Professional Documents
Culture Documents
D 2015
Obligations and Contracts
Prof.J. Batongbacal
- Keng Hua duly notified Sea-Land about the wrong shipment through a letter dated January 24, 1983.
- Keng Hua is not bound by the bill of lading because it never gave its consent. It admits physical
acceptance of the bill of lading, but argues that its subsequent actions belie the finding that it accepted the
terms.
- Notice of Refused or On Hand Freight: proof that Keng Hua declined to accept the shipment.
RESPONDENTS ARGUMENTS:
- None really, just that Keng Hua should pay demurrage charges since it delayed Sea-Lands vessel by
failing to unload the shipment during the free time period.
RATIO:
1) YES, Keng Hua accepted and is thus bound by the bill of lading.
- A bill of lading has two functions:
a) receipt for the goods shipped,
b) a contract by which three parties (shipper, carrier, and consignee) undertake specific
responsibilities and assume stipulated obligations.
- A bill of lading delivered and accepted constitutes the contract of carriage even though not signed because
the acceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance
of the contract and of all its terms and conditions of which the acceptor has actual or constructive notice.
- Acceptance = perfect and binding contract
- The bill of lading between Ho Kee, Keng Hua, and Sea-Land was a valid and PERFECTED contract.
Section 17 of the bill of lading provides that the shipper and consignee were liable for demurrage charges
for the failure to discharge the shipment within the grace period.
- SC not persuaded by Keng Huas arguments. Keng Hua did not immediately object to or dissent from any
term or stipulated in the bill of lading. It waited for SIX MONTHS to send a letter to Sea-Land saying that it
would not accept the shipment.
- The inaction for such a long period conveys the clear inference that it accepted the terms and
conditions of the bill of lading.
- Re: Notice of Refused or On Hand Freight: said notice was not written by Keng Hua; it was sent by SeaLand to Keng Hua four months after it received the bill of lading. Its only significance is to highlight Keng
Huas prolonged failure to object to the bill of lading.
- Issue of WoN Keng Hua accepted the bill of lading is raised for the first time in the SC (not raised in the
lower courts). Hence, it is barred by estoppel.
- Prolonged failure to receive and discharge cargo -> violation of terms of bill of lading -> liability for
demurrage
2) YES, it is proper
- Keng Hua argued that Sea-Land made no demand for the sum of P67,340. Also, Sea-Lands loss and
prevention manager (P50,260) and its counsel (P37,800) asked for different amounts.
- The amount fo P67,340 was a factual conclusion of the trial court, affirmed by the Court of Appeals, and is
therefore binding on the SC. Such finding is supported by extant evidence.
- Re: discrepancy in amounts demanded: result of the variance of dates when the demands were made.
The longer the cargo remained unclaimed, the higher the demurrage. Thus when counsel demanded on
April 24, 1983 P37,800, it already ballooned to P67,340 by November 22.
3) NO.
- Re: violation of laws: mere apprehension of violating said laws, without a clear demonstration that taking
delivery of the shipment has become legally impossible, cannot defeat Keng Huas obligations under the bill
of lading.
4) NO.