Professional Documents
Culture Documents
—————— —————— In finding for the petitioner, the trial court held that
Balance P303,483.37 the petitioner was absolved in its obligation to pick-
up the remaining sulfuric acid because its failure
Less Charges
was due to force majeure. According to the trial
Basay Maintenance court, it was private respondent who committed a
Expense breach of contract when it failed to accommodate
from Aug. 15 to Dec. the additional order of the petitioner, to replace
15, 1986 those that sank in the sea, thus:
because it was, based on SGS survey report, Since the third party surveyor was neither
unstable and unseaworthy. petitioner's nor private respondent's employee, his
Witness surveyor Eugenio Rabe's incident report, professional report should carry more weight than
dated December 13, 1986 in Basay, Negros Oriental, that of Melecio Hernandez, an employee of
elucidated this point: petitioner. Petitioner, as the buyer, was obligated
under the contract to undertake the shipping
Loading was started at 1500hrs. requirements of the cargo from the private
November 19. At 1600Hrs. November respondent's loadports to the petitioner's
20, loading operation was temporarily designated warehouse. It was petitioner which
stopped by the vessel's master due to chartered M/T Sultan Kayumanggi. The vessel was
ships stability was heavily tilted to petitioner's agent. When it failed to comply with the
port side, ship's had tried to transfer necessary loading conditions of sulfuric acid, it was
the loaded acid to stbdside but failed incumbent upon petitioner to immediately replace
to do so, due to their auxiliary pump M/T Sultan Kayumanggi with another seaworthy
on board does not work out for acid. vessel. However, despite repeated demands,
xxx xxx xxx petitioner did not comply seasonably.
Note. Attending surveyor arrived BMC Additionally, petitioner claims that private
Basay on November 22, due to respondent's employee, Gil Belen, had
delayed advice of said vessel recommended to petitioner to fully utilize the
Declared quantity loaded onboard vessel, hence petitioner's request for additional
based on data's provided by order to complete the vessel's 500 MT capacity. This
PHILPHOS representative. claim has no probative pertinence nor solid basis. A
party who asserts that a contract of sale has been
On November 26, two representative
changed or modified has the burden of proving the
of shipping company arrived Basay to
change or modification by clear and convincing
assist the situation, at 1300Hrs
evidence. 22 Repeated requests and additional
repairing and/or welding of tank
orders were contained in petitioner's letters to
number 5 started at 1000Hrs
private respondent. In contrast, Belen's alleged
November 27, repairing and/or
action was only verbal; it was not substantiated at
welding was suspended due to the
all during the trial. Note that, using the vessel to full
explosion of tank no. 5. Explosion
capacity could redound to petitioner's advantage,
ripped about two feet of the double
not the other party's. If additional orders were at the
bottom tank.
instance of private respondent, the same must be
November 27 up to date no progress properly proved together with its relevance to the
of said vessel. 19 question of delay. Settled is the principle in law that
While at Sangi, Cebu, the vessel's condition (listing) proof of verbal agreements offered to vary the
did not improve as the survey report therein noted: terms of written agreements is inadmissible, under
the parol evidence rule. 23 Belen's purported
Declared quantity loaded on board recommendation could not be taken at face value
was based on shore tank withdrawal and, obviously, cannot excuse petitioner's default.
due to ship's incomplete tank
calibration table. Barge displacement Respondent court found petitioner's default
cannot be applied due to ship was unjustified, and on this conclusion we agree:
listing to Stboard side which has been It is not true that the defendant was
loaded with rocks to control her not in a position to deliver the
stability. 20 272.481 MT which was the balance of
the original 500 MT purchased by the In order that the debtor may be in default, it is
plaintiff. The whole lot of 500 MT was necessary that the following requisites be present:
ready for lifting as early as August 15, (1) that the obligation be demandable and already
1986. What the defendant could not liquidated; (2) that the debtor delays performance;
sell to the plaintiff was the additional and (3) that the creditor requires the performance
227.51 MT which said plaintiff was judicially or extrajudicially. 27
ordering, for the reason that the In the present case, private respondent required
defendant was short of the supply petitioner to ship out or lift the sulfuric acid as
needed. The defendant, however, had agreed, otherwise petitioner would be charged for
no obligation to agree to this the consequential damages owing to any delay. As
additional order and may not be stated in private respondent's letter to petitioner,
faulted for its inability to meet the dated December 12, 1986:
said additional requirements of the
plaintiff. And the defendant's Subject: M/T "KAYUMANGGI"
incapacity to agree to the delivery of Gentlemen:
another 227.51 MT is not a legal
justification for the plaintiffs refusal to This is to reiterate our telephone
lift the remaining 272.481. advice and our letter HJR-8612-031
dated 2 December 1986 regarding
It is clear from the plaintiff's letters to your sulfuric acid vessel, M/T
the defendant that it wanted to send "KAYUMANGGI".
the "M/T Don Victor" only if the
defendant would confirm that it was As we have, in various instances,
ready to deliver 500 MT. Because the advised you, our Basay wharf will
defendant could not sell another have to be vacated 15th December
227.51 MT to the plaintiff, the latter 1986 as we are expecting the arrival
did not send a new vessel to pick up of our chartered vessel purportedly to
the balance of the 500 MT originally haul our equipments and all other
contracted for by the parties. This, remaining assets in Basay. This
inspite the representations made by includes our sulfuric acid tanks. We
the defendant for the hauling thereof regret, therefore, that if these tanks
as scheduled and its reminders that are not emptied on or before the 15th
any expenses for the delay would be of December, we either have to
for the account of the plaintiff. 24 charge you for the tanks waiting time
at Basay and its consequential costs
We are therefore constrained to declare that the (i.e. chartering of another vessel for
respondent court did not err when it absolved its second pick-up at Basay, handling,
private respondent from any breach of contract. etc.) as well as all other incremental
Our next inquiry is whether damages have been costs on account of the protracted
properly awarded against petitioner for its loading delay. 28 (Emphasis supplied)
unjustified delay in the performance of its obligation Indeed the above demand, which was unheeded,
under the contract. Where there has been breach of justifies the finding of delay. But when did such
contract by the buyer, the seller has a right of action delay begin? The above letter constitutes private
for damages. Following this rule, a cause of action of respondent's extrajudicial demand for the petitioner
the seller for damages may arise where the buyer to fulfill its obligation, and its dateline is significant.
refuses to remove the goods, such that buyer has to Given its date, however, we cannot sustain the
remove them. 25 Article 1170 of the Civil Code finding of the respondent court that petitioner's
provides: delay started on August 6, 1986. The Court of
Those who in the performance of their Appeals had relied on private respondent's earlier
obligations are guilty of fraud, letter to petitioner of that date for computing the
negligence, or delay and those who in commencement of delay. But as averred by
any manner contravene the tenor petitioner, said letter of August 6th is not a
thereof, are liable for damages. categorical demand. What it showed was a mere
statement of fact, that "[F]for your information any
Delay begins from the time the obligee judicially or delay in Sulfuric Acid withdrawal shall cost us
extrajudicially demands from the obligor the incremental expenses of P2,000.00 per day."
performance of the obligation. 26 Art. 1169 states: Noteworthy, private respondent accepted the full
Art. 1169. Those obliged to deliver or payment by petitioner for purchases on October 3,
to do something incur in delay from 1986, without qualification, long after the August
the time the obligee judicially or 6th letter. In contrast to the August 6th letter, that
extrajudicially demands from them of December 12th was a categorical demand.
the fulfillment of their obligation.
Records reveal that a tanker ship had to pick-up the buyer or seller the goods are at
sulfuric acid in Basay, then proceed to get the the risk of the party at fault.
remaining stocks in Sangi, Cebu. A period of three (emphasis supplied)
days appears to us reasonable for a vessel to travel On this score, we quote with approval the findings of
between Basay and Sangi. Logically, the the appellate court, thus:
computation of damages arising from the shipping
delay would then have to be from December 15, . . . The defendant [herein private
1986, given said reasonable period after the respondent] was not remiss in
December 12th letter. More important, private reminding the plaintiff that it would
respondent was forced to vacate Basay wharf only have to bear the said expenses for
on December 15th. Its Basay expenses incurred failure to lift the commodity for an
before December 15, 1986, were necessary and unreasonable length of time.
regular business expenses for which the petitioner But even assuming that the plaintiff
should not be obliged to pay. did not consent to be so bound, the
Note that private respondent extended its lease provisions of Civil Code come in to
agreement for Sangi, Cebu storage tank until August make it liable for the damages sought
31, 1987, solely for petitioner's sulfuric acid. It by the defendant.
stands to reason that petitioner should reimburse Art. 1170 of the Civil Code provides:
private respondent's rental expenses of P32,000
monthly, commencing December 15, 1986, up to Those who in the
August 31, 1987, the period of the extended lease. performance of their
Note further that there is nothing on record refuting obligations are guilty of
the amount of expenses abovecited. Private fraud, negligence, or
respondent presented in court two supporting delay and those who in
documents: first, the lease agreement pertaining to any manner contravene
the equipment, and second a letter dated June 15, the tenor thereof, are
1987, sent by Atlas Fertilizer Corporation to private liable for damages.
respondent representing the rental charges Certainly, the plaintiff [herein
incurred. Private respondent is entitled to recover petitioner] was guilty of negligence
the payment for these charges. It should be and delay in the performance of its
reimbursed the amount of two hundred seventy two obligation to lift the sulfuric acid on
thousand August 15, 1986 and had contravened
(P272,000.00) 29 pesos, corresponding to the total the tenor of its letter-contract with the
amount of rentals from December 15, 1986 to defendant. 30
August 31, 1987 of the Sangi, Cebu storage tank.
As pointed out earlier, petitioner is guilty of delay,
Finally, we note also that petitioner tries to exempt after private respondent made the necessary
itself from paying rental expenses and other extrajudicial demand by requiring petitioner to lift
damages by arguing that expenses for the the cargo at its designated loadports. When
preservation of fungible goods must be assumed by petitioner failed to comply with its obligations under
the seller. Rental expenses of storing sulfuric acid the contract it became liable for its shortcomings.
should be at private respondent's account until Petitioner is indubitably liable for proven damages.
ownership is transferred, according to petitioner.
However, the general rule that before delivery, the Considering, however, that petitioner made an
advance payment for the unlifted sulfuric acid in the
risk of loss is borne by the seller who is still the
owner, is not applicable in this case because amount of three hundred three thousand, four
hundred eighty three pesos and thirty seven
petitioner had incurred delay in the performance of
its obligation. Article 1504 of the Civil Code clearly centavos (P303,483.37), it is proper to set-off this
amount against the rental expenses initially paid by
states:
private respondent. It is worth noting that the
Unless otherwise agreed, the goods adjustment and allowance of private respondent's
remain at the seller's risk until the counterclaim or set-off in the present action, rather
ownership therein is transferred to than by another independent action, is encouraged
the buyer, but when the ownership by the law. Such practice serves to avoid circuitry of
therein is transferred to the buyer the action, multiplicity of suits, inconvenience, expense,
goods are at the buyer's risk whether and unwarranted consumption of the court's time. 31
actual delivery has been made or not, The trend of judicial decisions is toward a liberal
except that: extension of the right to avail of counterclaims or
xxx xxx xxx set-offs. 32 The rules on counterclaims are designed
to achieve the disposition of a whole controversy
(2) Where actual delivery has been involving the conflicting claims of interested parties
delayed through the fault of either at one time and in one action, provided all parties
can be brought before the court and the matter 19 Records, p. 21.
decided without prejudicing the right of any party. 33 20 Id. at 23.
Set-off in this case is proper and reasonable. It
involves deducting P272,000.00 (rentals) from 21 TSN, December 20, 1989, p. 6.
P303,483.37 (advance payment), which will leave 22 77 Corpus Juris Secundum, Sales, Section
the amount of P31,483.37 refundable to petitioner. 86, Evidence, p. 773.
WHEREFORE, the petition is hereby DENIED. The 23 Gerales vs. Court of Appeals, 218 SCRA
assailed decision of the Court of Appeals in CA G.R. 638, 648-649 (1993); citing Continental
CV No. 33802 is AFFIRMED, with MODIFICATION that Airlines Inc. vs. Santiago. 172 SCRA 490
the amount of damages awarded in favor of private (1989).
respondent is REDUCED to Two hundred seventy
two thousand pesos (P272,000.00). It is also 24 Rollo, p. 42.
ORDERED that said amount of damages be OFFSET 25 78 Corpus Juris Secundum, Sales, Action
against petitioner's advance payment of Three for Damages, Section 462, Right of Action, p.
hundred three thousand four hundred eighty three 112.
pesos and thirty-seven centavos (P303,483.37)
representing the price of the 272.481 MT of sulfuric 26 SSS vs. Moonwalk Development and
Housing Corporation, 221 SCRA 119, 127
acid not lifted. Lastly, it is ORDERED that the excess
amount of thirty one thousand, four hundred eighty (1993).
three pesos and thirty seven centavos (P31,483.37) 27 Id. at 128.
be RETURNED soonest by private respondent to
28 Records, p. 137.
herein petitioner.1âwphi1.nêt
29 P32,000 x 8.5 months.
Costs against the petitioner.
30 Rollo, pp. 43-44.
SO ORDERED.
31 Development Bank of the Philippines vs.
Bellosillo, Mendoza and Buena, JJ., concur.
Court of Appeals, 249 SCRA 331, 341 (1995).
Footnotes 32 Id., citing 20 Am. Jur. 2d, Counterclaim,
1 Rollo, pp. 36-45, Penned by Justice 237-238.
Associate Justice Salome A. Montoya, 33 Id., citing Kuenzel vs. Universal
concurred in by Justices Jose C. Campos and
Carloading and Distributing Co., Inc. (1939)
Serafin V.C. Guingona, of the Special Fifth 29 F. Supp. 407.
Division of the Court of Appeals.
2 Rollo p. 44.
3 Records, pp. 5-6.
4 Id. at 136.
5 Id. at 137.
6 TSN, September 1, 1989, pp. 28-29.
7 Records, pp. 47-48. Emphasis ours.
8 Id. at 49.
9 Id. at 50.
10 Id. at 41.
11 Id. at 138.
12 Id. at 40.
13 Id. at 65, Affidavit of Gil B. Belen.
14 Id. at 46.
15 Rollo, p. 51.
16 Id. at 52-53.
17 Id. at 41-42.
18 Mijares vs. CA, 271 SCRA 558, 566 (1997),
citing Cuizon vs. Court of Appeals, 260 SCRA
645, (1996); Floro vs. Llenado, 244 SCRA 713
(1995).