TONG BROTHERS CO., PETITIONER, VS. INTERMEDIATE APPELLATE COURT AND JULIANO AND COMPANY, RESPONDENTS.

This is a petition to review on certiorari the decision
and order of the then Intermediate Appellate Court, now Court of Appeals, in
AC-G.R. No. 68505 which awarded a total amount of P907,220.66 as damages,
including attorney’s fees, in favor of the private respondent.

The petitioner is a registered general partnership engaged in the
construction and repair of vessels with drydocking
facilities at Recodo, Zamboanga
del Sur while the private
respondent is a domestic corporation engaged in the coastwise shipping industry
operating for that purpose the vessel M/S Zamboanga-J.

Sometime in December, 1974, the private respondent allegedly
contracted with the petitioner the annual drydocking
and repair of the Zamboanga-J.  On the ground that the petitioner did not
complete and execute all the work necessary, essential
and indispensable to rendering the vessel seaworthy resulting in its
deterioration and total loss, the private respondent filed a complaint against
the petitioner for specific performance and damages with the Court of First
Instance of Cotabato.

The petitioner denied that there was a perfected contract to
repair Zamboanga-J between the two parties.

To prove its case against the petitioner, the private respondent
tried to establish the following facts:

xxx       xxx       xxx

“x x x As
the need arose, the plaintiff had its vessels drydocked
for repairs at the dockyard of  the defendant-appellant in Zamboanga City.  This business relationship started in 1960’s
(t.s.n., March
11, 1980, p. 7).  The
procedure was for these vessels to be drydocked and
repaired and after each job, a statement of account would be sent to the
plaintiff-appellee, which remitted payments to the
defendant-appellant in varying amounts (Exh. 9).  Although Exhibit 9 consolidates the accounts
pertaining to the Cotabato J and the Zamboanga-J, in point of fact, statements were separately
prepared for said vessels.

“Because the business relationship between the parties herein
had continued for over 10 years, the plaintiff-appellee
enjoyed credit facilities from the defendant-appellant and the defendant
performed repair work on the plaintiff’s vessel without need of a formal
written contract.  On the strength of
this relationship, the plaintiff, sometime in December, 1974 brought the Zamboanga-J to the defendant-appellant’s dockyard.  The defendant-appellant asked for a deposit
of P15,000.00 but even without having received this amount that it had requested, the defendant-appellant
drydocked the vessel on December 27, 1974 (t.s.n., March 11, 1980, p. 8).  The sum of P15,000.00 was received by the
defendant on December 28, 1974 for which it issued two receipts, one for
P5,000.00 and the other for P10,000.00 (Exhs. “A” and “B”).

“With this payment, the defendant commenced work on the Zamboanga-J by removing the rudders, pulled out tail shafts
with propellers, etc., removed bottom hull plankings
in way of inspecting ribs, and replaced same with new plankings,
etc. (t.s.n., ibid, pp. 112, 126, 134, 135)

“The plaintiff, even
before the Zamboanga-J was drydocked,
also shipped various lumber materials to Zamboanga City
to the defendant-appellant, through Luis Canto, in accordance with instructions
from, and based on specifications of the defendant (Exhs.
D, E, F, G, and all submarkings, t.s.n. February 14, 1978, pp. 25-30,
pp. 31-34).

“For some excuse or other, the defendant did not continue the
job on the Zamboanga-J.  Instead, it undocked the vessel on February 4, 1975 and left it exposed
to the elements where it remained until it became a total loss.  This suit was therefore filed to call the
defendant-appellant to account for its failure to comply with its obligation to
repair the plaintiff-appellee’s vessel which failure resulted in damages to the plaintiff- appellee.” (pp. 36-37, Rollo)

On the other hand, the petitioner denied responsibility for the
total loss of the vessel M/S Zamboanga-J and stated
the facts as follows:

xxx       xxx       xxx

“x x x Its business name is VARADERO DE
RECODO.  It used to repair the vessels
owned by plaintiff-appellee.  The last vessel of plaintiff-appellee which was drydocked at
the VARADERO DE RECODO was Zamboanga-J.  It was drydocked on December
27, 1974, after plaintiff-appellee paid
P15,000.00, representing partial payment of its old
accounts.  Conformably with the written
application filed by plaintiff-appellee with the
Coast Guard, Zamboanga
City, inspector Anton Casimero, inspected the vessel Zamboanga-J
on January 2, 1975.  Present during the inspection were Messrs.
Ricardo Tong and Joaquin Tong, representatives of defendant-appellant and Mr.
Luis Canto, representative of plaintiff-appellee.  While admittedly the man of plaintiff-appellee in Zamboanga
City, Mr. Luis Canto had no
authority to enter into a contract with defendant-appellant for the repair of Zamboanga-J.  Because
of the extensive repair to be done on the vessel, defendant-appellant prepared
a written contract for the signature of plaintiff-appellee’s
authorized representative.  In said
written contract, plaintiff-appellee was to have
deposited with defendant-appellant the amount of P50,000.00,
among others.  Mr. Luis Canto, man of plaintiff-appellee’s in Zamboanga
City, was informed on several
occasions by defendant-appellant to get in touch with his employer in Cotabato City,
the purpose being was (sic) for plaintiff-appellee’s
representative to see for himself the extent of the deterioration of the vessel
and to sign the written contract prepared by defendant-appellant.  No authorized representative of plaintiff-appellee came to Zamboanga City.  It sent, however, several telegrams to
defendant-appellant demanding, among others, that defendant-appellant repair
the Zamboanga-J, there being an earlier agreement
between defendant-appellant and Mr. Protacio Juliano, authorized representative of plaintiff-appellee.  On the
other hand, defendant-appellant advised plaintiff-appellee
to send its authorized representative to Zamboanga City
to see for himself the extent of the deterioration of the vessel Zamboanga-J, and insisted, among others, that it had no
contract with plaintiff-appellee for the repair of Zamboanga-J.  In
addition thereto, plaintiff-appellee never bothered
to secure the JOB ORDER from the Coast Guard, it being its duty to do so.  The vessel was undocked on February 4, 1975, and the following
day, defendant-appellant sent plaintiff-appellee a
Statement of Account in the amount of P13,134.95.  Of this amount P9,800.00
represented expenses for dock rental and for the docking and undocking of the
vessel.  The balance of the amount
represented expenses for labor and materials used in closing the open sections
of the vessel.  Without these latter
expenses, the vessel Zamboanga-J could not have been
REFLOATED.  Zamboanga-J
was not repaired and it is now a total loss.” (pp. 2-4,
Appellant’s Brief).

The lower court ruled in favor of the private respondent.  The dispositive
portion of the decision reads:

“WHEREFORE, the Judgment is hereby entered in favor of JULIANO
& COMPANY INCORPORATED and against the defendant TONG BROTHERS AND COMPANY
who (sic) is ordered to pay the plaintiff the following:

“1.  To pay plaintiff the sum of FOUR HUNDRED AND
FIFTY THOUSAND PESOS (P450,000.00), which is the value
of the Zamboanga-J which is now a total loss;

“2.  To pay the plaintiff the sum of FIVE HUNDRED
FORTY TWO THOUSAND TWO HUNDRED AND TWENTY PESOS AND SIXTY SIX CENTAVOS
(P542,220.66) which is the unrealized net income of the ZAMBOANGA-J for the
expected five years serviceability of the ZAMBOANGA-J
had the defendant repaired the same and finished the job;

“3.  To
reimburse plaintiff the sum of TEN THOUSAND PESOS (P10,000.00)
as reimbursement for what plaintiff had paid its counsel;

“4.  To reimburse plaintiff the sum of FIVE
THOUSAND PESOS (P5,000.00) as reimbursement for the
expenses incurred by the plaintiff in
prosecuting the case and

“5.  To
pay the costs of this suit.” (Rollo, pp. 34-35)

Upon appeal, the then Intermediate Appellate Court affirmed the
lower court’s decision but reduced the value of the boat to P350,000.00.

We initially denied the petition in a resolution dated May 5, 1986.  Upon a motion for reconsideration, we set
aside the resolution and gave due course to the petition.

The petitioner assigns
the following errors:

I

THE RESPONDENT INTERMEDIATE APPELLATE COURT
ERRED IN FINDING THAT THERE WAS A PERFECTED CONTRACT FOR THE REPAIR OF THE
VESSEL ZAMBOANGA-J AND THAT THE PROXIMATE CAUSE OF THE LOSS OF THE VESSEL WAS
PETITIONER’S VIOLATION THEREOF.

II

THE RESPONDENT INTERMEDIATE APPELLATE COURT
ERRED IN AWARDING EXCESSIVE DAMAGES TO PRIVATE RESPONDENT CONSIDERING THAT THE
SUBJECT VESSEL WAS A WORLD WAR II DERELICT AND CONSIDERING FURTHER THAT THE
RESPONDENT APPELLATE COURT FOUND AS A FACT THAT THE OWNER OF THE VESSEL WAS
ALSO AT FAULT IN NOT MINIMIZING ITS LOSSES.

III

THE RESPONDENT INTERMEDIATE APPELLATE COURT
ERRED IN FINDING THAT PETITIONER FAILED TO CONSIGN THE VESSEL UPON THE REFUSAL
OF ITS OWNER TO ACCEPT ITS RETURN INSPITE OF THE EVIDENCE THAT THE VESSEL HAD
ALWAYS BEEN UNDER THE FULL CONTROL AND DIRECTION OF ITS OWNER.  (Rollo, pp. 17-18)

The decisive issue is whether or not there was a perfected
contract between the petitioner and the private respondent to repair the vessel
Zamboanga-J.

The applicable laws on work done upon a vessel are the general
rules on contract.  A contract may be
entered into in whatever form except where the law requires a document or other
special form as in the contracts enumerated in Article 1388 of the Civil
Code.  The general rule, therefore, is
that a contract may be oral or written.  (Royal Lines, Inc. v. Court of Appeals, 143 SCRA 608).

The appellate court, adopting the findings and conclusions of the
lower court, ruled that there was a perfected contract for the repair of the
vessel Zamboanga-J. 
It based its ruling on the following circumstances:  1) The previous transactions and business
relationship between the two parties showed that they never executed written
contracts for the repair of vessels owned by the private respondent; 2) The
procedure for necessary repairs of the private respondent’s vessels consisted
only in the drydocking of the vessel at the
petitioner’s shipyard to be repaired by the latter after which the bill would
be sent to the former for the payment; 3) In the case of the contract to repair
Zamboanga-J, this vessel was accepted by the
petitioner and it was drydocked on December 27, 1974;
4) A day after, or on December 28, 1974, the private respondent paid P15,000.00
in the form of two (2) checks as initial deposit for the repair of Zamboanga-J; 5) There was a job order from the Coast Guard
as evidenced by the application for drydocking
(Exhibit C) and the admitted inspection of the vessel by the Coast Guard in the
presence of Mr. Joaquin Tong, a managing partner of the Varadero
de Recodo, the business name of the petitioner; and
6) The petitioner actually commenced the repair of the vessel when it removed
the rudders and pulled out the tail shafts and did other things.

The general rule is that the “jurisdiction of this Court in
cases brought to us from the Court of Appeals is limited to reviewing and
revising the errors of law imputed to it, its findings of facts being conclusive.  (Community
Savings and Loan Association, Inc., et al. v. Court of Appeals, et al., G.R.
No. 75786, August 31, 1987, citing De Gala-Sison v. Manalo, 8 SCRA 595; Goduco v.
Court of Appeals, 14 SCRA 282; Ramirez Telephone Corporation v. Bank of
America, 29 SCRA 171; Chua v. Court of Appeals, 33 SCRA 373.) There are,
however, exceptions to this rule as when:

“x x x (1) the conclusion is a finding grounded entirely on
speculation, surmise and conjectures; (2) the inference made is manifestly
mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on
misapprehension of facts; (5) the Court of Appeals went beyond the issues of
the case and its findings are contrary to the admission of both appellant and appellees [Roque v. Buan, L-22459, Oct. 31, 1967, 21 SCRA 648]; (6) the
findings of facts of the Court of Appeals are contrary to those of the trial
court; (7) said findings of facts are conclusions without citation of specific
evidence on which they are based; (8) the facts set forth in the petition as
well as in the petitioner’s main and reply briefs are not disputed by the
respondents [Garcia v. CA, L-26490, June 30, 1970, 33 SCRA 622]; and (9) when
the finding of facts of the Court of Appeals is premised on the absence of
evidence and is contradicted by evidence on record [Salazar v. Gutierrez,
L-21727, May 29, 1970, 33 SCRA 243].” (Tolentino
v. De Jesus, 56 SCRA 167)

The fact that the parties’ previous contracts for the repair of
the private respondent’s vessels were all oral and that the procedure consisted
merely in the vessels being drydocked at the
petitioner’s shipyard and after repair the petitioner would just send the bill
to the private respondent, does not necessarily result in a conclusive
presumption that all subsequent contracts between the parties of similar or
allied nature should also be oral and the procedure be the same.

An examination of the records reveals that there are
circumstances overlooked by the appellate court which support the petitioner’s
contentions that — 1) there was no perfected contract between the parties to
repair Zamboanga-J, and 2) the proximate cause of the
total loss of Zamboanga-J was the abandonment of the
vessel by the private respondent.

On January 2, 1975, during the inspection made by the Coast Guard
inspector, Anton Casimero, in the presence of Mr.
Luis Canto, the private respondent’s representative, and Mr. Joaquin Tong,
managing partner of the petitioner, it was found that the wooden boat had so
deteriorated that in order to repair it, all the original ribs of the boat and
the planking must be removed and that, in effect, the repair would be a construction
of a new boat. 
It was also established that the private respondent never paid on time
during the parties’ previous transactions and when the Zamboanga-J
was drydocked at the petitioner’s shipyard, the private respondent still owed P28,000.00 for previous jobs. 
In fact, the petitioner had filed a collection suit, Civil Case No. 281
(1728), against the private respondent with the Court of First Instance of Cotobato.

These undisputed facts give credence to the petitioner’s
contention that before accepting the job request to repair Zamboanga-J,
it wanted to have the private respondent sign a written contract with an initial downpayment
of P50,000.00. 
According to the petitioner,
the P15,000.00 was partial settlement of
previous accounts.  Taking into
consideration the petitioner’s previous experiences together with the private
respondent’s allegations, it is equally likely that the P15,000.00
paid by the latter on December 28, 1974 was only a
condition precedent to the acceptance of Zamboanga-J
for drydocking and not a downpayment
for its repair.  We agree with the
petitioner in its contentions:

“x x x That the payment of P15,000 on December 28, 1974 could
not have possibly been for the repairs of the Zamboanga-J
is confirmed no less than by the
very findings of the trial court when it stated that ‘the procedure that was
followed was for the vessels of plaintiff (herein private respondent) to be drydocked and repaired and after (sic) job, the statements
of account will be sent to plaintiff and in turn, the plaintiff will remit
payment to the defendant (herein petitioner) in varying amounts’ (p. 182,
R.A.).  Following this reasoning, and
concededly since the work on the Zamboanga-J had not
yet even commenced, then the P15,000 payment on December 28, 1974 could only
pertain to the partial settlement of private respondent’s previous unpaid
accounts.  It is for this reason that the
two receipts marked as Exhibits A and B issued on December 28, 1974
for P15,000 made no specific mention that these were
in payment for the repairs of the Zamboanga-J.  As a matter of fact, private respondent
admits that no such downpayment
had been required for past repairs with
the shipyard.

“Petitioner’s submission is further strengthened when we
consider that no estimate of the expenses for repairs to be incurred had as yet
been made on the vessel Zamboanga-J on December 28,
1974 (one day after the vessel was admitted for drydocking)
and petitioner would have no basis for
requesting an immediate downpayment.  The evidence shows that it was only on January 2, 1975 when a Coast Guard
inspector conducted an ocular inspection of the vessel in the presence of Luis Canto, private respondent’s
representative.  Logically, it was only
at that time (January 2, 1975) that the shipyard was appraised of the work to
be done on the vessel and for this reason, said petitioner demanded for a
P50,000 downpayment, not P15,000 as claimed by private
respondent.” (p. 24, Rollo)

Contrary to the findings of the appellate court, there was
actually no job order issued by the Coast Guard.  Exhibit “C” is merely the
petitioner’s application for an inspection of the boat addressed to the Coast
Guard.  Moreover, the removal of the
rudders and pulling out of the tail shafts with propellers, done even before January
2, 1975, were standard operating procedures on
the part of the petitioner to inspect the condition of the tail shafts and also
the state of the rudders.  This did not
amount to a commencement of the repair of the vessel or a partial compliance
with a contract to repair the vessel.

Between January 14, 1975 to January 28, 1975, the
two parties communicated with each other through telegrams.

On January 14, 1975,
Protacio Juliano, owner of
the respondent company sent the following telegram to the petitioner:

“PLEASE ADVISE EXTENT OF REPAIR FOR DRYDOCK ZAMBO-J PER OUR
AGREEMENT WIRE REPLY

JULIANO” (Exhibit
J-2, p. 20, Folder of Exhibits)

On January 16, 1975
Juliano again sent the following telegram to the
petitioner:

“URGENTLY REQUIRE STATUS REPAIR
ZAMBOANGA-J ADVISE COLLECT

JULIANO” (Exhibit
J-3, p. 20, Folder of Exhibits)

On January 17, 1975,
the petitioner in turn sent the following telegram to Juliano:

“NEED YOUR PRESENCE BEFORE WE START
THE REPAIR FOR EVALUATION REGARDS

VARADERO” (Exhibit
J-4, p. 20, Folder of Exhibits)

On January 18, 1975,
Juliano sent the following telegram to the
petitioner:

“REUR JAN 17 INSISTING ON PREVIOUS
AGREEMENT MY PRESENCE NO LONGER NECESSARY PLEASE REPLY

TOTO JULIANO”
(Exhibit J-5, p. 20, Folder of Exhibits)

In reply to Juliano, the petitioner
sent the following telegram in January
20, 1975:

“WE CANNOT START THE JOB ORDER WITHOUT
YOUR PRESENCE TO DETERMINE THE EXTENT OF WORK

VARADERO DE RECODO”
(Exhibit J-4, p. 21, Folder of Exhibits)

On January 22, 1975,
the petitioner sent another telegram to Protacio Juliano as follows:

“YOUR PRESENCE BADLY NEEDED UP TO FRIDAY IF NOT ARRIVED
PRESUME NOT INTERESTED WITH THE REPAIR OF ZBGA-J STOP WILL COVER OPENED SECTION
AND UNDOCK

VARADERO DE RECODO”
(Exhibit 5-B, p. 23, Folder of Exhibits)

In reply, Atty. Badoy, representing the
private respondent, sent a telegram to the petitioner on January 23, 1975, to wit:

“RE-ZAMBOANGA-J PARTY CONCERNED OUT OF
CITY ANYTHING YOU DO NOT IN ACCORDANCE WITH AGREEMENT IS SOLELY AT YOUR OWN
RISK REGARDS

ATTY. BADOY”
(Exhibit A, p. 23, Folder of Exhibits)

On January 28, 1975,
the petitioner sent another telegram to Juliano, to
wit:

“REURTEL JANUARY 23 NO AGREEMENT AS TO
THE EXTENT OF REPAIRS AND PAYMENT WILL UNDOCK VESSEL

VARADERO DE RECODO” (Exhibit J-7, p. 21, Folder of Exhibits)

These series of communications show that there was no perfected
contract to repair the vessel Zamboanga-J.  The parties were aware of where they stood.

Article 1315 of the Civil
Code provides:

“Contracts are perfected by mere consent, and from that moment the parties are bound not only
to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good
faith, usage and law.”

while Article 1319 thereof provides:

“Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. 
The offer must be certain and the acceptance absolute.  A qualified acceptance constitutes a
counter-offer.”

As can be gleaned from the exchange of telegrams between the two
parties, there was not yet a meeting of the minds as to the cause of the
contract.  The cause of a contract has
been defined “as the
essential reason which moves the
contracting parties to enter into it (8 Manresa, 5th Edition, p.
450).  In other words, the cause is the
immediate, direct and proximate reason which justifies the creation of an
obligation thru the will of the contracting parties (3 Castan, 4th Edition, p. 347).” (General
Enterprises, Inc. v. Lianga Bay Logging Co., Inc., 11
SCRA 733, 739).  For the private
respondent, the cause of the contract was the repair of its vessel Zamboanga-J while for the petitioner the cause would be its
commitment to repair the vessel and
make it seaworthy.  The telegrams dated
January 17, January 20, and January 28, 1975 sent by the petitioner to the
private respondent, however, indicate that the former had not accepted the
repair of Zamboanga-J, the reason being that the
extent of the repair to be made necessitated a major expense so that the
petitioner insisted on the presence of the private respondent for evaluation
before it accepted the repair of the wooden vessel.  That the petitioner had not yet consented to
the contract is evident when on January
28, 1975, it sent a
telegram stating:  “xxx NO AGREEMENT AS
TO THE EXTENT OF REPAIRS AND PAYMENT WILL UNDOCK VESSEL”.  The fact that the private respondent
who received this telegram ignored it, confirms that there was no perfected
contract to repair Zamboanga-J.

It is to be noted that despite its knowledge of Zamboanga-J having been undocked as early as February 7, 1975 when the petitioner
sent a telegram advising that “Zamboanga-J
undocked already”, the private respondent took no action to save its
vessel.  Instead, its officers and crew
were ordered ashore and the vessel was
left to rot and decay in the sea of
Zamboanga.  It was only on July 28, 1975, after the lapse of almost six months, that
the private respondent tried to recover the value of its vessel from the
petitioner.  This prompted the petitioner
to send another telegram to the private respondent on August 1, 1975, to wit:

“AS EARLY AS JANUARY VARADERO DEMANDED ZAMBOANGAJ OFFICERS
YOUR MR CANTO TAKE ZAMBOANGAJ OUT VARADERO PREMISES BUT YOUR OFFICERS CREW
ABANDONED SAME PRESENTLY VARADERO PAYING SECURITY GUARDS AND DEMANDING
REIMBURSEMENT

ATTORNEY JESUS
AQUINO

COUNSEL VARADERO
RECODO”

(Exhibit 5-C, p.
23, Folder of Exhibits)

Under the circumstances, we rule that the proximate cause of the
total loss of Zamboanga-J was the negligence of the
private respondent.  Breach of contract
by the appellant could not have been the proximate cause as there was no
perfected contract between the parties to repair Zamboanga-J.  Hence, the private respondent is not entitled
to recover damages against the private respondent.

We agree with the petitioner that:

“The loss of the vessel can be attributed only to the
immediate and proximate negligence of private respondent who failed to exercise
the diligence of a good father of a family. 
Because after the undocking on February 4, 1974:  (1) the officers and the crew were allowed to
depart; (2) no measures were taken to
have the vessel repaired; (3) the vessel
was left to the elements; (4) a marine surveyor was hired only six
months later when the ship was already beyond repair, the subsequent loss can
be attributed solely to the negligence of the owner.  Consequently, petitioner should be totally
absolved of any liability for the loss of Zamboanga-J
as so provided under Article 2179 of the Civil Code.

“‘ART. 2179.  When the plaintiff’s own negligence was the immediate
and proximate cause of his injury, he cannot recover damages.  But if his negligence was only contributory,
the immediate and proximate cause of the injury being the defendant’s lack of
due care, shall mitigate the damages to be awarded.  (Underscoring supplied)’

“The private respondent, as the shipowner, was in actual possession of the vessel all along
even when it was on drydock and after it had been
undocked.  This is shown by the affidavit
dated September 20, 1985 of the petitioner attached as Annex A to the
Supplement to Motion for Reconsideration dated September 25, 1985 (Annex I,
Petition) and by the fact that the vessel had a thousand items by value to be
safeguarded such as nautical instruments, bedding, kitchen utensil and the
like.  As a matter of fact, the crew of
the vessel was on board when the Zamboanga-J was
released from petitioner’s shipyard on February
4, 1975.  Respondent’s
witness Luis Canto even admitted that the subject vessel was afloat.  For several months, private respondent
allowed the Zamboanga-J to rot and deteriorate by
exposing it to the elements.  The private
respondent did not take any measure to save
the ship but even ordered its crew to abandon it.  The marine surveyor was dispatched only on
September 1976 to inspect the Zamboanga-J which at
that time was already a total loss.” (p. 27, Rollo)

The private respondent did not bother from January, 1975 to
September, 1976 or for almost two years, to find out what happened to its
vessel inspite of its full knowledge that the boat
had been undocked and to take concrete steps to save and rehabilitate it.  It relied completely on an alleged verbal
understanding in order to get from the petitioner the full value of a
functioning vessel and the income it claimed would have been earned for the next five years.  Not only was a written agreement for the
repair of the vessel, missing in this case but the petitioner formally refused
to accept the job and to enter into the contract unless certain terms were
met.  Under the circumstances, we are
constrained to rule that the respondent court committed reversible error.

WHEREFORE, the instant petition is hereby GRANTED.  The questioned decision is REVERSED AND SET
ASIDE.  The complaint in Civil Case No.
2446 of the then Court of First Instance of Cotabato
is DISMISSED.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin, and Cortes, JJ., concur.