G.R. No. L-40234 December 14, 1987
MARIMPERIO COMPAÑIA NAVIERA, S.A., petitioner, vs. COURT OF APPEALS and UNION IMPORT & EXPORT CORPORATION and PHILIPPINES TRADERS CORPORATION, respondents.

FACTS

Private respondents, Union Import & Export Corporation and Philippine Traders Corporation, entered into a joint venture to purchase copra from Indonesia. They chartered petitioner Marimperio’s vessel, the SS Paxoi, through an agent, with a “Uniform Time Charter” executed in London. The Charter Party stipulated, under Clause 6, that hire must be paid in cash every 15 days in advance. Crucially, it granted the owners the right to withdraw the vessel from the charterers’ service without any protest or court formality in case of default in payment. The charterers failed to make the advance payments punctually. The first 15-day hire was paid late, and the second was also overdue when, on April 23, 1965, the petitioner’s agent notified the charterers’ agent that the vessel was being withdrawn due to default.

ISSUE

Whether the petitioner shipowner validly exercised its contractual right to extrajudicially withdraw the vessel from the charterers’ service due to the latter’s default in the advance payment of hire.

RULING

Yes. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s original decision, which upheld the petitioner’s right to withdraw the vessel. The legal logic is anchored on the principle of autonomy of contracts and the specific terms of the agreement. A contract, such as the Charter Party, is the law between the parties. Clause 6 explicitly and unequivocally granted the owner the right to withdraw the vessel upon the charterer’s default in the advance payment of hire, “without noting any protest and without interference by any court or any formality whatsoever.” This stipulation is not contrary to law, morals, good customs, public policy, or public order; therefore, its validity must be sustained. Consequently, when the charterers defaulted on their payment obligations, the petitioner was merely enforcing a contractual stipulation for which mutual consent had been given. A judicial action for rescission is not necessary when the contract itself provides for a mode of termination or cancellation upon violation of its terms. The petitioner’s act of withdrawal via telex notification was a valid exercise of a contractual right, constituting a lawful extrajudicial rescission. The acceptance of late payments for previous periods did not constitute a waiver of the right to insist on timely payment for subsequent periods, as the contract clearly provided for advance payment as a continuing condition.