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Case Digest: Northern Motors, Inc. vs Prince Line, G.R. No. L-13884

Northern Motors, Inc. vs Prince Line, GR No. L-13884, February 29, 1960

Subject: Obligations and Contracts

Facts

Northern Motors Inc. is the owner, by transfer from Liddel & Co., Inc., of a consignment of merchandise, consisting of 33 cases of auto spare parts and accessories, covered by Bill of Lading No. 19, discharged in Manila into the custody of Delgado Brothers, Inc., and later cleared and taken delivery of by Luzon Brokerage Co., Inc., as agents of the consignee, upon presentation of the corresponding release papers from the Bureau of Customs. However, instead of 33, cases, only 32 were delivered to Northern Motors Inc. broker. Northern Motors Inc., thereupon, demanded payment of the reasonable value (P3,117.53) of the missing case from Delgado Brothers, Inc., but later offered to refund only P500.00, claiming that under paragraph 15 of its Management Contract, its liability is limited only to P500.00 unless the value of the merchandise is otherwise specified or manifested.

Court of First Instance of Manila ordered Delgado Brothers, Inc., as the arrastre contractor in the Port of Manila, to pay Northern Motors the amount of P500.00 and costs, instead of P3,117.53 as demanded by it in its complaint.

Issue

Whether or not the management contract in question is binding upon Northern Motors for the reason that it was not a party thereto.

Ruling

Yes, because of its "acceptance."

Under the law (Art 1311, NCC), contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. If a contract should contain some stipulation in favor of a third person, he may demand its fulfilment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.

Tested in the light of the above legal provision, Paragraph 15 of the Management Contract in question, it is believed, contains provisions which are in the nature of stipulations pour autrui, that is, for the benefit or in favor of a third party, the appellant in the case at bar. In the pleadings filed by the parties, as well as in the decision of the court a quo, SC find ample evidence of appellant’s acceptance of said favor in its communication thereof to appellee. It is undisputed that appellant took delivery of its cargo from appellee, as arrastre operator under the Management Contract, and after the presentation and signing by it, through its duly authorized broker, of the pertinent documents covering the release of said cargoes.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. Again, it became bound when it brought court action against appellee, also by virtue of the latter’s obligations as the arrastre contractor under the same Management Contract, for the purpose of recovering the reasonable value of the missing case of auto spare parts and accessories.

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