ADR SHIPPING SERVICESS, INC V.

GALLARDO
G.R. No. 134873, September 17, 2002
FACTS:
Petitioner ADR Shipping Services, Inc. entered into a contract with private
respondent Gallardo for the use of the formers vessel MV Pacific Breeze to
transport logs to Taiwan. The logs were the subject of a sales agreement between
private respondent as seller being a timber concessionaire and log dealer, and
Stywood Philippines, as buyer. Private respondent paid an advance charter fee of
P242,000 representing ten percent of the agreed charter fee. Under the charter
agreement, the boat should be ready to load by February 5, 1988.
The boat failed to arrive on time, prompting private respondent to notify petitioner of
its cancellation of the charter contract and the withdrawal of the advance payment
deposited to the account of ADR shipping. ADR Shipping refused to return the
advance payment to Gallardo claiming that the agreement on the date of February 5,
1988 was just the reference commencing date and the true loading date was
February 16, 1988. This prompted the latter to file a case for sum of money and
damages. The Regional Trial Court ordered ADR Shipping to pay Gallardo the
advance payment with 6 percent interest per annum and attorneys fees. The
decision of the trial court was affirmed by the Court of Appeals. Hence, this petition.
ISSUE:
Whether or not private respondent is entitled to the refund of the advance payment
representing his deposit for the charter of the ship provided by petitioner.
RULING:
There was ambiguity in the interpretation of the contract provisions as to the date of
the loading of the ship. Ambiguities in a contract are interpreted strictly, albeit not
unreasonably, against the drafter thereof when justified in light of the operative facts
and surrounding circumstances. In this case, ambiguity must be construed strictly
against ADR which drafted and caused the inclusion of the ambiguous provisions.
The charter agreement explicitly states that February 5, 1988 is the intended date
when the ship is expected ready to load while February 16, 1988 is merely the
canceling date. Considering that the subject contract contains the foregoing express
provisions, the parties have no other recourse but to apply the literal meaning of the
stipulations. The cardinal rule is that when the terms of the contract are clear, leaving
no doubt as to the intention of the parties, the literal meaning of its stipulations is
controlling.
Pursuant to the provision of Art 1191 of the Civil Code, the power to rescind
obligations is implied in reciprocal ones in case one of the obligors should not
comply with what is incumbent upon him, and the injured party may rescind the
obligation, with payment of damages. In this case the private respondent is entitled
to the return of his down payment, subject to a legal interest of 6 percent per annum,
and to the payment of damages.