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HomeOpinionNarrow ChannelCan the Consignee Be Held Liable for Demurrage Charges?

Can the Consignee Be Held Liable for Demurrage Charges?

No. And this is the story.

In early April 1980, LS Cigar & Cigarette (LSCC) imported from Savannah, Georgia, USA, 468 rolls of board liners. The shipment was packed in 12 container vans and transported to Manila by SS Far East, owned and operated by K-Line. The ship agent of K-Line in Manila was then SBC Co (SBC).

On 11 May 1980, the SS Far East arrived at the Port of Manila. SBC notified LSCC of the arrival of the vessel/cargo consisting of the 12 container vans. SBC likewise informed LSCC that container demurrage would be charged unless the latter took delivery of the cargo within 10 days from the container yard (CY) of the terminal operator.

On the same day, SBC released the delivery permit for the 12 containers to BB Brokerage Co. (BBC) upon payment of freight charges.

The next day, BBC (in behalf of LSCC) processed the shipping documents with the Bureau of Customs. But the BOC refused to act on them because the manifest listed only 10 containers and the bill of lading (b/l) stated 12 containers.

BBC requested SBC to amend the manifest. SBC initially refused on the ground that an amendment would violate the TCC, but later on agreed to amend the manifest.

On 29 May 1980, BBC filed the amended manifest with the BOC, which approved the release of the shipment on 3 June 1980.

On 11 June 1980, SBC informed LSCC it had to pay P470,000 in demurrage charges as the free time had expired on 26 May 1980.  On 13 June 1980, LSCC paid the total demurrage charges. But the 12 containers were not released due to the breakdown of the arrastre’s equipment at the CY.

On 19 July 1980, LSCC paid additional demurrage charges in the amount of PHP20,160 for the period July 14-19, 1980 to secure the release of its 12 containers.

On 21 July 1980, LSCC wrote SBC for a refund of the demurrage charges it paid.  But SBC replied it could not modify the rules or authorize refund of the stipulated tariffs.

Hence, LSCC filed a complaint for specific performance to compel the carrier K-Line through SBC to refund the demurrage charges it paid plus damages with the Regional Trial Court (RTC).

SBC/K-Line contended the collection of container charges was authorized by the B/L and that they were not free to waive these charges because it would be unlawful for any common carrier engaged in transportation involving the foreign commerce of the United States to charge or collect a greater or lesser compensation than the rates and charges specified in its tariffs on file with the Federal Maritime Commission.

The RTC rejected LSCC’s claim for refund, holding that the B/L was the contract between the parties, and therefore LSCC was liable for demurrage charges.

The Court of Appeals affirmed the ruling of the RTC. And after the denial of its motion for reconsideration, LSCC appealed to the Supreme Court (SC). The SC ruled in the following tenor:

“ xxx.

x xx.  Petitioner [LSCC] cannot be held liable for demurrage because the delay in obtaining release of the goods was not due to its fault. The evidence shows that because the manifest issued by the respondent [K-Line], through SBC, stated 10 containers, whereas the bill of lading showed 12 containers, the Bureau of Customs refused to give an entry permit to petitioner [LSCC].  For this reason, petitioner’s broker had to see the respondent’s agent but the latter did not immediately do something to correct the manifest. 

x xx

The period of delay must be deemed to have stopped on 13 June 1980 because on this date petitioner paid PHP__________.  If it was not able to get its cargo, it was because of the breakdown of the shifter or cranes. It would be unjust to charge after 13 June 1980 since the delay in emptying the containers was not due to the fault of the petitioner [LSCC]. x xx.”

In sum, I wish to point out that the consignee may be held liable for demurrage charges but only if the delay in release of container/s is its fault.

Next story, please.  And stay safe.

For questions or comments, email the writer at atty.joeytbanday@gmail.com.

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