LUA KIAN V.

MANILA RAILROAD COMPANY

G.R. No. L-23033 / 19 SCRA 5, 5 January 1967

FACTS:
Manila Port Service ,the arrastre operator, is a subsidiary of defendant Manila Railroad
Company.

Manila Port Service received in Jan. 1960 shipments of Carnation evaporated milk for
two consignees, Lua Kian and Cebu United. According to their respective bills of lading, Luan
Kian was supposed to receive 2,000 cases but only received 1,829 (171 short of 2,000) while
Cebu United was supposed to receive 3,000 cases but received 3,171. The excess 171 cases
were marked "Cebu United".

Accordingly this situation placed the defendant arrastre operator in a dilemma, for should it
deliver them to Lua Kian the goods could be claimed by the consignee Cebu United Enterprises
whose markings they bore, and should it deliver according to markings, to Cebu United
Enterprises, it might be sued by the consignee, Lua Kian whose bill of lading indicated that it
should receive 171 cases more. The Management Contract even exempts exempts the arrastre
operator from responsibility for misdelivery or non-delivery due to improper or insufficient
marking.

ISSUE:
Is Manila Port Service liable for the short-delivery to Lua Kian?

HELD:
Yes.

The legal relationship between an arrastre operator and the consignee is akin to that of a
depositor and warehouseman.  As custodian of the goods discharged from the vessel, it was
defendant arrastre operator's duty, like that of any ordinary depositary, to take good care of the
goods and to turn them over to the party entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld delivery because of the discrepancy between
the bill of lading and the markings and conducted its own investigation, not unlike that under
Section 18 of the Warehouse Receipts Law, or called upon the parties, to interplead, such as in a
case under Section 17 of the same law, in order to determine the rightful owner of the goods.

Notwithstanding Section 12 of the Management Contract exempting the arrastre from liability,
the court cannot excuse the defendant from liability because the bill of lading showed that only
3,000 cases were consigned to Cebu United Enterprises. The fact that the excess of 171 cases
were marked for Cebu United Enterprises and that the consignment to Lua Kian was 171 cases
less than the 2,000 in the bill of lading, should have been sufficient reason for the MPS to
withhold the goods pending determination of their rightful ownership.