Country Bankers Insurance Corporation v. Shipyard

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari1 to reverse and set aside the January 29, 2004 Decision2 and October 28, 2004 Resolution3 of the Court of Appeals in CA-G.R. CV No. 58001, wherein the Court of Appeals affirmed with modification the February 10, 1997 Decision4 of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CBB-13447. Hereunder are the undisputed facts as culled from the records of the case. On January 27, 1992, Unimarine Shipping Lines, Inc. (Unimarine), a corporation engaged in the shipping industry, contracted the services of Keppel Cebu Shipyard, formerly known as Cebu Shipyard and Engineering Works, Inc. (Cebu Shipyard), for dry docking and ship repair works on its vessel, the M/V Pacific Fortune.5 On February 14, 1992, Cebu Shipyard issued Bill No. 26035 to Unimarine in consideration for its services, which amounted to ₱4,486,052.00.6 Negotiations between Cebu Shipyard and Unimarine led to the reduction of this amount to ₱3,850,000.00.

The terms of this agreement were embodied in Cebu Shipyard's February 18, 1992 letter to the President/General Manager of Unimarine, Paul Rodriguez, who signed his conformity to said letter, quoted in full below: 18 February 1992 Ref No.: LL92/0383 UNIMARINE SHIPPING LINES, INC. C/O Autographics, Inc. Gorordo Avenue, Lahug, Cebu City Attention: Mr. Paul Rodriguez President/General Manager This is to confirm our agreement on the shiprepair bills charged for the repair of MV Pacific Fortune, our invoice no. 26035.

The shiprepair bill (Bill No. 26035) is agreed at a negotiated amount of ₱3,850,000.00 excluding VAT. Unimarine Shipping Lines, Inc. ("Unimarine") will pay the above amount of [₱3,850,000.00] in US Dollars to be fixed at the prevailing USDollar to Philippine Peso exchange rate at the time of payment. The payment terms to be extended to Unimarine is as follows: Installments Amount Due Date 1st Installment ₱2,350,000.00 30 May 1992 2nd Installment ₱1,500,000.00 30 Jun 1992 Unimarine will deposit post-dated checks equivalent to the above amounts in Philippine Peso and an additional check amount of ₱385,000.00, representing 10% [Value Added Tax] VAT on the above bill of ₱3,850,000.00.

In the event that Unimarine fails to make full payment on the above due dates in US Dollars, the post-dated checks will be deposited by CSEW in payment of the amounts owned by Unimarine and Unimarine agree that the 10% VAT (₱385,000.00) shall also become payable to CSEW. Unimarine in consideration of the credit terms extended by CSEW and the release of the vessel before full payment of the above debt, agree to present CSEW surety bonds equal to 120% of the value of the credit extended. The total bond amount shall be ₱4,620,000.00.

Yours faithfully, CEBU SHIPYARD & ENG'G WORKS, INC. Conforme: (SGD) SEET KENG TAT Treasurer/VP-Admin. (SGD)