G.R. No. L-12058; April 27, 1960
JOSE BERNABE and CO., INC., plaintiff-appellant, vs. DELGADO BROTHERS, INC., defendant-appellee.

FACTS

On January 11, 1956, the S.S. Phyrrus arrived at the Port of Manila carrying a shipment of machine spare parts, including a flywheel, consigned to plaintiff Jose Bernabe & Co., Inc. The defendant, Delgado Brothers, Inc., the arrastre contractor for the Port of Manila under a Management Contract with the Bureau of Customs dated October 21, 1950, received the shipment during the night of January 11, 1956. The flywheel was received “uncrated or unpacked and in an apparent good order condition.” When the plaintiff’s representative later went to take delivery, he requested a Bad Order Examination. The inspection, conducted in the presence of the plaintiff’s representative, revealed the flywheel was cracked in several parts. The plaintiff filed a claim for indemnity for P2,251.60, the alleged value of the damaged flywheel, which the defendant denied. The case was submitted on a stipulation of facts, and the Court of First Instance of Manila dismissed the complaint. The plaintiff appealed, raising only questions of law.

ISSUE

1. Who has the burden of proving the cause of the damage to the flywheel?
2. Is the defendant’s liability limited to P500.00 pursuant to Paragraph 15 of its Management Contract with the Bureau of Customs, and is the plaintiff, a non-party to that contract, bound by such limitation?

RULING

1. On the Burden of Proof: The burden was on the defendant, as the custodian. The flywheel was received by the defendant “in an apparent good order condition.” It was therefore incumbent upon the defendant to prove either that the flywheel was already damaged upon discharge despite its appearance, or that the damage was not due to its fault or negligence. The defendant introduced no such evidence. Therefore, the conclusion is that the flywheel was in good order when received and the damage occurred while in the defendant’s custody for which it is liable. The defendant’s contractual exemptions (for damage not easily detected during discharge or for packages received at night) were inapplicable as the flywheel was uncrated and there was no evidence the damage was not easily detectable.
2. On the Limitation of Liability: The defendant’s liability is limited to P500.00, and the plaintiff is bound by this limitation. Paragraph 15 of the Management Contract limits the arrastre contractor’s liability to P500.00 per package unless the value is otherwise specified, declared, or manifested and corresponding arrastre charges have been paid. The plaintiff’s representative, upon taking delivery, signed a “permit to deliver imported goods” and received a Gate Pass, both of which contained a clear notice subjecting the transaction to the terms of the Management Contract, including the P500.00 liability limit. Although the plaintiff was not a party to the Management Contract, by accepting the benefits of the arrastre service, it is also bound by its concomitant obligations and limitations. The Court, citing a prior case involving the same parties, held that the plaintiff could have protected itself by declaring the actual value of the cargo in the required import documents and paying the corresponding higher arrastre charges. Having failed to do so, it cannot demand the full undeclared value.
DISPOSITIVE PORTION:
The decision of the lower court is reversed. Defendant Delgado Brothers, Inc. is ordered to indemnify plaintiff Jose Bernabe & Co., Inc. in the sum of Five Hundred Pesos (P500.00), with legal interest from December 13, 1955 (the date of the filing of the complaint), and with costs against the defendant.