G.R. No. 134873 - ADR Shipping Services, Inc. vs. Gallardo

ADR Shipping Services, Inc. (petitioner) entered into a charter agreement with Marcelino Gallardo (respondent), a timber concessionaire and log dealer operating as Mar Gallardo Trading.
The charter involved the use of the MV Pacific Breeze for transporting 60,000 cubic meters of logs to Kaoshung, Taiwan, under a separate sales agreement between Gallardo and Stywood Philippines, Inc.

According to the contract, the MV Pacific Breeze was to be ready to load by February 5, 1988, as explicitly stated in Box No. 9 of the charter party.
A cancellation clause (Paragraph 10) provided that if the vessel was not ready to load on or before a specific date—with reference to a typographical mix-up between Box 9 and Box 19—the charterer had the option to cancel the contract.
Gallardo tendered an advance payment of P242,000, representing ten percent of the agreed charter fee, as evidenced by two official receipts issued by ADR.

The MV Pacific Breeze did not arrive on time as per the charter agreement, failing to meet the February 5, 1988 readiness date.
On February 5, 1988, Gallardo sent a formal letter cancelling the contract due to the vessel’s delayed arrival and demanded a refund of the P242,000 advanced.
ADR refused to return the advanced amount, which led Gallardo to file a case for sum of money and damages.

The Regional Trial Court (RTC) of Manila, Branch 50, rendered a decision in favor of Gallardo, ordering ADR to refund P242,000, add 6% interest per annum from the complaint filing date, award P20,000 as attorney’s fees, and cover costs of suit.
The Court of Appeals (CA) affirmed the RTC’s decision in CA-G.R. CV No. 47556, and ADR’s motion for reconsideration was subsequently denied.

ADR contended that a subsequent agreement existed whereby Stywood Philippines, Inc. would take over the charter contract from Gallardo, purportedly evidenced by an alleged "take-over agreement."
The disputed document (Exhibit 3) was challenged on several grounds: it was not notarized, was undated, and featured a signature inconsistent with Gallardo’s other known signatures in related documents.
There was also a discrepancy noted in the cargo description between the initial charter party and the subsequent agreement, further undermining ADR’s claim.

The charter agreement contained ambiguity regarding the intended readiness date and the cancellation date.
While Box No. 9 clearly fixed February 5, 1988 as the expected loading date, Paragraph 10 (with the typographical error between Box 19 and Box 9) created room for conflicting interpretations.
The ambiguity was resolved strictly against ADR, the party that drafted the contract, ultimately favoring Gallardo’s interpretation of the terms.

Whether respondent Gallardo is entitled to the refund of P242,000 advanced for the charter of the MV Pacific Breeze.
Determining the correct interpretation of the charter clauses, particularly the dates for vessel readiness and cancellation.

Whether there was a valid novation or substitution of the charter contract to Stywood Philippines, Inc. as alleged by ADR.
Whether the documentary evidence (the purported take-over agreement) is genuine and legally effective to transfer contractual obligations between the parties.

How ambiguities in the charter party, especially between Box No. 9 and Box No. 19, are to be interpreted given the evident typographical error.
Whether the literal enforcement of the charter party’s terms supports Gallardo’s cancellation and refund claim.