GR L 16271; (October,1961) (Digest)
G.R. No. L-16271; October 31, 1961
ATLANTIC MUTUAL INSURANCE CO., plaintiff-appellant, vs. MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, defendants-appellees.
FACTS
In April 1952, South Sea Trading Corporation of New York shipped assorted goods to its Manila counterpart, with the shipment insured by Atlantic Mutual Insurance Company. The vessel arrived in Manila on May 13, 1957, and the cargo was discharged into the custody of the arrastre operator, Manila Port Service, a subsidiary of Manila Railroad Company. The consignee claimed non-delivery of three bales of cotton piece goods valued at P5,020.89 and damage to another case valued at P109.25. Atlantic Mutual, as insurer, paid the consignee these amounts and subsequently filed a claim for reimbursement against the arrastre operator for the lost bales.
The arrastre service’s liability was governed by a management contract between Manila Port Service and the Bureau of Customs. Paragraph 15 of this contract limited the arrastre operator’s liability for any undelivered package to P500, unless the value of the package was otherwise specified or manifested by the consignee at the time of delivery. In this instance, the consignee did not declare a higher value for the bales.
ISSUE
Whether Atlantic Mutual Insurance Company, as subrogee of the consignee, is bound by the liability limitation of P500 per package stipulated in the management contract between Manila Port Service and the Bureau of Customs.
RULING
Yes, the plaintiff-appellant is bound by the liability limitation. The Supreme Court affirmed the lower court’s decision, limiting recovery to P500 per bale, for a total of P1,500. The legal logic is anchored on the principle that the consignee, by accepting the delivery permit which incorporated by reference the terms of the management contract—specifically the gist of paragraph 15—voluntarily subjected itself to the contractual limitation of liability. The consignee had the opportunity to avoid this limitation by declaring a higher value for the packages upon making its claim for delivery, which it failed to do.
The Court rejected the plaintiff’s argument that, as a non-party to the management contract, it was not bound. By stepping into the shoes of the consignee through subrogation, the insurer acquired no greater rights than the consignee itself. Since the consignee was bound by the stipulation, the subrogee is similarly bound. The Court cited consistent jurisprudence (e.g., Tomas Grocery v. Delgado Brothers, Inc.) upholding the validity and enforceability of such liability limitations in arrastre service contracts when the consignee accepts delivery under the stipulated terms without declaring a higher value. The decision was affirmed with costs against the plaintiff.