G.R. No. 181833 ; January 26, 2011
INTERNATIONAL FREEPORT TRADERS, INC., Petitioner, vs. DANZAS INTERCONTINENTAL, INC., Respondent.

FACTS

In March 1997, petitioner International Freeport Traders, Inc. (IFTI) ordered a shipment of goods from Jacobs Suchard Tobler Ltd. of Switzerland under “F.O.B. Ex-Works” terms. Jacobs engaged Danmar Lines, whose agent respondent Danzas Intercontinental, Inc. (Danzas) issued negotiable house bills of lading stating “F.O.B.” and “freight payable at destination,” with IFTI as the notify party. Danmar, which had no vessel, contracted Orient Overseas Container Line (OOCL) to ship the goods, paying OOCL an arbitrary fee to cover expenses for release and delivery to Clark. OOCL issued a master bill of lading naming Danzas as consignee. The goods arrived in Manila on May 14, 1997. Danzas informed IFTI and requested the original bills of lading and a bank guarantee to secure release. IFTI initially refused, insisting OOCL should handle delivery since it was paid the arbitrary fee. After Danzas withheld processing, IFTI eventually procured a bank guarantee (approved May 23, 1997, picked up by Danzas June 6, 1997) and issued a promissory note on June 10, 1997, requesting release and promising to pay charges within five days after delivery pending investigation. Danzas released the goods on June 13, 1997, and delivered them to IFTI at Clark on June 16, 1997. A meeting followed where Danzas agreed to reduce its claimed charges. However, on January 19, 1998, Danzas demanded payment of ₱181,809.45 from IFTI for handling the shipment. Upon IFTI’s refusal, Danzas filed a complaint for sum of money. The Metropolitan Trial Court (MeTC) ruled for Danzas, but the Regional Trial Court (RTC) dismissed the complaint. The Court of Appeals (CA) reversed the RTC, finding a perfected contract of lease of service between IFTI and Danzas and holding IFTI liable for delay-related charges.

ISSUE

1. Whether a contract of lease of service exists between IFTI and Danzas.
2. Whether IFTI is liable to Danzas for the costs of the delay in the release of the goods from the port.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals decision.
1. On the existence of a contract: The Court found that a contract of lease of service was perfected between IFTI and Danzas. The facts showed a chain of contracts: IFTI with Jacobs, Jacobs with Danmar, and Danmar with OOCL. Danzas, as Danmar’s agent, was responsible for the final leg of delivery from Manila to Clark. Despite Danmar’s payment of an arbitrary fee to OOCL intended to cover delivery, Danzas was not a party to that arrangement and rightfully insisted on separate compensation under the F.O.B. terms. IFTI’s actions—preparing the import permit for Danzas, eventually procuring the bank guarantee as Danzas required, and issuing the June 10, 1997 promissory note promising to pay charges—constituted negotiation and acceptance, perfecting a contract. The cause was the release and delivery of the goods; the consideration was the compensation for these services.
2. On liability for delay costs: The Court held IFTI liable for the electric charges, demurrage, and storage fees amounting to ₱122,191.75 incurred from May 20 to June 13, 1997. The delay was attributable to IFTI’s fault. IFTI initially refused to provide the necessary documents (original bills of lading and bank guarantee) demanded by Danzas as a condition for processing the release. The Court did not believe IFTI’s claim that the bank guarantee was ready for pick-up by May 23, 1997, noting it made no sense to withhold it when Danzas collected the import permit on May 26, 1997. IFTI’s eventual compliance through negotiation led to the contract, and its earlier refusal caused the delay. Therefore, IFTI was responsible for the resulting charges.