G.R. No. L-18673 November 29, 1965.
ALEX LO KIONING, doing business under the firm name of LUZON RATTAN INDUSTRIES, plaintiff-appellee, vs. UNITED STATES LINES COMPANY, defendant, MANILA PORT SERVICE and MANILA RAILROAD COMPANY, defendants-appellants.

FACTS

Plaintiff-appellee Alex Lo Kiong was the consignee of three bales of drapery fabrics unloaded from the SS “Pioneer Mill” at the Port of Manila on May 21, 1960. The shipment was placed under the custody of the arrastre operator, Manila Port Service, a subsidiary of Manila Railroad Company. None of the three bales were delivered to the appellee. After paying taxes and arrastre charges, appellee’s customs broker, Falcon Brokerage Company, filed a claim for their value (P3,890.68) against Manila Port Service and a similar claim against the carrier, United States Lines Company. Upon denial of the claims, appellee instituted an action to recover P5,873.63 with interest, attorney’s fees, and costs. The trial court dismissed the claim against the carrier but rendered judgment against the arrastre operator appellants for P3,890.68 with interest, attorney’s fees, and costs. The appellants invoked the provisions of the management contract between the Bureau of Customs and Manila Port Service, particularly Section 15, which limits liability for loss to P500.00 per package unless the value is specified and corresponding arrastre charges are paid based on that declared value.

ISSUE

Whether the appellee is bound by the provisions of the management contract, particularly the clause limiting the arrastre operator’s liability to P500.00 per package, and whether the appellee is entitled to recover the full value of the lost shipment.

RULING

Yes, the appellee is bound by the provisions of the management contract. The Supreme Court modified the decision appealed from. It limited the liability of appellants to P500.00 for each of the three bales, in accordance with the management contract’s liability clause. The Court also eliminated the award of attorney’s fees and costs to the appellee. The Court held that the appellee, through his broker’s actions in signing necessary documents, obtaining a delivery permit, and tendering payment of arrastre charges fixed under the management contract, became a party to said contract. The delivery permit was stamped with conditions subjecting it to the terms of the management contract, including the liability limitation. To be exempt from this limitation and claim full value, the consignee must have declared the value in the cargo manifest and bill of lading and paid arrastre charges computed on that basis. Here, the appellee paid only P7.72 in arrastre charges, computed on cubic measurement, not on the declared value of the goods. Therefore, the liability limit applied.