Case Digest (G.R. No. L-24835)
Case Digest (G.R. No. L-24835)
Facts:
Reparations Commission v. Northern Lines, Inc. and Fieldmen's Insurance Company, Inc., G.R. No. L-24835. July 31, 1970, the Supreme Court En Banc, Concepcion, C.J., writing for the Court.Pursuant to Republic Act No. 1789, the Reparations Commission awarded two vessels to Northern Lines, Inc. (the Buyer) for inter-island service. Complete delivery dates were stated in the contract schedules as April 25, 1960 (M/S Magsaysay, later M/S Don Salvador) and May 26, 1960 (M/S Estancia, later M/S Don Amando). Separate conditional deeds of purchase were executed (September 12 and October 20, 1960), and FICI Surety Bonds Nos. 3825 and 4123 were executed on April 25, 1960 and May 30, 1960 respectively, with Fieldmen's Insurance Co., Inc. as surety, each bond in the amount of P174,761.42 to guarantee performance.
The appended payment schedules expressly designated an "Amount of 1st installment (10% of F.O.B. cost) P174,761.42" with a "Due date of 1st installment" of April 25, 1962 for Don Salvador and May 26, 1962 for Don Amando. The schedules then set out a “Term: Ten (10) Equal Yearly Installments” of P184,386.34 due annually from 1963 through 1972. Northern Lines filed two declaratory relief suits (CFI Manila Civil Cases Nos. 50194 and 50488) on April 24, 1962 and May 26, 1962 respectively, seeking a declaration that the first installments would be due in 1963 rather than 1962. Thereafter, on September 10, 1962, the Commission filed CFI Civil Case No. 51542 against the Buyer and the Surety, alleging nonpayment of the first installments then due and demanding P349,522.84 plus interest, attorney's fees and costs.
Branch XIII of the CFI dismissed Case No. 50488 on October 29, 1962; the Buyer's appeal to the Supreme Court (docketed L-20725) was dismissed July 2, 1963 for failure to file a brief. On April 30, 1964 Branch VII of the CFI, after jointly trying Cases Nos. 50194 and 51542, dismissed the petition for declaratory relief (50194) and, in Case No. 51542, ordered the Buyer and the Surety to pay jointly and severally the two first installments of P174,761.42 each with legal interest from filing, limited the Surety’s liability per cause to P174,761.42, awarded attorney’s fees and costs, and ordered reimbursement and premium recoveries in favor of the Surety against the Buyer. Reconsideration was denied. The Buyer and the Surety appealed to the Court of Appeals, which, finding questions of law, certified the appeal to the Supreme Court.
Issues:
- When did the first installments under the two contracts become due — April 25 and May 26, 1962, or April 25 and May 26, 1963?
- Was the Commission’s collection action (CFI Case No. 51542) barred or premature by reason of the Buyer's earlier declaratory relief suits (CFI Cases Nos. 50194 and 50488)?
- May the Surety raise, on appeal, the defense that its bonds had expired before the first installments became due?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)