179-199); Appellee's Brief dated 13 September 2006 (rollo, pp. 208-215).

14. Id. at 214.

15. Id.

16. Id. at 20.

17. Id. at 236-241.

18. Id. at p. 22.

19. Id. at 23.

20. Id. at 33-34.

21. Id. at 244-249.

22. Id. at 248.

23. Id. at 259-265; dated 27 February 2012.

24. Id. at 262.

25. See Note 9.

26. 278 Phil. 118, 127 (1991).

27. Rollo, p. 54.

28. See Note 26.

29. Magellan Manufacturing Marketing Corp. v. CA.

30. Answer, p. 1; rollo, p. 58.

31. Rollo, p. 174.

32. Id. at 175.

33. Id. at 243; in a Resolution dated 24 November 2011.

34. Id. at 286-288; in a Manifestation dated 18 September 2012.

35. G.R. No. 189871, 13 August 2013.