G.R. No. L-13439; January 31, 1962
DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES, plaintiff-appellee, vs. MANILA PORT SERVICE and MANILA RAILROAD COMPANY, defendants-appellants.

FACTS

The case involves a claim for a missing bale of printed cotton piece goods. Barber Line shipped 13 bales from New York to Manila, consigned to Vistan, Geraldez & Co., Ltd. The shipment was insured by the Domestic Insurance Company of the Philippines. Upon the vessel’s arrival, the cargo was discharged into the custody of the arrastre operator, Manila Port Service, a subsidiary of Manila Railroad Company. Only 12 bales were delivered to the consignee. The insurer paid the consignee’s claim for the missing bale in the amount of P1,586.45 and then filed a subrogation action to recover this sum from the arrastre service and the railroad company.
The defendants admitted liability but contested the amount. They argued that their liability was limited to P500.00 per package pursuant to the terms of the Management Contract between the Bureau of Customs and Manila Port Service. This limitation was stamped and printed on the dorsal side of the Delivery Permit (Exhibit 2-MPS) and the Gate Pass (Exhibit 3-MPS) used by the consignee to take delivery of the goods. The consignee presented these documents and received the 12 bales without specifying a higher value for the shipment or paying corresponding higher arrastre charges.

ISSUE

Whether the liability of the arrastre operator, Manila Port Service, for the undelivered bale is limited to P500.00 as stipulated in the Management Contract, which condition was incorporated in the delivery documents signed by the consignee.

RULING

Yes, the liability is limited to P500.00. The Supreme Court modified the lower court’s decision, reducing the award from P1,586.45 to P500.00. The legal logic is anchored on contract and estoppel. The consignee, by presenting the Delivery Permit and Gate Pass containing the stamped and printed conditions, accepted the terms under which the arrastre service released the goods. These terms expressly incorporated the provisions of the Management Contract, particularly Paragraph 15, which limited liability to P500.00 per package unless a higher value was specified, declared, or manifested and corresponding charges were paid.
The Court found this situation indistinguishable from its prior rulings in Jose Bernabe, Inc. vs. Delgado Brothers, Inc. and similar cases. The consignee’s act of taking delivery under those documents constituted acquiescence to the contractual limitation. Since the consignee did not declare a higher value or pay extra charges, it was bound by the P500.00 limit. As the insurer’s subrogated rights cannot exceed those of the insured consignee, the recovery from the arrastre operator is likewise limited. The arrastre service’s liability is contractual, and the consignee, by its own voluntary act of using the prescribed documents, agreed to the limitation of liability contained therein.