ONG YET MUA HARDWARE CO., PLAINTIFF AND APPELLEE VS. MANILA RAILROAD CO., ET AL., DEFENDANTS AND APPELLANTS.

Ong Yet Mua Hardware versus Manila Railroad

The Case

This is a civil action for the recovery of the value of cargo lost while in the custody of an arrastre operator at the Port of Manila. Ong Yet Mua Hardware Company, the consignee, sues the Manila Railroad Company, the parent of the Manila Port Service, for the invoice value of two missing cases of planes and plane blades. The case matters because it fixes the rule on when a consignee who is not a signatory to the management contract between the Bureau of Customs and the arrastre operator is nonetheless bound by that contract's clause limiting the operator's liability to 500 pesos per package. The answer turns on the acts of the consignee's own customs broker.

Procedural History

The consignee filed its complaint in the Court of First Instance of Manila. After trial, that court rendered judgment in favor of the consignee, ordering the defendant to pay the full invoice value claimed, with interest, attorney's fees, and costs. The trial court held that the management contract was not binding on the consignee, even though its duly authorized broker, the Serrano Brokerage, had signed the gate pass and the delivery permit. The defendant then appealed directly to the Supreme Court, pleading that the appeal would raise only questions of law.

Facts

In or about June 1956, four cases of planes and plane blades were unloaded from the vessel SS Perseus at the Port of Manila. Ong Yet Mua Hardware Company was the consignee. Upon discharge, the cargo was placed under the custody of the Manila Port Service, an arrastre operator for the Port of Manila and a subsidiary of the Manila Railroad Company.

Of the four cases, only two were delivered to the consignee. The consignee filed a claim for the invoice value of the missing case Number 46, at 384 pesos and 78 centavos, and case Number 47, at 607 pesos and 97 centavos. The defendant admitted liability for the entire invoice value of case Number 46, but claimed that its liability for case Number 47 was limited to 500 pesos under the management contract between the Manila Port Service and the Bureau of Customs.

The consignee argued that, never having been a party to the management contract, it could not be bound by the limited liability clause. But the delivery permit issued by the Bureau of Customs, secured at the consignee's instance, bore stamped words making the permit subject to all the terms of the management contract, particularly the clause limiting liability to 500 pesos per package. When that permit was presented to the Manila Port Service, the latter issued a gate pass repeating the same condition. The consignee's duly authorized broker, the Serrano Brokerage, signed both the gate pass and the delivery permit.

Issues

• Whether or not the consignee, though not a signatory to the management contract, is bound by its clause limiting the arrastre operator's liability to 500 pesos per package.
• Whether or not the appeal raises only a question of law, such that the Supreme Court may resolve it directly.

Applicable Provisions

The decision quotes the liability clause of the management contract between the Manila Port Service and the Bureau of Customs:

Section 15. And the contractor shall be solely responsible as an independent contractor for, and promptly pay to the steamship company, consignee, consignor, or other interested party or parties the invoice value of each package but which in no case shall be more than five hundred pesos for each package unless the value is either specified or manifested.

This clause caps the operator's liability at 500 pesos per package unless the value is specified or manifested, and it is the provision the consignee is said to have accepted through its broker.

Ruling

On the first issue, the Court ruled for the defendant. It invoked its earlier pronouncement in Tomas Grocery versus Delgado Brothers, where a consignee who had not repudiated its privity with its customs broker, and had accepted the benefit of delivery through him, was held bound by the notices on the permit to deliver and on the gate passes. The Court reasoned that a consignee cannot avail itself of the provisions of the management contract when its agent, a licensed customs broker, accepted delivery of the cargo, and at the same time deny being a party to that contract when it is adverse to its interests. This doctrine, the Court noted, had been repeatedly affirmed in other decisions, and it is conclusive on the present litigation.

On the second issue, the Court held that no question of fact was involved, the only evidentiary matter of record being the stipulation of facts submitted by the parties. Since it did not appear in the stipulation that the respective invoice values of the missing goods were declared or manifested so as to be exempt from the limited liability clause, that clause applied with full force and effect.

Doctrine

A consignee who accepts the benefit of delivery of its cargo through its duly authorized customs broker is bound by the terms and conditions stamped on the delivery permit and the gate pass, including the clause in the management contract limiting the arrastre operator's liability to 500 pesos per package. The consignee cannot take the benefit of the contract and, at the same time, repudiate it when its terms are adverse to its interests. The limitation applies unless the value of the goods is otherwise specified, declared, or manifested, for the clause itself excepts the case where the value is either specified or manifested.

Disposition

The judgment appealed from was set aside, and the defendant was ordered to pay the plaintiff only 884 pesos and 78 centavos, with legal interest from the filing of the complaint, with costs against the plaintiff.

Remember This

The one line to memorize: a consignee cannot accept the benefit of the management contract through its broker and later deny being a party to it when the contract works against it. Examiners use this case to test the binding effect of the arrastre operator's limited liability clause on consignees who are not signatories to the management contract.