ADR Shipping v.

Marcelino Gallardo and Court of Appeals

G.R. No. 134873 September 17, 2002

QUISUMBING, J.:

Facts:
Marcelino Gallardo is engaged in the business of timber concessionaire and in one
transaction, it has engaged the services of ADR Shipping to charter the MV Pacific Breeze to
deliver 60, 000 cubic meters of log to Taiwan. This is relation to a prior contract of sale of the
logs with Gallardo as seller and Stywood Philippines, Inc. Under the agreement, it was stipulated
the the MV Pacific Breeze would be ready to be loaded with the cargo on February 5, 1988.
Another stipulation to that effect states that should the vessel fail to be ready for loading on or
before the agreed date, and demand for the same was made at least 48 hours from the agreed
loading time, then the contractors may opt for the cancellation of the contract. Another
stipulation states that should the services not be executed on February 16, 1988, then the
agreement is likewise cancelled.

On the day of the loading, the boat did not arrive on time and on that same day, Gallardo
notified ADR shipping his intent to cancel the agreement and demanded that the deposit amount
of 242,000 PHP be returned. ADR soon refused to return the amount which lead to an action for
collection of sum of money instituted by Gallardo against, ADR. The Regional Trial Court ruled
in favor of Gallardo and it was affirmed by the Court of Appeals.

In this petition, ADR asserts that the date February 5, 1988 is the commencement of the
reckoning period for the cancellation of the agreement in case of delay, and that the February
16, 1988 is the true cancellation date of the agreement. Further, it adds that February 5, 1988 is
not the exact date of arrival of the MV Pacific Breeze in the port for loading.

Issue:
Whether or not the interpretation of ADR shipping of the stipulation in the agreement
regarding the cancellation of the contracts are correct

Ruling:
The Supreme Court held that the interpretation of ADR Shipping is untenable and this
petition lacks merit. It held that when the stipulations in the contract are cleat and there is no
room for interpretation, there is no other recourse than to resort to the literal interpretation of the
contract.

The stipulation of the charter agreement is clear; first is that there is an express agreement
that the vessel shall be ready for loading on February 5, 1988; second, that in case the vessel fails
to arrive on the day the loading is to be made, then the contractor, herein Gallardo, may opt for
the cancellation of the contract. There is no other logical way this concurrence of the stipulation
should be interpreted; the vessel arrived late on February 5, 1988, and thus, Gallardo had the
right to cancel the agreement as per the stipulation. ADRs assertion of its own interpretation of
the stipulation is untenable.