MARKET DEVELOPERS, INC. (MADE), PETITIONER, VS. HON. INTERMEDIATE APPELLATE COURT AND GAUDIOSO UY, RESPONDENTS.

What one may notice at the outset about this case is that the private
respondent, although the plaintiff in the court a quo, seems to
have lost all interest after the decision in his favor was appealed to the
respondent court. He did not even
submit a brief.^[1]
Later, when this petition was filed and he was required to comment, he also
failed to do so. Required to show cause
for his non-compliance, he explained that his records of the case had been
misplaced. Anyway, he said, he could
not add to the evidence presented at the trial; hence, he was submitting the
case for resolution by this Court without further
pleadings.^[2]

It is not as simple as that. The petitioner has raised substantial arguments not touched in the
decision under challenge. It was in the
private respondent’s interest to refute these arguments if he was to maintain
his advantage. Notably, the issues
raised by the petitioner are mainly legal and could have been answered without
much need of referring to the records. If there was such a need, it would have been easy for the private
respondent to consult the records in this Court, which were available to
him. But it is now too late for him to
do so because of his waiver.

The private respondent’s seeming indifference becomes all the
more costly to him in the light of the challenged decision of the respondent
court.^[3]
It was rather sketchy, to say the least. Hardly an original idea or finding was
volunteered. The appellate court made a
brief recital of the facts, summarized the allegations of the plaintiff
and the defendant, quoted at length the findings and conclusions of the trial
court,^[4]
declared them “well-taken and
meritorious,” and concluded by affirming the appealed decision in toto. It was a mistake for the private respondent
to fully rely on that unsatisfactory decision.

It appears that on June 20, 1978, petitioner Market Developers,
Inc. (MADE) entered into a written barging and towage contract with private
respondent Gaudioso Uy for the shipment of the former’s cargo from Iligan City
to Kalibo, Aklan, at the rate of P1.45 per bag. The petitioner was allowed 4 lay days and agreed to pay demurrage
at the rate of P5,000.00 for every day of delay, or in excess of the stipulated
allowance.^[5]
On June 26, 1978, Uy sent a barge and a tugboat to Iligan City and loading of
the petitioner’s cargo began immediately. It is not clear who made the request, but upon completion of the loading
on June 29, 1978, the parties agreed to divert the barge to Culasi, Roxas City,
with the cargo being consigned per bill of lading to Modern Hardware in that
city.^[6]
This new agreement was not reduced to writing. The shipment arrived in Roxas City on July 13, 1978, and the cargo was
eventually unloaded and duly received by the consignee. There is some dispute as to the time
consumed for such unloading. At any rate, about six months later, Uy
demanded payment of demurrage charges in the sum of P40,855.40 for an alleged
delay of eight days and 4/25 hours.^[7]
MADE ignored this demand, and Uy filed suit. He was sustained by the trial court, which ordered the petitioner to pay
him the said amount with interest plus P4,000.00 attorney’s fees and the cost
of the suit.^[8]
As earlier stated, this decision was fully affirmed on appeal to the respondent
court, which is the reason for this petition.

Agreeing with the trial court, the respondent court held that
since the diversion of the cargo to Roxas City was not covered by a new written
agreement, the original agreement must prevail.

It is this conclusion that is now disputed by the petitioner,
which contends that the first written contract was replaced by a new verbal
agreement that did not contain any stipulation for demurrage. There is the further insistence that the
alleged delay in the unloading of the cargo in Roxas City should not have been
readily assumed as a fact by the trial and
respondent courts because it had not been established by competent
evidence and was based on mere hearsay. The petitioner also argues that the claim for demurrage was barred by
laches, the private respondent having asserted it tardily and obviously only as
an afterthought.^[9]

After considering the issues and the arguments of the parties, we
find that it was erroneous for the respondent courts to affirm that the
original contract concluded on June 20, 1978, continued to regulate the
relations of the parties. What it
should have held instead was that the first written
contract had been cancelled and replaced by the second verbal contract because
of the change in the destination of the cargo.

In his testimony, the private
respondent said he felt there was no need to draft another agreement as anyway
the rates remained unchanged at P1.45 per sack of the petitioner’s cargo. He did not consider, however, that there was
a substantial difference between Roxas City and Kalibo, Aklan, as ports of
destination, that affected the continued existence of the first contract.

As correctly pointed out by the
petitioner, Roxas City is a much busier port than Kalibo, Aklan, where
unloading of its cargo could have been accomplished faster because of the
lighter traffic. That is why he agreed
to pay demurrage charges under the original contract but not under the revised
verbal agreement. Testifying for the
petitioner, Julian Chua, its sales manager, declared that he had expressed
misgivings about paying demurrage charges in Roxas City but was assured by Uy
that there would be no such charges.^[10]
This testimony was never denied by the private respondent.

Indeed, it would have been
foolhardy for the petitioner to assume demurrage charges in Roxas City,
considering the crowded condition of the port in that place. Such assumption should not have been lightly
inferred, especially since it is based on the resurrection of a contract
already voided because of the change in the port of
destination. To hold that the old
agreement was still valid and subsisting notwithstanding this substantial
change was to impose upon the petitioner a condition he had not, and would not
have, accepted under the new agreement.

In ruling that in the absence of a new written agreement the old
agreement must prevail, the courts a quo were saying that the
first agreement continued to be valid because the second was void. That is hardly a logical conclusion. If the first contract was, indeed, still
valid, then it was clearly violated because of the diversion of the cargo
which, if we follow the reasoning of the courts a quo, could not
have been agreed upon verbally.

Was the second contract invalid because it was not in writing?

Article 1356 of the Civil Code provides:

Contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are
present. However, when the law requires
that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and
indispensable x x x.

We affirmed this rule only recently when we said in Tong v.
Intermediate Appellate Court^[11]
that “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.”

The contract executed by MADE and Uy was a contract of
affreightment. As defined, a contract
of affreightment is a contract with the shipowner to hire his ship or part of
it, for the carriage of goods, and generally takes the form either of a charter
party or a bill of lading.^[12]

Article 652 of the Code of Commerce provides that “a charter
party must be drawn in duplicate and signed by the contracting parties”
and enumerates the conditions and information to be embodied in the contract,
including “the lay days and extra lay days to be allowed and the demurrage
to be paid for each of them.”

But while the rule clearly shows that this kind of contract must
be in writing, the succeeding Article 653 just as clearly provides:

If the cargo should be received without a charter party having been
signed, the contract shall be understood as executed in accordance with what
appears in the bill of lading, the sole evidence of title with regard to the
cargo for determining the rights and obligations of the ship agent, of the
captain and of the charterer.

We read this last provision as meaning that the charter party may
be oral, in which case the terms thereof, not having been reduced to writing,
shall be those embodied in the bill of lading.

Conformably, we recognized in Compañia Maritima v. Insurance
Company of North America,^[13]
the existence of a contract of affreightment entered into by telephone, where
it was shown that this oral agreement was later confirmed by a formal and
written booking issued by the shipper’s branch office and later carried out by
the carrier.

We see no reason why the second agreement of the parties to deliver
the petitioner’s cargo to Roxas City instead of Kalibo, Aklan, should not be
recognized simply because it was not in writing. Law and jurisprudence support the validity of such a contract. And there is no justification either
incorporate in such contract the stipulation for demurrage in the original
written contract which provided for a different port of destination than that
later agreed upon by the parties. It
was precisely this vital change in the second contract that rendered that first
contract ineffectual.

If the rate provided for in the old written contract was
maintained in the new oral contract, it was simply because, as the private
respondent himself declared, the rates for Kalibo, Aklan and Culasi, Roxas
City, were the same. But the demurrage
charges cannot be deemed stipulated also in the verbal contract because the
conditions in the ports of Aklan and Roxas City were, unlike the rates, not the
same. In fact, they were vastly
different.

The parol evidence rule is clearly inapplicable because that
involves the verbal modification – usually not allowed – of a written agreement
admittedly still valid and subsisting. In the case at bar, the first written agreement had not merely been
modified but actually replaced by the second verbal agreement, which is
perfectly valid even if not in writing like the first. As has been correctly held:

No principle of law makes it necessary that a new contract upon the
same subject between the same persons shall be reduced to writing because the old
contract was written.^[14]

Regarding the bill of lading, an examination thereof will reveal
that there is no condition or requirement therein for the payment of demurrage
charges. Under the afore-quoted Article
653 of the Code of Commerce, therefore, there was no reason to read any
stipulation for demurrage into the second contract.

At that, even assuming that the original agreement for demurrage
had been carried over in the second contract, there is no acceptable evidence
of the delay allegedly incurred by the petitioner in the unloading of its cargo
in Roxas City. Uy’s testimony on this
matter is self-serving, let alone the fact that he admittedly was not present
at the unloading. His corroboration is
hearsay. This consisted merely of
Exhibits B and C,^[15]
the so-called statement of facts regarding the unloading of the cargo from the
barge, prepared by the barge patron, a certain Ding Julian. This person was not presented at the trial
to testify on his report and could therefore not be subjected to cross examination.

A no less important consideration is the timeliness of the
private respondent’s demand for the payment of demurrage charges as this would
indicate the real intention of the parties regarding this matter.

The petitioner points out that the original bill sent by the
private respondent charged it only for the freight but made no mention of the
demurrage charges. The trial court
correctly noted, and the respondent court agreed, that “this is so because
at the time Exhibit ‘2’ was made which was on July 8, 1978, there was yet no
demurrage. As a matter of fact,
unloading had not yet started. The
unloading started on July 13, 1978. (Exh. D).”

True. But accepting arguendo
the facts stated in the mentioned exhibits, we find that after sending the petitioner
the billing dated July 8, 1978, the private respondent did not make any
additional billing for demurrage following the completion of the unloading on
July 24, 1978, as alleged. It is also a
matter of record that on September 1, 1978, the petitioner remitted to Uy a
check “in full payment of our account,”^[16]
which was accepted without protest and eventually encashed by the private
respondent. Furthermore, the
petitioner’s sales manager testified that MADE and Uy entered into at least one
more voyage afterwards, and there was no demand made then for the demurrage
charges for the voyage to Roxas City.^[17]
This has not been denied. Uy says he
made such demand verbally several times but offered no corroboration. It was only on February 5, 1979, that he made
his demand in writing.^[18]

Considering that Uy’s original billing for freightage was made
even while the petitioner’s cargo was still being unloaded in Roxas City, one
can only wonder why the billing for the demurrage charges was not made with
similar dispatch, that is, soon after the alleged delay. Uncharacteristically, that billing was not
at all prompt; indeed, it was inexplicably deferred. It is not explained either why, when the petitioner remitted what
it expressly described as “full payment” of its account, Uy did not
make haste to say that the demurrage charges were still outstanding nor did he
mention this claim when he later entered into another freightage contract with
the petitioner. More curiously, it took
all of six months before it occurred to Uy to make a written demand for
demurrage although he says his several verbal demands had been consistently
ignored.

The Court finds that while this delay, standing by itself, is not
long enough to constitute laches, it nevertheless clearly reflects on the
private respondent’s credibility when assessed in relation to the facts above
narrated.

The sum of it all is that while private respondent could have met
all the arguments of the petitioner frontally, he elected to rely merely on the
decisions of the trial court and the respondent court, perhaps feeling smugly
that he had already won. That was his
error. He misjudged those
judgments. It should never be assumed
that when this Court sits to review the decisions of the lower courts, it will
merely and automatically affirm them without further inquiry on the convenient
assumption that they are correct. That
may be a presumption, and it is often valid, but it is never conclusive upon
us. Such decisions are always examined
carefully and thoroughly by this Court, in the light of the issues and
arguments raised by the parties before it, and may be modified or even reversed
whenever warranted to give the deserving suitor the appropriate relief. As in this case.

WHEREFORE, the
petition is GRANTED. The decision of
the respondent court is REVERSED. Civil
Case No. R 18095 in the Regional Trial Court of Cebu is hereby dismissed, with
costs against the private respondent.

SO ORDERED.

Narvasa, (Chairman), Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Rollo, p. 11.

^[2]
Ibid., p. 39.

^[3]
Id., p. 26. Decision
penned by Castro-Bartolome, J., with Coquia, Zosa and Ejercito, JJ.,
concurring.

^[4]
Original records, p. 107; decided by Judge Celso Avelino of the Court of First
Instance, 14th Judicial District, Branch XIII.

^[5]
Exhibit “A.”

^[6]
Exhibit “B.”

^[7]
Exhibit “D.”

^[8]
Decision, p. 109.

^[9]
Rollo, p. 10.

^[10]
TSN, March 24, 1980, p. 27.

^[11]
156 SCRA 726.

^[12]
Black’s Law Dictionary, p. 83.

^[13]
12 SCRA 213.

^[14]
Teal v. Bilby, 31 L Ed 263.

^[15]
Exhibit “C.”

^[16]
Exhibit “3.”

^[17]
Supra, note 20, p. 39.

^[18]
Exhibit “D.”