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IS the consignee liable for expenses incurred by the delivery agent? Yes, and this is the story.

In March 1979, Freeport Traders, Inc (FTI) ordered a shipment of chocolates from Tobler Ltd of Switzerland. Tobler contracted the services of Marl Lines of Switzerland [ML], an NVOC, to ship to goods to the Philippines.

ML issued Tobler a negotiable house bill of lading. The B/L stated the terms “FOB” and “freight payable at destination” with Tobler as the shipper, CB Banking Corp as the consignee, FTI as notify party and Fanboy Inc, (FB) as “delivery agent” in the Philippines.

ML as an NVOC contracted Overseas Container Lines (OCL) to ship the goods from Switzerland to Manila. OCL issued a non-negotiable master B/L with ML as the shipper and FB as the consignee/notify party and delivery agent.

The goods eventually arrived at the Port of Manila. FB immediately notified FTI of the arrival of the goods and required FTI to surrender the original B/L and submit a bank guarantee. But FTI did neither. Hence, FB was not able to process the release of the goods.

Later, FTI provided the bank guarantee and a promissory note that it will pay any charges incurred by FB for the release and delivery of the goods. FB secured the release and delivery of the goods to FTI. It demanded payment of P181,000.00 for “handling” the shipment.

FTI ignored the demand of FB. Hence, FB filed a complaint for a sum of money against FTI with the Metropolitan Trial Court (MTC). After trial on the merits, the MTC rendered a decision in favor of FB. But on appeal, the Regional Trial Court (RTC) reversed the decision of the MTC.

Subsequently, the Court of Appeals reversed the decision of the RTC. Hence, FTI elevated the case to the Supreme Court. And the Supreme Court ruled in the following tenor:

“x x x.

What is clear to the Court is that, by acceding to all the documentary requirements that FB imposed on it, FTI voluntarily accepted its services. The bank guarantee FTI gave FB assured the latter that it would eventually be paid all freight and other charges arising from the release and delivery of the goods to it.

x x x

Here, there is no other conclusion than that the parties entered into a contract of lease of service for the clearing and delivery of the imported goods.”

The consignee should always comply promptly with all the documentary requirements needed by the “delivery agent” to secure the release and delivery of his goods. Otherwise, he may be liable for all charges/expenses incurred by the “delivery agent” due to his delay in providing the required documents.

For inquiries or comments, email the writer at jtb@pac-atlantic.com.ph

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