Market Developers, Inc. v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Petitioner Market Developers, Inc. (MADE) entered into a written contract with private respondent Gaudioso Uy for the shipment of cargo from Iligan City to Kalibo, Aklan, at a specified rate, with stipulated lay days and demurrage charges for delay. Subsequently, the parties verbally agreed to divert the barge to Culasi, Roxas City, with the cargo consigned to Modern Hardware. This diversion was not reduced to writing. The shipment arrived in Roxas City, and the cargo was unloaded. Approximately six months later, Uy demanded payment of demurrage charges for an alleged delay in unloading. Procedural History: MADE ignored the demand, prompting Uy to file suit. The trial court ruled in favor of Uy, ordering MADE to pay demurrage charges, interest, attorney's fees, and costs. The Intermediate Appellate Court affirmed the trial court's decision in toto. The Petition: MADE filed a petition for review, arguing that the verbal agreement for diversion replaced the original written contract and did not include demurrage charges. MADE also contended that the alleged delay was not established by competent evidence and that the claim for demurrage was barred by laches.
Issue(s)
Whether the verbal agreement to divert the shipment to Roxas City replaced the original written contract of affreightment. Whether demurrage charges from the original written contract are applicable to the subsequent verbal agreement for diversion. Whether the alleged delay in unloading was sufficiently proven by competent evidence. Whether the claim for demurrage charges is barred by laches.
Ruling
The petition is granted. The decision of the respondent court is reversed, and Civil Case No. R 18095 in the Regional Trial Court of Cebu is dismissed.
Ratio Decidendi
On whether the verbal agreement replaced the original written contract: The Court held that it was erroneous for the respondent courts to affirm that the original contract continued to regulate the parties' relations. The diversion of the cargo to Roxas City, a port with substantially different conditions than Kalibo, Aklan, constituted a significant change that effectively cancelled and replaced the first written contract with the second verbal contract. The Court reasoned that Roxas City is a busier port, and it would have been unreasonable for MADE to assume demurrage charges under the new agreement, especially since the verbal assurance from Uy was that there would be no such charges. The Court found it illogical to impose conditions of the old agreement on a new one that had been fundamentally altered by the change in destination. On the applicability of demurrage charges: The Court ruled that demurrage charges from the original written contract were not automatically carried over to the new verbal agreement. While the freight rates remained the same, the conditions of the ports of Aklan and Roxas City were vastly different. The Court noted that Article 653 of the Code of Commerce provides that if cargo is received without a charter party signed, the contract is understood as executed according to the bill of lading. In this case, the bill of lading did not contain any stipulation for demurrage charges. Furthermore, the Court emphasized that the verbal agreement was a replacement, not a mere modification, of the written contract, and no principle of law requires a new contract to be in writing simply because the old one was. On the sufficiency of evidence for delay: The Court found no acceptable evidence of the delay allegedly incurred by MADE in unloading the cargo in Roxas City. The Court characterized Uy's testimony as self-serving and hearsay, as he was not present at the unloading. The exhibits presented (Exhibits B and C), which were statements prepared by the barge patron, were deemed insufficient because the patron was not presented for cross-examination. The Court highlighted that the original billing for freightage was made even while the cargo was being unloaded, but no similar dispatch was shown for the demurrage charges after the alleged delay. On the issue of laches: While the delay in demanding demurrage charges, standing alone, might not be long enough to constitute laches, the Court found that it clearly reflected on the private respondent's credibility when assessed in relation to other facts. The Court pointed to the fact that MADE remitted a check described as "full payment" which was accepted and encashed by Uy without protest. Furthermore, MADE and Uy entered into at least one more voyage afterward without any demand for the Roxas City demurrage. Uy's claim of verbal demands was uncorroborated, and it took six months before a written demand was made. This uncharacteristic delay in asserting the claim, coupled with the acceptance of full payment and subsequent dealings, undermined Uy's credibility regarding the demurrage charges.
Main Doctrine
A verbal agreement to divert a shipment to a different destination, which involves substantially different port conditions, effectively replaces a prior written contract of affreightment, and the terms of the original contract, such as demurrage charges, are not automatically carried over to the new verbal agreement unless explicitly stipulated.