CENON VILLANUEVA, PLAINTIFF AND APPELLEE VS. BARBER WILHELMSEN LINE, ET AL., DEFENDANTS. MANILA PORT SERVICE AND MANILA RAILROAD COMPANY, INC., DEFENDANTS AND APPELLANTS.

Villanueva versus Barber Wilhelmsen Line

The Case

Cenon Villanueva, a consignee of imported goods, sues the foreign carrier, its Manila ship agent, and the arrastre operator for the value of a shortage in the cargo delivered to him. The action is one for recovery of a sum of money arising from the loss of part of a shipment discharged at the Port of Manila. The case matters because it settles a question that recurs in every arrastre claim: whether a consignee who is not a signatory to the Management Contract between the arrastre operator and the Bureau of Customs is nevertheless bound by the fifteen-day period for filing claims written into that contract, the gate pass, and the delivery permit.

Procedural History

Villanueva filed the complaint in the Court of First Instance of Manila against Barber Wilhelmsen Line, Macondray and Company, the Manila Port Service, and the Manila Railroad Company. The parties submitted the case upon a stipulation of facts, agreeing that the only issue was whether the fifteen-day period for filing a claim for shortage or damage was binding on the consignee and barred the action. The trial court held that the carrier and the ship agent were not responsible for the loss, but resolved the stipulated issue in the negative, and rendered judgment ordering the port service and the railroad company to pay the plaintiff jointly and severally. The Manila Port Service and the Manila Railroad Company appealed directly to the Supreme Court.

Facts

Villanueva was the consignee of two bales of rayon remnants marked Milco, discharged from the vessel Torreador, which arrived at the Port of Manila on June 14, 1957. The shipment was covered by a bill of lading issued in New York by Barber Steamship Line, the carrier and owner or operator of the vessel. Macondray and Company was the carrier's agent in Manila. The carrier and the ship agent placed the goods in the custody of the Manila Port Service, a subsidiary of the Manila Railroad Company and the sole arrastre operator for the port of Manila, complete and in good condition.

The goods were delivered to Villanueva with a shortage of about 262 pounds, valued at 879 pesos and 96 centavos. On July 8, 1957, he filed a provisional claim. The port service rejected it on the ground that it had been filed more than fifteen days after June 15, 1957, the date of discharge of the goods from the carrying vessel, or beyond the period stipulated in paragraph 15 of the Management Contract between the Manila Port Service and the Bureau of Customs. That paragraph was incorporated by reference and substantially reproduced in the gate pass and in the permit used by the consignee to take delivery.

Maintaining that he was not bound by the contract, Villanueva instituted the action on March 25, 1958, for the recovery of the value of the shortage plus attorney's fees and litigation expenses. The carrier and the ship agent claimed full discharge upon delivery of the goods to the port service, while the port service and the railroad company invoked paragraph 15.

Issues

• Whether or not the fifteen-day period within which to file a claim for shortage or damage to merchandise, stipulated in the Management Contract, is binding upon a consignee who did not sign the contract but who took delivery of the goods upon a gate pass and delivery permit that referred to and substantially reproduced that provision.
• Whether or not the consignee's action is barred for having been filed beyond that period.

Applicable Provisions

Paragraph 15 of the Management Contract between the Manila Port Service and the Bureau of Customs provides:

In any event the Contractor shall be relieved and released of any and all responsibility or liability for loss, damage, misdelivery, and/or non-delivery of goods, unless suit in the Court of proper jurisdiction is brought within a period of one (1) year from the date of discharge of the goods, or from the date when the claim for the value of such goods has been rejected or denied by the CONTRACTOR, provided that such claim shall have been filed with the CONTRACTOR within fifteen (15) days from the date of discharge of the last package from the carrying vessel.

This is the very stipulation the consignee sought to escape, and the Court holds that it binds him because he accepted the gate pass and delivery permit that carried it.

Ruling

On the first issue, the Court ruled that the provision is binding on the consignee. The question had already been settled in several decisions, beginning with Northern Motors versus Prince Line, where the Court held that a consignee who obtains a delivery permit and gate pass and uses them to demand delivery becomes a party to the Management Contract. The Court quoted its own reasoning:

Even therefore, if appellant was not a signatory to said Management Contract, it legally became a party thereto when it through its broker, the Luzon Brokerage Co., Inc. obtained the delivery permit and gate pass in the above manner prescribed by law and, making use of them, demanded from appellee the delivery of the 33 cases, pursuant to appellee's undertaking in virtue of the very same Management Contract.

The Court drew the same principle from Mendoza versus Philippine Airlines, where a consignee who appeared at the airport with the air way bill and demanded delivery thereby made himself a party to the contract of carriage, his cause of action necessarily being founded on its breach. The Court noted that this view was reiterated in Tomas Grocery versus Delgado Brothers, in two Bernabe versus Delgado Brothers decisions, in Delgado Brothers versus Li Yao and Company, in Sun Brothers versus Manila Port Service, and in Juan Ysmael and Company versus United States Lines Company. The consignee cannot take the benefit of the contract when it suits him and reject its burdens when it does not.

On the second issue, the Court held that the action was barred. The Court observed that other issues might have been raised, such as the sufficiency of the period available to the consignee, but the record did not show the date on which he was notified that he could take delivery. More importantly, both parties had submitted the case below for the determination of only one question, and since the jurisdiction of the lower court was thus limited, the authority of the Supreme Court in the exercise of its appellate jurisdiction could not extend to any other issue.

Doctrine

A consignee who is not a signatory to the Management Contract between the arrastre operator and the Bureau of Customs nevertheless becomes a party to it when he obtains a delivery permit and gate pass that refer to and substantially reproduce its provisions, and uses them to demand delivery of the goods. Having accepted the benefit of the contract, he is bound by its burdens, including the requirement that a claim for loss, damage, misdelivery, or nondelivery be filed within fifteen days from the date of discharge of the last package from the carrying vessel. A party cannot take advantage of a contract when it suits him and reject its provisions when he thinks otherwise. And where the parties stipulated below that only one question was submitted for determination, the appellate court cannot pass upon any other issue.

Disposition

The Supreme Court reversed the decision appealed from and absolved the defendants from the complaint, with costs against the plaintiff.

Remember This

The one line to memorize: a consignee who takes delivery under a gate pass and permit that reproduce the Management Contract is bound by its fifteen-day claim period, because he cannot accept the benefit and reject the burden. Examiners use this case to test the binding effect of arrastre contracts on non-signatory consignees and the limits of appellate review when the parties stipulate a single issue.