REPARATIONS COMMISSION, PLAINTIFF-APPELLEE, VS. COMPAÑIA MARITIMA, DEFENDANT-APPELLANT.

Years back, the Reparations Commission (REPACOM) filed a complaint in
the Court of First Instance of Manila against Compañia Maritima
(MARITIMA), Zenith Insurance Corporation and the Customs Arrastre
Service to recover P160,002.77 representing the value of eight lost
crates of reparations goods. The lost crates, which contained machinery
and equipment for the end-use of San Jose Cement Corporation, were part
of the shipment of reparations goods from Japan on board MARITIMA’s
vessel, M/V MACTAN, consigned to REPACOM at Manila.

In its answer, MARITIMA set up a counterclaim against REPACOM for unpaid
freight not only for the shipment in question but also for reparations
shipments on board other MARITIMA vessels.

After hearing, the trial court rendered a decision absolving MARITIMA
upon a finding that the lost cargo had actually been discharged from its
vessel in good order and turned over to the custody of the Customs
Arrastre Service in the name of REPACOM. But the Court declined to rule
on the counterclaim of MARITIMA, saying:

“Notwithstanding the evidence adduced by defendant Compañia
Maritima on its counterclaim against the plaintiff, the Court does not
consider it proper to make a ruling on the same in this proceedings; and
counsel for defendant Compañia Maritima may institute a separate action
for such claim.”

It is the refusal of the trial court to decide MARITIMA’s counterclaim that is the subject of this appeal.

Ordinarily, we would remand this case to the court a quo for it to
decide the permissive counterclaim in question. Such a step, however,
would further prolong the proceedings which have already been
protracted. We have therefore opted to write finis to the case by
deciding the counterclaim here and now.

The evidence discloses that on various occasions, there were shipped on
freight-collect basis by Japanese suppliers (as shippers) on board
MARITIMA’s vessels reparations goods from Japan consigned to REPACOM at
Manila. Except for a small amount, the freight charges (P357,055.51)
for all these shipments have not been paid.

REPACOM does not dispute the existence of the unpaid freight but
disclaims liability therefor by invoking Section 11 of the Reparations
Act (Rep. Act. No. 1789, as amended), the pertinent portion of which
reads:

“Sec. 11. Terms of procurement. – x x x The insurance, ocean
freight and other expenses incident to importation (of reparations
goods) shall be paid by the end-user in accordance with usual business practices.” (Italics supplied)

On the other hand, MARITIMA contends that the quoted law applies only as
between the REPACOM and the end-users, but not when the carrier seeks
to collect freight from REPACOM as consignee with which MARITIMA has
privity, unlike the end-user who is a complete stranger to the carrier.
MARITIMA invokes the bills of lading and the provisions of the Code of
Commerce, particularly Article 686 thereof, which both provide that it
is the consignee who must pay the freight upon delivery to him of the
cargo.

The issue raised is not new. In a prior case involving the very same
parties who are involved in the instant appeal, the question before the
Court was whether REPACOM, as consignee of reparations goods, was liable
for freight. Speaking through the then Associate Justice, now Chief
Justice, Enrique M. Fernando, this Court absolved the REPACOM, thus:

“The rule is that the law forms part of, and is read into, every
contract, unless clearly excluded therefrom in those cases where such
exclusion is allowed * * *. What is the law that forms part of, and is
to be read into, the contract between plaintiff-appellant and
defendant-appellee? It is, to repeat, Section 11 of Republic Act No.
1789 as amended. More specifically: ‘The insurance, ocean freight and
other, expenses incident to importation shall be paid by the end-user in
accordance with usual business practice.’ The last sentence is equally
plain: ‘Nothing herein shall be construed as exempting the end-user
from paying in full all the necessary costs, charges and expenses
incident to the application for and the procurement, production,
delivery and acquisition of, the goods concerned.’ The above provisions,
then, form part of and must be read into the shipping contracts between
plaintiff-appellant and defendant-appellee, unless they could be
‘clearly excluded therefrom’, assuming ‘such exclusion is allowed.’

“There is thus no persuasive force to the first error imputed to
the lower court for their being applied to the contractual relationship
between the parties. There is no showing that the shipping contracts
bet­ween them are clearly excluded from the law, much less that such
exclusion could be allowed. The lower court had no choice then. It
yielded obedience to the law. What it did certainly cannot be
stigmatized as error.

“It is in that sense that reliance by plaintiff-appellant on the
force and effect to be given the usual contracts between shipper and
carriers, while finding support in the applicable provisions both of the
Civil Code and the Code of Commerce, is far from persuasive. As was
pointed out in the equally forceful brief of defendant-appellee, to so
view the matter is to ignore what has been explicitly set forth in
Section 11 of the Reparations Act which is controlling.”

WHEREFORE, MARITIMA’s counterclaim is dismissed.

SO ORDERED

Melencio-Herrera, (Acting Chairman), Relova, Gutierrez, Jr. and De La Fuente, JJ., concur.

Teehankee, J., (Chairman), on official leave.