G.R. No. L-17050; May 31, 1961
ATLANTIC MUTUAL INSURANCE CO., plaintiff-appellee, vs. MACONDRAY & CO., INC., ET AL., defendants-appellees, MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, defendants-appellants.

FACTS

Atlantic Mutual Insurance Company filed suit to recover P532.86 for damage to a shipment of Holy Scriptures insured by it and consigned to the Bible House in Manila. The cargo was shipped from New York on the “S.S. Leoville,” represented locally by Macondray & Co., Inc., and was unloaded at the Port of Manila into the custody of the arrastre contractor, Manila Port Service, between May 29 and June 2, 1956. The insurer, having paid the claim, brought this action in subrogation against Macondray & Co. and, alternatively, Manila Port Service and its parent company, Manila Railroad Company.
The case was submitted for decision on a stipulation of facts. It was admitted that out of 312 cartons, 309 were discharged from the vessel “complete and in good order” into the custody of Manila Port Service. Three cases were noted as discharged in bad order, but their minor damage is not the subject of this claim. Subsequent examinations at the consignee’s request, conducted days after the unloading, revealed that several of the cases originally received in good order showed signs of water damage. The total assessed damage was P532.86. The lower court held Manila Port Service and Manila Railroad Company liable and absolved Macondray & Co.

ISSUE

The sole issue is whether the damage to the cargo occurred while it was in the custody of the carrier (making Macondray & Co. liable) or while it was in the custody of the arrastre operator, Manila Port Service (making the appellants liable).

RULING

The Supreme Court affirmed the lower court’s decision, holding Manila Port Service and Manila Railroad Company liable. The legal logic rests on the application of presumptions and the burden of proof based on the stipulated facts. Since the parties stipulated that the specific cases in question were received by Manila Port Service from the carrier “complete and in good order,” the damage discovered later must be presumed to have occurred during the period the goods were in the appellants’ custody. This period lasted about ten days before the consignee’s inspection.
The Court applied Article 265 of the Civil Code, which presumes that loss or damage to goods while in an obligor’s possession is due to its fault or negligence in the absence of proof to the contrary. Manila Port Service failed to present any evidence to rebut this legal presumption. It did not show that the damage existed prior to its receipt or that it was caused by a fortuitous event. The appellants’ attempt to invoke terms of a management contract with the Bureau of Customs was rejected, as these were not presented in the trial court and could not be raised for the first time on appeal. Consequently, liability was properly placed upon the arrastre service.