G.R. No. L-9614. May 12, 1958

An appeal from a decision of the Court of First Instance of Manila, the
dispositive part of which reads:

“PREMISES CONSIDERED, the Court hereby renders judgment in favor of the
defendant and against the plaintiff, dismissing the plaintiff’s complaint, and
ordering the plaintiff to pay the defendant the amount of P67,374.39 as damages
for repairs made on the three vessels due to the typhoon; the amount of
P47,905.59 as damages for salaries of officers and crews of the three vessels
while tied up in the port of Cebu; the amount of P6,104.20 as damages for
steward expenses for the food of said officers and crews while the vessels were
tied up in the port of Cebu; and the amount of P3,000.00 as attorney’s fees,
plus the costs of this action.”

Early in August, 1950, K.H. Hemady, then president of plaintiff Juan Ysmael
& Co., Inc., asked Nicolas Y. Orosa, of the Hongkong & Shanghai Banking
Corporation, to look for steam vessels available for sale to the Indonesian
Republic. After making some inquiries, Mr. Orosa found, soon thereafter, that
defendant William Lines, Inc. had three such vessels, namely, s/s Cebu s/s
Luzon and s/s Panay. Thereupon, he asked and obtained from the defendant an
option to buy said vessels within fifteen (15) days (Exhibit S), which was
extended for another fifteen (15) days. Then Orosa contacted Hemady and arranged
a meeting between himself, Hemady and James Chiongbian, defendant’s executive
director, at which meeting Orosa advised Chiongbian that plaintiff was
interested in said vessels, for the purpose of selling the same to the
Indonesian Government. Thereafter, Hemady dealt directly with Chiongbian.

According to plaintiff’s evidence, defendant’s price for the three (3)
vessels was P1,800,000, on which plaintiff wanted a 5% commission, or
P90,000.00. Although agreeable thereto, defendant was unwilling to have the
commission deducted from said price. Hence, the commission was added to the
latter, and the price for the Indonesian Government was fixed at P1,890,000,
Hence, on August 25, 1950, plaintiff wrote the letter Exhibit 2-W.L.
reading:

“Republic of Indonesia
Shipping Commission
Admiral Apartments,
Manila

Gentlemen:

This is to confirm my previous offer to the Indonesian Government of the
steamships S/S ‘Panay”, ‘Cebu’, and ‘Luzon’ for the price of One Million Eight
Hundred Ninety Thousand Pesos (P1,890,000.00).

I am certain that these ships are badly needed at this time in Indonesia and
that the temporary inspection that was recently given on the S/S ‘Luzon’ by your
shipping inspectors, Mr. C. Hschaper, Mr. F.J. Mathieu, and Mr. Frank C. Starr,
has resulted in a satisfactory conclusion, and if the above ships are accepted,
we hereby invite your shipping inspectors to make a thorough, final and complete
inspection of all three ships at any time that is convenient to them. We
ourselves are thoroughly convinced that since these ships were built in late
1946, they have been kept and are in the best operatable condition possible.

If the above offer is acceptable, kindly open an irrevocable Letter of Credit
in the name of Juan Ysmael & Co., Inc., Manila, for the above amount.

Very truly yours,

JUAN YSMAEL & CO., INC.

By: (Sgd.) K. H. Hemady
K.
H. HEMADY
President”

Defendant approved this communication, by writing, at its lower left hand
margin, the following:

“Above acknowledged and approved.

WILLIAM LINES INC.

By: (Sgd.) James Chiongbian
JAMES CHIONGBIAN

Manager”

On August 26, 1950, plaintiff wrote the communication Exhibit 3-W.L. (also
Exhibit G), which is of the following tenor:

“Republic of Indonesia
Shipping Commission
c/o the Indonesian
Embassy
Manila

Gentlemen:

This is to confirm my previous offer to the Indonesian Government of the
steamships S/S ‘Panay’, ‘Cebu’, and ‘Luzon’ for the price of One Million Eight
Hundred Ninety Thousand Pesos (P1,890,000,00) for all three ships, complete.

I am certain that these ships are badly needed at this time in Indonesia and
that the temporary inspection that was recently given on the S/S ‘Luzon’ by your
shipping inspectors, Mr. C. Hschaper, Mr. P.J. Mathieu, and Mr. Frank C. Starr,
has resulted in a satisfactory conclusion, and if the above ships are accepted,
we hereby invite your shipping inspectors to make a thorough, final and complete
inspection of all three ships at any time that is convenient to them. We
ourselves are tho-
roughly convinced that since these ships were built in
late 1946, they have been kept and are in the best operatable condition
possible.

In the event the Indonesian Government advises that these ships must be
delivered to an Indonesian port, it is, therefore, necessary that an additional
sum of P45,000.00 be advanced so as to pay for the cost of delivering these
ships to an Indonesian port. Naturally,it depends upon the length of time
involved in the delivery, etc. We shall calculate closely what the actual
expenses involved would be and if we have any amount left over, we shall
immediately return the amount to the Indonesian Government.

If the above offer is acceptable, kindly open an irrevocable Letter of Credit
in the name of Juan Ysmael & Co., Inc., Manila, for the above amount,
including the advance of P45,000.00 for delivery of these ships to an Indonesian
port.

Very truly yours,

JUAN YSMAEL & CO., INC.

By:
(Sgd.) K. H. Hemady
K. H. HEMADY
President

Above acknowledged and approved.

WILLIAM LINES INC.

By: (Sgd.) James Chiongbian
JAMES CHIONGBIAN

Manager”

Meanwhile, a commission of agents of the Indonesian Government had come to
the Philippines, upon representations made by the plaintiff and at its expense,
to inspect the vessels and negotiate preliminarily the purchase thereof. The
commission contacted Hemady and Chiongbian, with whose permission the technical
advisers of the commission inspected the s/s Luzon in Manila and the s/s Cebu
and the s/s Panay in Cebu. The result of the inspection was, in genera
satisfactory, except that the crankshaft of the s/s Cebu required repairs.
Hence, on October 19, 1950, plaintiff wrote the letter Exhibit B, which is as
follows:

“Republic of Indonesia
Shipping Commission
c/c The Indonesian
Embassy
Manila

Attention: Major Rachman Mashjur

Dear Sirs;

We are happy to inform you that from, our understanding the inspections of
the three (3) William vessels, ‘Cebu’, ‘Panay’, and ‘Luzon’, have resulted in
good findings by your shipping inspectors, with the exception of the ‘Cebu’
which requires a small amount of work in the crankshaft which, we understand,
will be done.

We shall await with interest when you will pay a visit to this office as soon
as you have full assurance that you will finally place an order with our firm
for the purchase of these three (3) vessels that have been in negotiations with
your Government by our firm during the last sixty days. Furthermore, in
reference to our letter to the Shipping Commission of Indonesia in Manila, under
date of August 26, 1950, refering to the fourth paragraph thereof concerning the
opening of the Letter of Credit in the name of Juan Ysmael & Co., Inc., we
desire that inasmuch as the Luzon Stevedoring Company will handle the entire
shipment of these three vessels to Indonesia for our firm and in behalf of your
Government, you kindly open an Irrevocable Letter of Credit in the name of E.M.
Grimm of the National City Bank of New York, New York, who is head of the Luzon
Stevedoring Company.

We earnestly hope that you will be kind enough to let us know within a few
days concerning the purchase of these three vessels, and we await and anticipate
a favorable reply from you.

Very truly yours,

JUAN YSMAEL & CO., INC.
(Sgd.) K. H. HEMADY
K. H.
HEMADY
President”

At a conference held in plaintiff’s office, on October 20, 1950,
representatives of both.parties herein and those of the Indonesian Republic
agreed, upon the latter’s request, that the price be reduced by P20,000, for the
repair of the crankshaft o the s/s Cebu; that the net price for the Indonesian
Republic would be P1,870,000, of which P70,000 shall be for the plaintiff and
the balance of P1,800,000 for the defendant; and that said sum of P1,870,000
shall be paid thru E.M. Grimm, President of Luzon Stevedoring Co., which had
undertaken to handle the delivery of the vessels to the Indonesian Government.
Conformably with this agreement, the latter’s representative prepared, on that
same occasion, the following cablegram to his home office:

“OCTOBER 20, 1950

LETKOL TAHIJA
KEMENTERIAN PERTAHANAN
DJAKARTA

PLEASE OPEN LC (Letter of Credit) IN THE NAME OF E.M. GRIMM AT NATIONAL CITY
BANK OF NOT YORK FOR CANADIAN COASTERS FOR AN AMOUNT OF PESOS 1,870,000 STOP
PESOS 1,890,000 MINUS PESOS 20,000 FOR THE REPAIR OF CRANKSHAFT STOP COASTERS
WILL BE DELIVERED IN CEBU STOP EXPENSES FOR CHEW AND EQUIPMENT FOR SAILING TO
DJAKARTA WILL BE ARRANGED BY MATTHIEW WITH LUSTEVECO STOP PLEASE INFORM
LUSTEVEC0 REGARDING THIS ARRANGEMENT STOP

RACHMANMASJHUR”

Plaintiff, in turn, wrote to the Luzon Stevedoring Co., letter Exhibit F,
which we quote;

“October 20, 1950

Luzon Stevedoring Company
Manila

Gentlemen:

We are happy to inform you that in reference to the three (3) William ships,
‘Luzon1, ‘Cebu’, and ‘Panay’, about which we have been negotiating directly with
the Indonesian Government for the past three months, the matter has today been
brought to a successful conclusion.

An official directive was cabled today from our office by Maj. Rachman
Masjhur, Chief of the Indonesian Shipping Commission, to the Ministry of Defense
of the Republic of Indonesia at Djakarta, authorizing them to cable instructions
to open a Letter of Credit in the name of Mr. E. M. Grimm of your concern in the
amount of P1,870,000.00. We regret to inform you, however, that there has been a
reduction of 20,000,00 from the original sales price of the three ships by our
firm to the Indonesian Government for P1,890,000.00 This deduction was made
inasmuch as a crankshaft must be replaced and repaired on the ‘Cebu’. The
official inspector of the Indonesian Shipping Commission requested that this
reduction had to be made before the sale could be consumated.

Our firm
has advised Maj. Masjhur to contact your firm immediately in regards to
outfitting and equipping the abovementioned three vessels with crews, etc., so
that they can be dispatched to Indonesia as soon as posr sible. This office will
keep you closely informed of any further developments resulting from this
transaction and we would appreciate a letter from you advising that you have
received this letter and also a confirmation from Mr. Grimm that he has received
the abovementioned amount. As soon as this amount has been confirmed by Mr.
Grimm, our firm would appreciate that you advise your Bank here to advance our
firm the amount of P1,870,000.00 so that we can immediately turn this amount
over to the owners of the William ships.

Very truly yours,

JUAN YSMAEL & CO.,
INC.

(Sgd.) K. H. Hemady
K. H. HEMADY
President”

While tied up in Cebu, for delivery to the party concerned, the vessels were
damaged by a typhoon that passed by on November 20, 1950. Said craft had,
therefore, to undergo repairs. For this reason, and because one of the technical
advisers of the Indonesian Government submitted thereto a report adverse to tho
purchase of the vessels, contradicting his previous advice thereon, said
Government became hesitant,on whether to acquire said vessels. After a trip of
Chiongbian to Indonesia to ascertain the cause for such hesitation, on January
8, 1951,defendant wrote the Chief of Staff of the Indonesian Armed Forces – for
which the vessels were seemingly intended – a letter “asking an immediate
decision” on the matter. The Indonesian Shipping Commission replied on January
13, stating that, inasmuch as defendant was “asking for an immediate decision x
xx this leads to the decision that the Government of the Republic of Indonesia
will not buy th aforementioned ships” and that the negotiation was thereby
“considered closed” (Exhibit 1). Chiongbian made another trip to Indonesia, and
eventually, on March 8, 1951, defendant and the
Indonesian Republic executed the corresponding “agreement to buy and
sell” said vessels for the aggregate price of $935,000, U.S. currency (Exhibit
5-W.L.). Subsequently, the vessels were delivered to the Indonesian Government
and the agreed price was paid to the defendant. Thereafter, plaintiff demanded
its alleged commission thereon (Exhibits L and M), and, upon defendants failure
to heed the demand, the former instituted the present action in the Court of
First Instance cf Manila to recover the sum of P70,000, plus P25,000,
representing expenses allegedly incurred for the promotion of the sale, and
P7,000, as attorney’s fees.

In its answer, the defendant alleged that
plaintiff had “completely” failed either to sell or to buy the vessels above
referred to; that said vessels were finally sold to the Indonesian Government
through the efforts of the defendant alone; that plaintiff’s alleged expenses in
the sum of P25,000 were incurred on its account and at its own risk, and without
defendant’s knowledge or consent; and that plaintiff had never been authorized
to act as an agent or representative of the defendant. The latter, likewise, set
up a counterclaim cf P82,163.80 for the re pairs of the damages suffered by the
vessels in November, 1950, plus P300,000 for unrealized profits, P50,000 for
damages to its business reputation and P10,000 as attorney’s fees. In
defendant’s amended answer, the counterclaim for compensatory damages was
Increased to P120,853, and that for unrealized profits was reduced to
P186,000.00.

In reply, plaintiff averred that it was defendant’s agent In the sale to the
Indonesian Government; that plaintiff was to be paid a commission for its
services as such agent; that defendant usually tied up its vessels in Cebu,
which is the home port of its vessels and where it has its main offices; that no
demand had ever been made by the defendant for the repairs mentioned in its
counterclaim; and that it has not suffered the damages therein alleged. After
appropriate proceedings, the lower court rendered a decision rejecting
plaintiff’s pretense, accepting defendant’s contention and sentencing the latter
as above stated. Hence this appeal by the plaintiff.

The main question for determination in this appeal is the if, nature of the
relation between plaintiff and defendant herein, under the above mentioned
transactions which culminated in the sale of s/s Cebu, s/s Luzon and s/s Panay
to the Indonesian Government. Plaintiff maintains that it was defendant’s agent.
Defendant denies said agency and asserts that plaintiff undertook to buy the
vessels f son the defendant with a view, in turn, to selling the vessels, at its
(plaintiff’s) own risk and account, to the Indonesian Government; and that, this
proposed sale to the latter by the plaintiff having failed completely, the
defendant “alone” sold the vessels to the Indonesian Government, without
plaintiff’s intervention.

Upon a review of the record, we are of the opinion, and so hold, that
plaintiff acted merely as a broker or intermediary between the defendant and the
Indonesian Government, Our main reasons therefor are?

1. Plaintiff’s representations to the Indonesian Government were approved by
   the defendant and such approval was transmitted and made known to the Indonesian
   Government. If the plan was for the defendant to sell the vessels of the
   plaintiff, in order that the latter could dispose of the vessels,acting in its
   own behalf, it would have been unnecessary to secure defendant’s approval to
   said representations by the plaintiff. What is more defendant’s pretense is
   refuted by said approval, which indicates that the source of plaintiff’s
   authority was the very defendant. Defendant says that its aforesaid approval
   meant only that it had no objection to the resale of the vessels by the
   plaintiff at an overprice. If, however, plaintiff were buying the vessels from
   the defendant – which expected payment in cash – the latter would have had no
   interest in what the former did or intended to do with the vessels, and no right
   whatsoever to interfere in the overprice that plaintiff may wish to put should
   it sell the vessels to a third party. Much less would defendant’s approval have
   been transmitted to this third party.

2. The original inducement for plaintiff’s intervention in the above mentioned
   transactions was computed at five per centum (5%) of the net price fixed by the
   defendant. This is, precisely, how the compensation of agents or brokers is
   generally fixed, Had plaintiff not acted in such capacity, it could, and,
   probably, would, have added P100,000 or P200,000 to plaintiff’s net price, and
   charged the Indonesian Government either P1,900,000 or P2,000,000 in round
   figures. The fact that plaintiff did not do so and that it had to obtain
   defendant’s approval to the amount of the over-price included in plaintiff’s
   offer to the Indonesian Government cannot be reconciled with defendant’s theory
   to the effect that plaintiff had acted on its own account and at its own risk,
   and, hence, independently of the defendant.

3. When, after inspection by technicians of the Indonesian Government, the s/s
   Cebu appeared to require some repairs, a conference was held between
   representatives of the plaintiff, of the defendant and of said Government. They
   agreed then that the cost of said repairs (P20,000) be deducted from plaintiff’s
   compensation; that the Indonesian Government would pay, therefore, P1,370,000,
   instead of P1,890,000; and that said sum of P1,870,000 would be divided as
   follows: P70,000 for the plaintiff, and P1,800,000 for the defendant. Had their
   understanding been that the vessels would be bought by the Indonesian
   Government, from the plaintiff, not from the defendant, through plaintiff,
   defendant would not have participated in said conference, and its approval to
   the reduction asked by said Government would have been unnecessary, inasmuch as
   plaintiff’s price was not affected thereby.

4. On January 8, 1951, defendants manager wrote to the Chief of Staff, Armed
   Forces of the Republic of Indonesia, “asking for an immediate decision whether
   to buy or not the three Canadian Coasters, s/s Luzon, s/s Cebu and s/s Panay”.
   If the Indonesian Republic was buying the vessels from plaintiff, not through
   plaintiff, from the defendant, the latter would not have dared write said
   communication to the Indonesian Government, much less ask an “Immediate
   decision” on the matter of the purchase of said vessels. Indeed, the “immediate
   decision” given by the Indonesian Government as requested by defendant, instead
   of telling the latter that it had no business asking said decision – which would
   be the case if defendant’s pretense were true – indicates clearly that even the
   Indonesian Government understood that the defendant was the seller and that
   plaintiff was only a go-between. This is borne out by the fact that, in the
   letter of the Indonesian Government to the defendant, dated January 13, 1951
   (Exhibit 1), the former stated that “there was an understanding between your
   Company and the Indonesian Shipping Commission that the buying of the three (3)
   above mentioned vessels will take place after inspection by the two nautical
   technical advisers of said Shipping Commission.” The “your Company” referred to
   in this communication is its addressee, defendant herein.

We have not overlooked the circumstances relied upon “by the defendant, and
the lower court, in support of the farmer’s pretense, such as Orosa’s option to
buy the vessels from the defendant and the statement in plaintiff’s letter
Exhibit 4-W.L. (quoted in full hereunder) to the defendant, to the effect that
“we contemplate in the very near future in being in a position to pa you cash
for the above mentioned three vessels”. The role play a by plaintiff must be
deduced, however, from the whole transaction not from isolated acts or
expressions. In this connection, Atty Orosa testified that, although, plaintiff
had originally thought of buying the vessels, it eventually was satisfied with
getting a commission as an intermediary. Contrary to defendant’s pretense, the
testimony of Orosa is straightforward, impartial and trustworthy. Besides, it is
strongly corroborated by the fact that plaintiff advised the representative of
the Indonesian Government and, also, the Luzon Stevedoring Go. (see Exhibit F,
supra) that the owner of the vessels was the defendant. In short, plaintiff
never represented to anybody that it owned the vessels or would own the
same.

It is urged by the defendant that plaintiff had been guilty of undue delay in
taking delivery of the vessels; that in its letter of October 18, 1950, Exhibit
J, plaintiff assured the defendant that the negotiations would be brought to a
conclusion and payment would be made “within the next few days”, and neither was
effected by November 20, 1950; that, in view of said delay, the damage then
suffered by the vessels in consequence of a fortuitous event should be at
plaintiff’s risk; that plaintiff’s intervention ceased completely thereafter,
particularly when, on January 13, 1951, the Indonesian Republic announced its
decision not to buy the vessels in question and declared the negotiations for
the acquisition thereof “closed”; and that the sale to the Indonesian Government
was perfected and consummated through the efforts of defendant “alone”, without
plaintiff’s assistance.

The argument, based upon plaintiff’s alleged delay in taking delivery of the
vessels, is predicated upon the premises that plaintiff was supposed to buy the
vessels from the defendant, which is false. In fact, not a single written demand
was ever made by the defendant upon the plaintiff, either for the latter to take
delivery of the vessels, or for the payment of the price thereof. Neither was
any similar demand made by the defendant upon the plaintiff for indemnity of the
damages – aggregating over P300,000, according to defendant’s counterclaim –
allegedly imputable to the plaintiff. We cannot believe that a matter as
important as this would have been the object merely of oral representations by
the defendant, as contended by the latter, even after plaintiff’s formal written
demand, which per sa indicated the possibility of litigation. Said omissions
strongly suggest that defendant did not regard the plaintiff as buyer or
prospective buyer of the vessels and that the present theory of the defense does
not dovetail with defendant’s understanding of the juridical relation between
the parties when the events that led to this litigation took place.

With respect to the alleged delay, defendant’s pretense is based upon Exhibit
J (also Exhibit 4-W.L.) reading:

“October 18, 1950

William Lines 924
San Fernando
Manila

Attention: Mr. James Chiongbian

Dear Sirs:

This is to inform you that the information now on hand strongly indicates
that within the next few days we can bring to a conclusion the negotiations
between our firm and your company in reference to the three (3) vessels, ‘Cebu’,
‘Panay’, and ‘Luzon’. We contemplate in the very near future in being in a
position to pay you cash for the abovementioned three vessels as agreed in our
option which we are holding amounting to P1,300,000.00. The P1,800,000.00
represents the full purchase price for the said three ships, ‘as is where is’.
Any other necessary repairs or materials purchased shall be for the account of
Juan Ysmael & Co., Inc

Kindly advise us, either personally or by letter, where you can
be located in the very near future so as to enable both of us to get together to
conclude this transaction once and for all.

Yours very truly,

JUAN
YSMAEL & CO., INC.

(Sgd.) K. H. Hemady
K. H. HEMADY
President

Above noted and agreed to.
Manila, October 18, 1950

WILLIAM LINES

(Sgd.) J. Chiongbian”

This communication contains, however, no assurance either as to the
consummation of the sale or as to the payment of the prior Plaintiff merely
stated therein “that the information now in hand strongly indicates that within
the next few days, we can bring to a conclusion the negotiations (not the sale
or delivery) between our firm and your company in reference to the three
vessels, Cebu Panay and Luzon”. Furthermore, the very defendant alleged in its
counterclaim that “plaintiff requested the defendant to have tho said vessels
tied up and ready for delivery at the port of Cebu by November, 1950“, without
specifying the date on which delivery would. be effected. What is mere,
defendant was apparently agreeable to the delivery being made sometime in
“November, 1950”. It is clear, therefore, that there was no default or delay on
plaintiff’s part when a typhoon damaged the vessels on November 20, 1950.
Thereafter, the vessels had to be sent to drydocks for repairs, although these
were net seemingly made right away. For one thing, the s/s Luzon was partially
repaired in Cebu and later sent to Hongkong, where the repairs appear tc have
been completad early in May, 1951. The records dc not show the date of
completion of the repairs of s/s Cebu and s/s Panay. In any event, prior thereto
defendant was not in a position to deliver the vessels, and, hence, plaintiff
should not be blamed for the consequent delay in the negotiations with the
Indonesian Government, which were practically complete when force majeure
interfered on November 20, 1950.

As regards the communication of the
Indonesian Government of January 13, 1951, announcing its decision not to buy
the vessels, it should be noted that the same was prompted by defendant’s
request for an “immediate decision” thereon. Inasmuch as it was not in a
position, at that time, to settle an internal conflict that developed between
two branches of its service in connection therewith, the Indonesian Government
felt that said request left it no choice but to say that it would not buy the
vessels. That the tenor of defendant’s request was responsible for this answer,
despite the fact that the Indonesian Government really wanted to buy the
vessels, although it could not say sc as yet, is apparent when we consider that
two (2) months later (March 8, 1951), it did formally agree to buy the vessels
at substantially the same terms and conditions negotiated prior to January 13,
1951, when said answer was given. Indeed, it would seem, also, that the request
for an “immediate answer” had hurt the sensibility of the Indonesian Government,
for which reason it said that said request led “to the decision x x x not to buy
the ships” and that the negotiation was thereby “considered closed”. Obviously,
plaintiff should not be made to suffer for the consequences of the defendant’s
lack of tact in handling the situation.

Lastly, it is clear from the record before us that the sale to the Republic
of Indonesia was not consummated by the defendant “alone”, without plaintiff’s
intervention. Plaintiff looked for and found the vessels for the Indonesian
Government. Through its friend Atty. Orosa, plaintiff got an option for the
vessels. Plaintiff settled with the defendant the price of the vessels.
Plaintiff contacted the Indonesian Republic and negotiated with the same for the
sale of said vessels. Plaintiff defrayed the expenses of the Indonesian mission
that came to the Philippines, examined the vessels and arranged the details of
the transaction. Needless to say, the sale would not have taken place without
such inspection. Again, the expenses for the repair of the crankshaft of s/s
Cebu were deducted from plaintiff’s share in the proceed; of the sale.
Plaintiff, likewise, arranged with the Luzon Stevedoring Co., Inc., for the
delivery of the vessels and the manner in which its price would be paid by the
Indonesian Government.

It is true that Chiongbian went to Indonesia in 1951, and finally got the
signature of the Indonesian Government to the “agreement to buy and sell” the
vessels. However, except for Chiongbian1s testimony to the effect that he had to
avail himself of the good offices of a nephew of President Sukarno, the record
is absolutely silent on what he had done to bring the sale to a successful
conclusion. Upon the other hand, the terms and conditions of the transaction
appear to be in substance, those arranged by the plaintiff. The price was
$1,870,000. And the vessels were to “be taken “as is” and “where is”. Hence,
the head of the aforementioned Indonesian Commission, that came to the
Philippines and dealt with plaintiff and the defendant, has made the following
statement.

“Djakarta, Java, Indonesia.
12th November 1951

TO WHOM IT MAY CONCERN

THIS IS TO CERTIFY, that I, K. Rachman Masjhur,
Major of the Army, Republic of Indonesia, do hereby state that the business firm
of Juan Ysmael & Co., Manila, and their representative in Indonesia, Mr.
Frank C. Starr, were the sole parties responsible for first advising about and
making the first firm offer of the three (3) vessels known as the CANADIAN
COASTERS’, namely the’ SS LUZON’, ‘SS CEBU’ & ‘SS PANAY’ said vessels, at
that time owned and operated by the WILLIAM LINES INC. of Manila, P.I. Said
offer being made to our Army.

and furthermore

that due to the sincere efforts of JUAN YSMAEL & CO., Manila, together
with their Indonesian representative, Mr. Frank C. Starr, was in fact a direct
cause that a Commission was formed, of which I was in command, to visit Manila
for the sole purpose to inspect and examine the above mentioned vessels and that
said inspection & examination was carried out and a due report was made
thereof and forwarded to my government and that based on the findings of this
report the purchase by the Government of the Republic of Indonesia of the above
mentioned vessels was effected in due time.

and that

this declaration is given, by me, of my own free will and sincere belief that
the above mentioned firm of Juan Ysmael & Company, Manila, and their
Indonesian representative, Mr. Frank C. Starr, are justly due recognition by all
and soy interested parties concerned herewith.

(Sgd.) K. Rachman Masjhur
K. Rachman Masjhur
Major,
T.N.L.

(Sgd.) F. Lease
Frank C. Lease
Ministry of Information
Republic of
Indonesia.
as Witness to signature
of Major K. Rachman Masjhur. Djakarta
Nov 12,1951

Chiongbian’s trip to Indonesia seemed, however, successful one respect – he
managed to iron out the evil effects of defendant’s ill advised letter of
January 8, 1951 asking an “immediate decision”. Evidently, defendant should not
be allowed to avail itself of the consequences of its aforementioned wrong move
in order to defeat plaintiff’s claim.

In short, the sale to the Indonesian Government was, in effect, the product
of plaintiff!s intervention, so that it is entitled to the P70,000 commission
agreed upon as compensation for its services in connection therewith. For this
reason, plaintiff should not recover its alleged expenses during the
negotiations, such expenses having been incurred at its own risk and in
consideration of the aforementioned compensation it expected to collect. Upon
the other hand, it is apparent that plaintiff is not liable, either for the
damages caused to the vessels by the typhoon on November 20, 1950, or for the
repair of said damages, or for the salaries and expenses of the crew during said
repairs the ultimate cause thereof being a fortuitous event.

WHEREFORE, the decision appealed from is hereby reversed, and another
one.-Will be entered sentencing defendant William Lines, Inc., to pay to
plaintiff Juan Ysmael & Co., Inc. the sum of P70,000.00 with interest
thereon, from December 17, 1953, the date of institution of this case, at the
rate of 6% per annum, besides the costs.

IT IS SO ORDERED.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,
Labrador, Reyes, J.B.L., Endencia, and Felix, JJ.,
concur.