G.R. No. 229490, March 01, 2023.
Case Parties: LA FILIPINA UY GONGCO CORPORATION AND PHILIPPINE FOREMOST MILLING CORPORATION, PETITIONERS, VS. HARBOUR CENTRE PORT TERMINAL, INC., ITS AGENTS, REPRESENTATIVES, ENTITIES ACTING IN ITS BEHALF, AND THE PHILIPPINE PORTS AUTHORITY, RESPONDENTS. [Consolidated with G.R. No. 230159 and G.R. No. 245515]

FACTS

La Filipina Uy Gongco Corporation (La Filipina) and Philippine Foremost Milling Corporation (Philippine Foremost), collectively La Filipina et al., were invited in 1997 by Harbour Centre Port Terminal, Inc. (Harbour Centre) and its sister companies to locate their businesses at the Manila Harbour Centre. La Filipina et al. purchased land after Harbour Centre agreed to specific requirements, including priority berthing, deep water for large vessels, and construction of specific facilities like a rail line and underground conveyor. La Filipina et al. constructed their facilities. In 1999, they discovered Harbour Centre lacked a Certificate of Registration/Permit to Operate from the Philippine Ports Authority (PPA), so they secured their own permit and executed a Lease Agreement with Harbour Centre with an understanding of no rent. In November 2004, the parties entered into a Memorandum of Agreement (MOA) detailing rights and obligations on port charges, priority berthing, and dredging to maintain a depth of -11.5 meters Mean Lower Low Water (MLLW). In August and September 2008, Harbour Centre demanded substantial payments for rent, overhang charges, and increased port and cargo handling charges, and threatened to remove La Filipina et al.’s structures. La Filipina et al. contested these demands as baseless and in violation of the MOA. On September 8, 2008, La Filipina et al. filed a Complaint for Compliance with Maritime Law, Regulation and Contract, Breach of Contract, Specific Performance, and Damages, with a prayer for injunction against Harbour Centre and PPA. They alleged Harbour Centre breached the MOA by violating priority berthing rights, failing to maintain the dredged depth (causing vessels to touch bottom), and unilaterally increasing port charges. The Regional Trial Court (RTC) ruled in favor of La Filipina et al., ordering Harbour Centre to perform its dredging obligations, abide by the MOA’s charge formula, honor priority berthing rights, pay liquidated and actual damages, exemplary damages, attorney’s fees, and credit excess charges paid. The Court of Appeals affirmed the RTC with modifications. Harbour Centre and La Filipina et al. filed separate petitions challenging aspects of the Court of Appeals’ rulings.

ISSUE

The primary issue is whether Harbour Centre breached its contractual obligations under the Memorandum of Agreement with La Filipina et al., particularly regarding priority berthing, dredging maintenance, and port charge increases, and the corresponding remedies and damages.

RULING

The Supreme Court denied the petitions in G.R. Nos. 229490 and 230159 and granted the petition in G.R. No. 245515. The Court upheld the finding that Harbour Centre breached the MOA. Harbour Centre violated La Filipina et al.’s priority berthing rights by refusing berthing to their barges in September 2008. Harbour Centre failed to maintain the dredged depth at -11.5 meters MLLW as stipulated, evidenced by hydrographic surveys and incidents of vessels touching bottom, thus incurring liquidated damages. Harbour Centre unilaterally increased port and cargo handling charges contrary to the formula agreed upon in the MOA. The Court affirmed the award of actual damages for costs incurred due to berthing delays and underwater surveys, exemplary damages, and attorney’s fees. However, it modified the award of liquidated damages, ruling that it should be computed from judicial demand (September 8, 2008) until Harbour Centre complies with its dredging obligation, not from December 6, 2004 as ordered by the RTC. The Court also ruled that the RTC retained jurisdiction to resolve La Filipina et al.’s Motion for Payment for the excess port charges deposited with the court, setting aside the Court of Appeals’ ruling that it had no jurisdiction. The permanent injunction was upheld. The core principle reiterated is that a contract is the law between the parties and must be complied with in good faith.