EN BANC
[G.R. No. L-12138. February 27, 1962. ]
OVERSEAS FACTORS, INC. and GERTRUDES CARLOS, Plaintiffs-Appellees, v. SOUTH SEA SHIPPING CO., LTD. A. MAGSAYSAY INC., The CAPTAIN AND CREW OF THE S. S. OCEAN TRADER and The COLLECTOR OF CUSTOMS OF MANILA, Defendants-Appellants. SOUTH SEA SURETY & INSURANCE CO., INC., cross-claimant, v. OVERSEAS FACTORS, INC. and GERTRUDES CARLOS, cross-defendants. NATIONAL RICE AND CORN CORPORATION, intervenor.
Paredes, Balcoff & Poblador and Angel S. Alvir for Plaintiffs-Appellees.
Ramon T. Oben and Solicitor General, for Defendants-Appellants.
Romualdo Constantino for cross-claimant.
Godofredo L. Guzman for intervenor.
SYLLABUS
1. SHIP AND SHIPPING; FREIGHT INCLUDED IN GOODS’ PURCHASE PRICE; CARRIER’S LIEN EXIST IF FREIGHT WAS NOT PAID. — The fact that the freight was already included in the purchase price of the goods paid by the purchaser to the appellees did not free the cargo of rice from the carrier’s lien as provided for in article 665 of the Code of Commerce, if the freight has not yet been fully paid by the charterer.
D E C I S I O N
PADILLA, J.:
On 3 and 9 September 1954 the National Rice and Corn Corporation and the Overseas Factors, Inc. entered into two contracts whereby the latter undertook to supply the former with 5,000 metric tons of Kangni rice at P.51 per ganta and 5,000 metric tons of Joshi rice at P.49 per ganta (Exhibits A & B). On 10 September 1954 the National Rice and Corn Corporation established for its account with the Philippine National Bank in Manila two irrevocable letters of credit (Nos. 62655 & 62656) in the amounts of $529,125 and $508,375, United States currency, in favor of the Pakistan Development Corporation, Ltd., Karachi, Pakistan (Exhibits A-2 & B-2).
On 30 October 1954, S. M. Yeung, authorized representative of the South Sea Shipping Co., Ltd., wrote to José W. Diokno, authorized representative of the Overseas Factors, Inc., in Karachi, Pakistan, enumerating the terms and conditions of the charter party they have agreed upon for shipment of the rice to be imported by the Overseas Factors, Inc. from Pakistan aboard the SS Ocean Trader owned by the South Sea Shipping Co., Ltd. At the foot of the letter, José W. Diokno affixed his signature signifying his intention to confirm the terms and conditions therein enumerated (Exhibit 10). On the same date, 30 October 1954, S. M. Yeung, in behalf of the South Sea Shipping Co., Ltd., and Chung Kien Tieng, in behalf of the Overseas Factors, Inc., entered into a formal contract of charter party in Karachi, Pakistan, incorporating the terms and conditions enumerated in the letter (Exhibit 11). (See Exhibit C.) On 12 November 1954 the terms and conditions of the charter party regarding the rate and payment of freight were amended by the parties in Hongkong (Exhibit 12).
On 4 November 1954 Juan A. Magsino, in behalf of Overseas Factors, Inc. entered into an agreement with Abdulaye A. Badat, sole proprietor of Ivlom Corporation, in Karachi, Pakistan, whereby the said corporation undertook to supply the Overseas Factors, Inc., with 5,000 metric tons of Kangni rice of the quality and specifications enumerated in Philippine National Bank Letter of Credit No. 62655 (Exhibit 6). Badruddin H. Mavani undertook to supply the Overseas Factors, Inc, with the needed Joshi rice.
On 5 November 1954 the Overseas Factors, Inc. and Gertrudes Carlos, co-financier of the former in its contract with the National Rice and Corn Corporation to supply it with the needed rice, jointly and severally applied to the South Sea Surety & Insurance Co., Inc. to act as surety upon a bond demanded by the South Sea Shipping Co., Ltd. in the amount of P315,000 to guarantee the payment by the charterers in Hongkong of the freight, demurrage, dead freight and other losses that might arise (Exhibit B-South Sea Surety & Insurance Co., Inc.) . On the same date, 5 November 1954, the Overseas Factors, Inc., as principal, and Gertrudes Carlos, as co-principal, and the South Sea Surety & Insurance Co., Inc., as surety, executed a performance bond in the amount of P315,000 in favor of the South Sea Shipping Co., Ltd. to guarantee the full payment by the charterers at Hongkong of all freight, demurrage, dead freight and other losses that might arise, within 14 days from the date of departure of the vessel from Karachi, Pakistan (Exhibits 14; A-South Sea Surety & Insurance Co., Inc.)
From 16 to 23 November 1954, 2,567.6053 metric tons gross of Joshi rice and from 20 to 25 November 1954, 5,054.0662 metric tons gross of Kangni rice or a total of 7,621.6715 metric tons of rice were loaded on board the SS Ocean Trader in Karachi, Pakistan (Exhibits Q- Naric; E-Naric).
On 25 and 29 November the bills of lading covering the said shipments of rice duly signed by the shipper’s agent were issued in the name of the Philippine National Bank, Manila, as consignee. It appears in the two bills of lading that the party to be notified upon arrival in Manila was the National Rice and Corn Corporation (Exhibits D & E).
On 25 November 1954 the SS Ocean Trader sailed from Karachi, Pakistan (Exhibits 1 & 17) and arrived in Manila on 18 December 1954 (Exhibit 15). The captain and crew members of the SS Ocean Trader refused to unload the cargo of rice unless the balance of the freight and other charges due were paid by the charterers. Hence an action was brought on 29 December 1954 in the Court of First Instance of Manila praying the Court to direct the defendants to convert the amount in rupees paid by the plaintiffs in Karachi, Pakistan, into British sterling pounds, computed at the legal rate of exchange as allowed by the Government of Pakistan; to deliver to the plaintiffs the bills of lading of the cargo of rice; to permit the unloading by the plaintiffs of the cargo of rice from the SS Ocean Trader pending trial of the case; to desist or refrain from interfering with such unloading upon the filing of an additional surety bond, if necessary, in an amount that the Court may fix to answer for damages that the defendants may suffer as a result of such injunction, and to pay the costs; and the Collector of Customs to see to it that the cargo of rice from the SS Ocean Trader be unloaded. Plaintiffs also pray that the demurrages sought to be collected by the defendants be computed at the rate L300 and not at L700 a day; and for other just and equitable relief (civil No. 24972). The defendants answered the complaint and set up a counterclaim of P316,364.38 for freightage, demurrage, charges for detention and other expenses of the vessel while on detention. The plaintiffs controverted the defendants’ counterclaim. The National Rice and Corn Corporation filed a complaint in intervention to protect its interest and the South Sea Surety & Insurance Co., Inc. filed a cross-claim against the plaintiffs.
The other pleadings filed by the parties and orders issued by the Court in connection with the disposition of the cargo of rice in question need not be stated for the determination of the case. 1
After trial, the Court rendered judgment, the dispositive part of which is as follows:chanrob1es virtual 1aw library
IN VIEW OF THE FOREGOING, the Court believes and so holds that the preponderance of evidence is in favor of the plaintiffs and against the defendant South Sea Shipping Co., Ltd. The total amount of 369,000 Pakistan rupees received by S. M. Yeung was in full payment of the transportation of the rice in question from Karachi to Manila, and that the delay in the unloading of such rice in Manila was not due to plaintiffs’ fault.
The claim for lien on the shipment of rice has no legal basis for the reason that the freight had already been paid in Karachi, Pakistan, before such shipment arrived in Manila.
The injunction bond filed by plaintiffs as well as the performance bond executed to guaranty the payment of freight are hereby ordered cancelled.
The complaint with respect to defendants A. Magsaysay, Inc., the Captain and the Crew of the S.S. Ocean Trader, and the Collector of Customs of Manila, is hereby dismissed, it appearing that they have nothing to do with the controversy between plaintiff Overseas Factors, Inc. and South Sea Shipping Co. Ltd.
Defendants’ counterclaim is hereby dismissed.
Defendant South Sea Shipping Co. Ltd. shall pay the costs.
SO ORDERED.
Manila, Philippines, December 28, 1956.
The defendants South Sea Shipping Co., Ltd. and A. Magsaysay, Inc. have appealed.
In the letter written by S. M. Yeung, authorized representative of the appellant shipping company, to José W. Diokno, authorized representative of the appellees, on 30 October 1954 in Karachi, Pakistan, summing up the principal terms and conditions of the charter party agreed upon by them, it appears that they have agreed, among others, as follows:chanrob1es virtual 1aw library
FREIGHT : Sterling one hundred shillings (100) per
metric ton gross weight, F10 and free
stowed;
PAYMENT
OF FREIGHT : Charterers to pay full freight to the Owners at
Hongkong in British Pound Sterling upon
signing of bill or bills of lading, ship lost or
not lost;
PERFORMANCE
BOND : Charterers to arrange a performance bond in
Hongkong satisfactory to the Owners at
Hongkong, latest before noon on the 1st
November 1954 to guarantee the due
performance of this charter and full
payment of all freight at Hongkong within
fourteen (14) days from date of vessel’s
departure from Karachi. Charter Party Form
(as adopted 1922). (Exhibit 10.)
On the same date, 30 October 1954, the parties executed in Karachi, Pakistan, a formal contract of charter party in a printed form of the uniform general charter adopted by the documentary committee of the Chamber of Shipping of the United Kingdom, as revised in 1922. Chung Kien Tieng signed in behalf of the appellees and Yeung Siu Man in behalf of the appellant shipping company. The pertinent terms of the contract are:chanrob1es virtual 1aw library
Rate of Freight: Sterling One hundred Shillings (100/-) per metric ton, free in, free out and free stowed.
Payment of Freight: The freight to be paid in case without discount on signing bills of lading in British Pound Sterling transferable to the Owners at Hongkong within fourteen (14) days from the date of the vessel’s departure from Karachi. (Exhibit C or 11.)
On 12 November 1954 the two clauses were amended by adding the following to the first clause:chanrob1es virtual 1aw library
or according to Owners’ option of Forty Two Pesos (Pesos 42. -) per metric tons, free in, free out and free stowed.
and the following to the second clause:chanrob1es virtual 1aw library
or according to Owners’ option of payment at Manila at the rate stated in clause No. 1. (Exhibit 12.) .
In the performance bond executed and signed by the appellees in favor of the appellants, it was stipulated that —
. . . the condition of this bond is such that if the Principal and co- Principal shall well and duly comply with the conditions and stipulations enumerated in the above mentioned agreement charter and contract of charter party as well as pay all freight at Hongkong within fourteen (14) days from the date of vessel’s departure from Karachi, then this obligation shall be null and void; otherwise, it shall remain in full force and effect. (Exhibits 14; A-South Sea Surety & Insurance Co., Inc.)
According to the appellant shipping company, the amount due from the appellees as freightage of the 7,621.6715 metric tons of rice at 100 shillings per metric ton was
On 30 October 1954, S. M. Yeung, authorized representative of the South Sea Shipping Co., Ltd., wrote to José W. Diokno, authorized representative of the Overseas Factors, Inc., in Karachi, Pakistan, enumerating the terms and conditions of the charter party they have agreed upon for shipment of the rice to be imported by the Overseas Factors, Inc. from Pakistan aboard the SS Ocean Trader owned by the South Sea Shipping Co., Ltd. At the foot of the letter, José W. Diokno affixed his signature signifying his intention to confirm the terms and conditions therein enumerated (Exhibit 10). On the same date, 30 October 1954, S. M. Yeung, in behalf of the South Sea Shipping Co., Ltd., and Chung Kien Tieng, in behalf of the Overseas Factors, Inc., entered into a formal contract of charter party in Karachi, Pakistan, incorporating the terms and conditions enumerated in the letter (Exhibit 11). (See Exhibit C.) On 12 November 1954 the terms and conditions of the charter party regarding the rate and payment of freight were amended by the parties in Hongkong (Exhibit 12).
On 4 November 1954 Juan A. Magsino, in behalf of Overseas Factors, Inc. entered into an agreement with Abdulaye A. Badat, sole proprietor of Ivlom Corporation, in Karachi, Pakistan, whereby the said corporation undertook to supply the Overseas Factors, Inc., with 5,000 metric tons of Kangni rice of the quality and specifications enumerated in Philippine National Bank Letter of Credit No. 62655 (Exhibit 6). Badruddin H. Mavani undertook to supply the Overseas Factors, Inc, with the needed Joshi rice.
On 5 November 1954 the Overseas Factors, Inc. and Gertrudes Carlos, co-financier of the former in its contract with the National Rice and Corn Corporation to supply it with the needed rice, jointly and severally applied to the South Sea Surety & Insurance Co., Inc. to act as surety upon a bond demanded by the South Sea Shipping Co., Ltd. in the amount of P315,000 to guarantee the payment by the charterers in Hongkong of the freight, demurrage, dead freight and other losses that might arise (Exhibit B-South Sea Surety & Insurance Co., Inc.) . On the same date, 5 November 1954, the Overseas Factors, Inc., as principal, and Gertrudes Carlos, as co-principal, and the South Sea Surety & Insurance Co., Inc., as surety, executed a performance bond in the amount of P315,000 in favor of the South Sea Shipping Co., Ltd. to guarantee the full payment by the charterers at Hongkong of all freight, demurrage, dead freight and other losses that might arise, within 14 days from the date of departure of the vessel from Karachi, Pakistan (Exhibits 14; A-South Sea Surety & Insurance Co., Inc.)
From 16 to 23 November 1954, 2,567.6053 metric tons gross of Joshi rice and from 20 to 25 November 1954, 5,054.0662 metric tons gross of Kangni rice or a total of 7,621.6715 metric tons of rice were loaded on board the SS Ocean Trader in Karachi, Pakistan (Exhibits Q- Naric; E-Naric).
On 25 and 29 November the bills of lading covering the said shipments of rice duly signed by the shipper’s agent were issued in the name of the Philippine National Bank, Manila, as consignee. It appears in the two bills of lading that the party to be notified upon arrival in Manila was the National Rice and Corn Corporation (Exhibits D & E).
On 25 November 1954 the SS Ocean Trader sailed from Karachi, Pakistan (Exhibits 1 & 17) and arrived in Manila on 18 December 1954 (Exhibit 15). The captain and crew members of the SS Ocean Trader refused to unload the cargo of rice unless the balance of the freight and other charges due were paid by the charterers. Hence an action was brought on 29 December 1954 in the Court of First Instance of Manila praying the Court to direct the defendants to convert the amount in rupees paid by the plaintiffs in Karachi, Pakistan, into British sterling pounds, computed at the legal rate of exchange as allowed by the Government of Pakistan; to deliver to the plaintiffs the bills of lading of the cargo of rice; to permit the unloading by the plaintiffs of the cargo of rice from the SS Ocean Trader pending trial of the case; to desist or refrain from interfering with such unloading upon the filing of an additional surety bond, if necessary, in an amount that the Court may fix to answer for damages that the defendants may suffer as a result of such injunction, and to pay the costs; and the Collector of Customs to see to it that the cargo of rice from the SS Ocean Trader be unloaded. Plaintiffs also pray that the demurrages sought to be collected by the defendants be computed at the rate L300 and not at L700 a day; and for other just and equitable relief (civil No. 24972). The defendants answered the complaint and set up a counterclaim of P316,364.38 for freightage, demurrage, charges for detention and other expenses of the vessel while on detention. The plaintiffs controverted the defendants’ counterclaim. The National Rice and Corn Corporation filed a complaint in intervention to protect its interest and the South Sea Surety & Insurance Co., Inc. filed a cross-claim against the plaintiffs.
The other pleadings filed by the parties and orders issued by the Court in connection with the disposition of the cargo of rice in question need not be stated for the determination of the case. 1
After trial, the Court rendered judgment, the dispositive part of which is as follows:chanrob1es virtual 1aw library
IN VIEW OF THE FOREGOING, the Court believes and so holds that the preponderance of evidence is in favor of the plaintiffs and against the defendant South Sea Shipping Co., Ltd. The total amount of 369,000 Pakistan rupees received by S. M. Yeung was in full payment of the transportation of the rice in question from Karachi to Manila, and that the delay in the unloading of such rice in Manila was not due to plaintiffs’ fault.
The claim for lien on the shipment of rice has no legal basis for the reason that the freight had already been paid in Karachi, Pakistan, before such shipment arrived in Manila.
The injunction bond filed by plaintiffs as well as the performance bond executed to guaranty the payment of freight are hereby ordered cancelled.
The complaint with respect to defendants A. Magsaysay, Inc., the Captain and the Crew of the S.S. Ocean Trader, and the Collector of Customs of Manila, is hereby dismissed, it appearing that they have nothing to do with the controversy between plaintiff Overseas Factors, Inc. and South Sea Shipping Co. Ltd.
Defendants’ counterclaim is hereby dismissed.
Defendant South Sea Shipping Co. Ltd. shall pay the costs.
SO ORDERED.
Manila, Philippines, December 28, 1956.
The defendants South Sea Shipping Co., Ltd. and A. Magsaysay, Inc. have appealed.
In the letter written by S. M. Yeung, authorized representative of the appellant shipping company, to José W. Diokno, authorized representative of the appellees, on 30 October 1954 in Karachi, Pakistan, summing up the principal terms and conditions of the charter party agreed upon by them, it appears that they have agreed, among others, as follows:chanrob1es virtual 1aw library
FREIGHT : Sterling one hundred shillings (100) per
metric ton gross weight, F10 and free
stowed;
PAYMENT
OF FREIGHT : Charterers to pay full freight to the Owners at
Hongkong in British Pound Sterling upon
signing of bill or bills of lading, ship lost or
not lost;
PERFORMANCE
BOND : Charterers to arrange a performance bond in
Hongkong satisfactory to the Owners at
Hongkong, latest before noon on the 1st
November 1954 to guarantee the due
performance of this charter and full
payment of all freight at Hongkong within
fourteen (14) days from date of vessel’s
departure from Karachi. Charter Party Form
(as adopted 1922). (Exhibit 10.)
On the same date, 30 October 1954, the parties executed in Karachi, Pakistan, a formal contract of charter party in a printed form of the uniform general charter adopted by the documentary committee of the Chamber of Shipping of the United Kingdom, as revised in 1922. Chung Kien Tieng signed in behalf of the appellees and Yeung Siu Man in behalf of the appellant shipping company. The pertinent terms of the contract are:chanrob1es virtual 1aw library
Rate of Freight: Sterling One hundred Shillings (100/-) per metric ton, free in, free out and free stowed.
Payment of Freight: The freight to be paid in case without discount on signing bills of lading in British Pound Sterling transferable to the Owners at Hongkong within fourteen (14) days from the date of the vessel’s departure from Karachi. (Exhibit C or 11.)
On 12 November 1954 the two clauses were amended by adding the following to the first clause:chanrob1es virtual 1aw library
or according to Owners’ option of Forty Two Pesos (Pesos 42. -) per metric tons, free in, free out and free stowed.
and the following to the second clause:chanrob1es virtual 1aw library
or according to Owners’ option of payment at Manila at the rate stated in clause No. 1. (Exhibit 12.) .
In the performance bond executed and signed by the appellees in favor of the appellants, it was stipulated that —
. . . the condition of this bond is such that if the Principal and co- Principal shall well and duly comply with the conditions and stipulations enumerated in the above mentioned agreement charter and contract of charter party as well as pay all freight at Hongkong within fourteen (14) days from the date of vessel’s departure from Karachi, then this obligation shall be null and void; otherwise, it shall remain in full force and effect. (Exhibits 14; A-South Sea Surety & Insurance Co., Inc.)
According to the appellant shipping company, the amount due from the appellees as freightage of the 7,621.6715 metric tons of rice at 100 shillings per metric ton was
