LORENZO SHIPPING vs.

BJ MATHEL
FACTS
Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in coastwise shipping. Respondent BJ Marthel International, Inc. is an
importer and distributor of different brands of engines and spare parts.
Respondent supplied petitioner with spare parts for the latter's marine engines. According to the quotation it sent, deliveries of such items are
“within 2 months after receipt of firm order.” Petitioner thereafter issued to respondent Purchase Order No. 13839 for the procurement of one set
of cylinder liner, valued at P477,000, to be used for M/V Dadiangas Express. The purchase order was co-signed by Jose Go, Jr., petitioner's vice-
president, and Henry Pajarillo, respondent’s sales manager.
Instead of paying the 25% down payment (indicated in the purchase order) for the first cylinder liner, petitioner issued in favor of respondent ten
postdated checks. The checks were supposed to represent the full payment of the aforementioned cylinder liner.
Subsequently, petitioner issued Purchase Order No. 14011, for another unit of cylinder liner. This purchase order stated the term of payment to be
"25% upon delivery, balance payable in 5 bi-monthly equal installments." Like the first purchase order, the second purchase order did not state the
date of the cylinder liner's delivery.
On 26 January 1990, respondent deposited petitioner's check that was postdated 18 January 1990, however, the same was dishonored by the drawee
bank due to insufficiency of funds. The remaining nine postdated checks were eventually returned by respondent to petitioner.
Petitioner claimed that it replaced said check with a good one, the proceeds of which were applied to its other obligation to respondent. For its part,
respondent insisted that it returned said postdated check to petitioner.
On 20 April 1990, Pajarillo delivered the two cylinder liners at petitioner's warehouse in Manila. The sales invoices evidencing the delivery of the
cylinder liners both contain the notation "subject to verification" under which the signature of petitioner's warehouseman, appeared.
Respondent sent a Statement of Account and respondent's vice-president sent a demand letter dated to petitioner requiring the latter to pay. Petitioner
sent the former a letter offering to pay only P150,000 for the cylinder liners. In said letter, petitioner claimed that as the cylinder liners were
delivered late and due to the scrapping of the M/V Dadiangas Express, it (petitioner) would have to sell the cylinder liners in Singapore and pay
the balance from the proceeds of said sale.
Respondent filed an action for sum of money and damages before the RTC. Prior to the filing of a responsive pleading, respondent filed an amended
complaint with preliminary attachment. The amendments also pertained to the issuance by petitioner of the postdated checks and the amounts of
damages claimed.
The RTC granted respondent's prayer for the issuance of a preliminary attachment. Petitioner filed an Urgent Ex-Parte Motion to Discharge Writ
of Attachment attaching thereto a counter-bond which the RTC allowed.
Petitioner afterwards filed its Answer alleging therein that time was of the essence in the delivery of the cylinder liners and that the delivery on 20
April 1990 of said items was late as respondent committed to deliver said items "within two (2) months after receipt of firm order."
Respondent filed a Second Amended Complaint with Preliminary Attachment which dealt solely with the number of postdated checks issued by
petitioner as full payment for the first cylinder liner it ordered from respondent. (In the first amended complaint, only nine postdated checks were
involved, in its second amended complaint, there were ten postdated checks).
Petitioner filed a Motion alleging therein that the cylinder liners run the risk of obsolescence and deterioration to the prejudice of the parties to this
case. Thus, petitioner prayed that it be allowed to sell the cylinder liners at the best possible price and to place the proceeds of said sale in escrow.
This motion was granted.
The RTC dismissed the complaint which ordered the plaintiff to pay P50,000.00 to the defendant. It held respondent bound to the quotation it
submitted to petitioner particularly with respect to the terms of payment and delivery of the cylinder liners. It also declared that respondent had
agreed to the cancellation of the contract of sale when it returned the postdated checks issued by petitioner.
The CA reversed the decision of the RTC.
ISSUES
1. Whether or not respondent incurred delay in performing its obligation under the contract of sale - NO
2. Whether or not said contract was validly rescinded by petitioner. -NO
RULING
Petitioner maintains that its obligation to pay fully the purchase price was extinguished because the adverted contract was validly terminated due
to respondent's failure to deliver within the two-month period. The threshold question, then, is: Was there late delivery of the subjects of the contract
of sale to justify petitioner to disregard the terms of the contract considering that time was of the essence thereof?
In determining whether time is of the essence in a contract, the ultimate criterion is the actual or apparent intention of the parties and before time
may be so regarded by a court, there must be a sufficient manifestation, either in the contract itself or the surrounding circumstances of that intention.
Petitioner insists that although its purchase orders did not specify the dates when the cylinder liners were supposed to be delivered, nevertheless,
respondent should abide by the term of delivery appearing on the quotation it submitted to petitioner. Petitioner theorizes that the quotation
embodied the offer from respondent while the purchase order represented its (petitioner's) acceptance of the proposed terms of the contract of sale.
Thus, petitioner is of the view that these two documents "cannot be taken separately as if there were two distinct contracts." We do not agree.
While this Court recognizes the principle that contracts are respected as the law between the contracting parties, this principle is tempered by the
rule that the intention of the parties is primordial and "once the intention of the parties has been ascertained, that element is deemed as an integral
part of the contract as though it has been originally expressed in unequivocal terms."
In the present case, we cannot subscribe to the position of petitioner that the documents, by themselves, embody the terms of the sale of the cylinder
liners. One can easily glean the significant differences in the terms as stated in the formal quotation and Purchase Order No. 13839 with regard to
the due date of the down payment for the first cylinder liner and the date of its delivery as well as Purchase Order No. 14011 with respect to the
date of delivery of the second cylinder liner. While the quotation provided by respondent evidently stated that the cylinder liners were supposed to
be delivered within two months from receipt of the firm order of petitioner and that the 25% down payment was due upon the cylinder liners'
delivery, the purchase orders prepared by petitioner clearly omitted these significant items. The petitioner's Purchase Order No. 13839 made no
mention at all of the due dates of delivery of the first cylinder liner and of the payment of 25% down payment. Its Purchase Order No. 14011
likewise did not indicate the due date of delivery of the second cylinder liner.
In the instant case, the formal quotation provided by respondent represented the negotiation phase of the subject contract of sale between the parties.
As of that time, the parties had not yet reached an agreement as regards the terms and conditions of the contract of sale of the cylinder liners.
Petitioner could very well have ignored the offer or tendered a counter-offer to respondent while the latter could have, withdrawn or modified the
same. The parties were at liberty to discuss the provisions of the contract of sale prior to its perfection. In this connection, we turn to the testimonies
of Pajarillo and Kanaan, Jr., that the terms of the offer were, indeed, renegotiated prior to the issuance of Purchase Order No. 13839.
The law implies, however, that if no time is fixed, delivery shall be made within a reasonable time, in the absence of anything to show that an
immediate delivery intended.
We also find significant the fact that while petitioner alleges that the cylinder liners were to be used for dry dock repair and maintenance of its M/V
Dadiangas Express between the later part of December 1989 to early January 1990, the record is bereft of any indication that respondent was aware
of such fact. The failure of petitioner to notify respondent of said date is fatal to its claim that time was of the essence in the subject contracts of
sale.
Finally, the ten postdated checks issued in November 1989 by petitioner and received by the respondent as full payment of the purchase price of
the first cylinder liner supposed to be delivered on 02 January 1990 fail to impress. It is not an indication of failure to honor a commitment on the
part of the respondent. The earliest maturity date of the checks was 18 January 1990. As delivery of said checks could produce the effect of payment
only when they have been cashed, respondent's obligation to deliver the first cylinder liner could not have arisen as early as 02 January 1990 as
claimed by petitioner since by that time, petitioner had yet to fulfill its undertaking to fully pay for the value of the first cylinder liner. As explained
by respondent, it proceeded with the placement of the order for the cylinder liners with its principal in Japan solely on the basis of its previously
harmonious business relationship with petitioner.
As an aside, let it be underscored that "[e]ven where time is of the essence, a breach of the contract in that respect by one of the parties may be
waived by the other party's subsequently treating the contract as still in force." Petitioner's receipt of the cylinder liners when they were delivered
to its warehouse on 20 April 1990 clearly indicates that it considered the contract of sale to be still subsisting up to that time. Indeed, had the
contract of sale been cancelled already as claimed by petitioner, it no longer had any business receiving the cylinder liners even if said receipt was
"subject to verification." By accepting the cylinder liners when these were delivered to its warehouse, petitioner indisputably waived the claimed
delay in the delivery of said items.
We, therefore, hold that in the subject contracts, time was not of the essence. The delivery of the cylinder liners on 20 April 1990 was made within
a reasonable period of time considering that respondent had to place the order for the cylinder liners with its principal in Japan and that the latter
was, at that time, beset by heavy volume of work.
There having been no failure on the part of the respondent to perform its obligation, the power to rescind the contract is unavailing to the petitioner.
Here, there is no showing that petitioner notified respondent of its intention to rescind the contract of sale between them. Quite the contrary,
respondent's act of proceeding with the opening of an irrevocable letter of credit on 23 February 1990 belies petitioner's claim that it notified
respondent of the cancellation of the contract of sale. Truly, no prudent businessman would pursue such action knowing that the contract of sale,
for which the letter of credit was opened, was already rescinded by the other party

Loadstar v Pioneer G.R. No. 157481 January 24, 2006 J. Quisimbing

Facts: Petitioner Loadstar Shipping is the registered owner and operator of the vessel M/V Weasel. On June 6, 1984, it entered into a voyage-
charter with Northern Mindanao Transport Company, Inc. for the carriage of 65,000 bags of cement from Iligan City to Manila. The shipper was
Iligan Cement Corporation, while the consignee in Manila was Market Developers, Inc. 67,500 bags of cement were loaded on board M/V
Weasel and stowed in the cargo holds for delivery to the consignee. Prior to the voyage, the consignee insured the shipment of cement with
respondent Pioneer Asia Insurance Corporation for P1,400,000, for which there was a marine policy issued. The vessel ran aground.
Consequently, the entire shipment of cement was good as gone due to exposure to sea water. Petitioner thus failed to deliver the goods to the
consignee in Manila. The consignee demanded from petitioner full reimbursement of the cost of the lost shipment. Petitioner refused to
reimburse despite repeated demands. The insurance company paid the consignee P1,400,000 plus an additional amount ofP500,000, the value of
the lost shipment of cement. In return, the consignee executed a Loss and Subrogation Receipt in favor of respondent concerning the latter€ ™s
subrogation rights against petitioner. Respondent filed a complaint against petitioner in the trial court for the recovery of the sum it paid. The trial
court ruled in favor of the insurance company. Petitioner€ ™s defense of force majeure was found bereft of factual basis. The RTC called
attention to the PAG-ASA report that at the time of the incident, tropical storm Asiang€ • had moved away from the Philippines. Further,
records showed that the sea and weather conditions in the area of Hinubaan, Negros Occidental from 8:00 p.m. of June 24, 1984 to 8:00 a.m. the
next day were slight and smooth. Thus, the trial court concluded that the cause of the loss was not tropical storm Asiang€ • or any other force
majeure, but gross negligence of petitioner. Petitioner appealed to the Court of Appeals. It affirmed the RTC Decision with modification that
Loadstar shall only pay the sum of 10% of the total claim for attorney€ ™s fees and litigation expenses. Hence this petition.
Issue: 1. WON petitioner is a common or a private carrier? 2. In either case, did petitioner exercise the required diligence: the extraordinary
diligence of a common carrier or the ordinary diligence of a private carrier?
Held: common carrier, No. Petition denied. Ratio: Petitioner is a corporation engaged in the business of transporting cargo by water and for
compensation, offering its services indiscriminately to the public. Thus, without doubt, it is a common carrier. The voyage-charter agreement
between petitioner and Northern Mindanao Transport Company, Inc. did not in any way convert the common carrier into a private carrier.
Conformably, petitioner remains a common carrier notwithstanding the existence of the charter agreement with the Northern Mindanao Transport
Company, Inc. since the said charter is limited to the ship only and does not involve both the vessel and its crew. As elucidated in Planters
Products, this charter is only a voyage-charter, not a bareboat charter. It is only when the charter includes both the vessel and its crew, as in a
bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the
property of the charterer. As a common carrier, petitioner is required to observe extraordinary diligence in the vigilance over the goods it
transports. When the goods placed in its care are lost, petitioner is presumed to have been at fault or to have acted negligently. Petitioner
therefore has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo. Article 1734
enumerates the instances when a carrier might be exempt from liability for the loss of the goods. These are: (1) Flood, storm, earthquake,
lightning, or other natural disaster or calamity Petitioner claims that the loss of the goods was due to a fortuitous event under paragraph 1. Yet,
its claim is not substantiated. On the contrary, there was evidence that the loss of the entire shipment of cement was due to the gross negligence
of petitioner. Records show that in the evening of June 24, 1984, the sea and weather conditions in the vicinity of Negros Occidental were calm.
The records reveal that petitioner took a shortcut route, instead of the usual route, which exposed the voyage to unexpected hazard. Petitioner has
only itself to blame for its misjudgment.
G.R. No. 167363 : December 15, 2010

SEALOADER SHIPPING CORPORATION, Petitioner, v. GRAND CEMENT MANUFACTURING CORPORATION, JOYCE

LAUNCH & TUG CO., INC., ROMULO DIANTAN & JOHNNY PONCE, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 177466
TAIHEIYO CEMENT PHILIPPINES, INC. (Formerly Grand Cement Manufacturing Corporation),Petitioner, v. SEALOADER
SHIPPING CORPORATION, JOYCE LAUNCH & TUG CO., INC., ROMULO DIANTAN & JOHNNY PONCE, Respondents.
LEONARDO-DE CASTRO, J.:
FACTS:
Sealoader Shipping Corporation (Sealoader) is a domestic corporation engaged in the business of shipping and hauling cargo from one point to
another using sea-going inter-island barges. Grand Cement Manufacturing Corporation (now Taiheiyo Cement Philippines, Inc.), on the other
hand, is a domestic corporation engaged in the business of manufacturing and selling cement through its authorized distributors and, for which
purposes, it maintains its own private wharf in San Fernando, Cebu, Philippines.
Sealoader executed a Time Charter Party Agreement with Joyce Launch and Tug Co., Inc. (Joyce Launch), a domestic corporation, which owned
and operated the motor tugboat M/T Viper. By virtue of the agreement, Sealoader chartered the M/T Viper in order to tow the formers
unpropelled barges. Subsequently, Sealoader entered into a contract with Grand Cement for the loading of cement clinkers and the delivery
thereof to Manila. Sealoaders barge, the D/B Toploader, arrived at the wharf of Grand Cement tugged by the M/T Viper. The D/B Toploader,
however, was not immediately loaded with its intended cargo as the employees of Grand Cement were still loading another vessel, the Cargo Lift
Tres.
On April 4, 1994, Typhoon Bising struck the Visayas area, the D/B Toploader was, at that time, still docked at the wharf of Grand Cement. In the
afternoon of said date, as the winds blew stronger and the waves grew higher, the M/T Viper tried to tow the D/B Toploader away from the
wharf. The efforts of the tugboat were foiled, however, as the towing line connecting the two vessels snapped. This occurred as the mooring lines
securing the D/B Toploader to the wharf were not cast off. The following day, the employees of Grand Cement discovered the D/B Toploader
situated on top of the wharf, apparently having rammed the same and causing significant damage thereto.
Grand Cement filed a Complaint for Damages against Sealoader; Romulo Diantan, the Captain of the M/T Viper; and Johnny Ponce, the Barge
Patron of the D/B Toploader. On the amended complaint, Sealoader filed a cross claim against Joyce Launch.
The RTC found defendants guilty of negligence, which caused damage to the [Grand Cements] wharf. The defendants negligence can be shown
from their acts or omissions, thus: they did not take any precautionary measure as demanded or required of them in complete disregard of the
public storm signal or warning; the master or captain or the responsible crew member of the vessel was not in the vessel, hence, nobody could
make any move or action for the safety of the vessel at such time of emergency or catastrophe; and the vessel was not equipped with a radio or
any navigational communication facility, which is a mandatory requirement for all navigational vessels.
On the second issue: Re: Damages. As the defendants are guilty of negligence, [Grand Cement] is entitled to recover damages from them. Even
the failure of the defendants to equip their vessel with the communication facility, such as radio, such failure is undisputedly a negligence. Had
defendants been mindful enough to equip their vessel with a radio, a responsible crew member of the vessel would have been informed through
the radio of the incoming typhoon and the notice from the [Grand Cement] about the said typhoon would have been of no concern to the
defendant and/or the responsible crew members of the vessel. The safety of the vessel and the avoidance of injury or damage to another should be
the primary concern of the defendants and/or the crew members themselves.
The damage to Grand Cements private wharf was caused by the negligence of both defendants Sealoader and Joyce Launch as well as their
employees, who are the complements of the barge Toploader and the tugboat M/T Viper.
Before the appellate court, Sealoader argued that the RTC erred in: (1) finding that the damage to the wharf of Grand Cement was caused by the
negligence of Sealoader; (2) holding Sealoader liable for damages despite the fact that it was Grand Cement that had the last clear chance to avert
the damage; (3) not holding that Grand Cement was negligent for not loading the vessel on time; and (4) giving credence to the afterthought
testimony of Grand Cements rebuttal witness.
The Court of Appeals held that like Sealoader, Grand Cement did not take any precaution to avoid the damages wrought by the storm. Grand
Cement waited until the last possible moment before informing Sealoader and Joyce about the impending storm. In fact, it continued loading on
another vessel (Cargo Lift 3) until 2:15 p.m. of April 4, 1994 or roughly just before the storm hit. It is no wonder that Sealoader did not
immediately move away from the pier since the owner of the pier, Grand Cement, was continuing to load another vessel despite the fast
approaching storm. In totality, we find that Grand Cement also did not exercise due diligence in this case and that its conduct contributed to the
damages that it suffered.
Article 2179 of the New Civil Code states that where the plaintiffs negligence was only contributory, the immediate and proximate cause of the
injury being the defendants lack of due care, the plaintiff may recover damages, the courts shall mitigate the damages to be awarded.
Contributory negligence is conduct on the part of the plaintiff which falls below the standard to which he should conform for his own protection
and which is legally contributing cause, cooperating with the negligence of the defendant in bringing about the plaintiffs harm.
Due to its contributory negligence, Grand Cement must carry part of the brunt of the damages. This Court finds it equitable that Grand Cement
should bear FIFTY PER CENT (50%) or half of the actual damages. The other pronouncements of the court regarding attorneys fees, litigation
expenses and cost of suit shall, however, not be disturbed.
ISSUE: Who among the parties in this case, should be liable for the damage sustained by the wharf of Grand Cement.
HELD: RTCs decision is sustained.
CIVIL LAW: negligence
The Court holds that Sealoader had the responsibility to inform itself of the prevailing weather conditions in the areas where its vessel was set to
sail. Sealoader cannot merely rely on other vessels for weather updates and warnings on approaching storms, as what apparently happened in this
case. Common sense and reason dictates this. To do so would be to gamble with the safety of its own vessel, putting the lives of its crew under
the mercy of the sea, as well as running the risk of causing damage to the property of third parties for which it would necessarily be liable.
Be that as it may, the records of the instant case reveal that Grand Cement timely informed the D/B Toploader of the impending typhoon.
The Court finds that the evidence proffered by Sealoader to prove the negligence of Grand Cement was marred by contradictions and are, thus,
weak at best. We therefore conclude that the contributory negligence of Grand Cement was not established in this case.
RULING:
No. The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the
other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the
loss but failed to do so, is chargeable with the loss. Negligence is defined as the omission to do something which a reasonable man, guided by
those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable
man would not do, or as Judge Cooley defines it, (T)he failure to observe for the protection of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury.
Sealoader was negligent for the lack of a radio or any navigational communication facility aboard the D/B Toploader. There is also a manifest
laxity of the crew of the D/B Toploader in monitoring the weather. Despite the apparent difficulty in receiving weather bulletins from the head
office of Sealoader, the evidence on record suggests that the crew of the D/B Toploader failed to keep a watchful eye on the prevailing weather
conditions.
The crew of the D/B Toploader and the M/T Viper were caught unawares and unprepared when Typhoon Bising struck their vicinity. According
to the Sworn Statement of Acosta, which was taken barely three months after the typhoon, he was already informed of the approaching typhoon.
Grand Cement was not guilty of negligent acts, which contributed to the damage that was incurred on its wharf. Sealoader had the responsibility
to inform itself of the prevailing weather conditions in the areas where its vessel was set to sail. Sealoader cannot merely rely on other vessels for
weather updates and warnings on approaching storms, as what apparently happened in this case. Common sense and reason dictates this.To do so
would be to gamble with the safety of its own vessel, putting the lives of its crew under the mercy of the sea, as well as running the risk of
causing damage to the property of third parties for which it would necessarily be liable.
The Court finds that the evidence presented by Sealoader to prove the negligence of Grand Cement was marred by contradictions and are, thus,
weak at best. Accordingly, the doctrine of last clear chance does not apply to the instant case