G.R. No. L-19485; February 17, 1967
RIZAL SURETY & INSURANCE CO., plaintiff-appellee, vs. MANILA RAILROAD CO., MANILA PORT SERVICE and C. F. SHARP & CO., INC., defendants. MANILA RAILROAD CO. and MANILA PORT SERVICE, defendants-appellants.

FACTS

The Manila Port Service, a subsidiary of the Manila Railroad Company and the arrastre operator at the port of Manila, received from the vessel “SS Dresden,” operated by C. F. Sharp & Co., a shipment of 454 cases of Hereford corned beef consigned to Natividad U. Lim. The shipment was discharged in good order on December 17, 1959, except for one damaged case. The consignee, Lim, had insured the shipment with Rizal Surety & Insurance Company. The arrastre operator delivered only 358 cases to Lim’s broker on January 20 and 29, 1960, resulting in a loss of 96 cases. Rizal Surety, as subrogee, paid Lim for the loss and filed a claim with Manila Port Service on January 21, 1960, which was rejected. The insurer then filed suit on October 14, 1960. The arrastre operators denied liability, arguing the claim was filed beyond the 15-day period from the date of discharge of the last package, as required by their management contract with the Bureau of Customs. The consignee received the delivery permit and gate pass, which contained the stamped stipulation, only on January 18 and 20, 1960, respectively, making compliance with the 15-day period impossible as more than 30 days had already elapsed since discharge. The consignee had also filed a provisional claim on December 13, 1959.

ISSUE

Whether the arrastre operator (Manila Port Service/Manila Railroad Co.) is relieved from liability for the loss of the cargo due to the consignee’s failure to file a formal claim within the 15-day period stipulated in the management contract.

RULING

No. The arrastre operator is not relieved from liability. The Supreme Court affirmed the lower court’s decision holding Manila Railroad Company and Manila Port Service jointly and severally liable. The Court ruled that under the circumstances, a literal compliance with the 15-day claim filing requirement would be illogical and oppressive. The loss occurred while the merchandise was in the arrastre operator’s custody, and the consignee had no reason to file a claim until she could have discovered the loss, which was no earlier than January 18, 1960, when she received the delivery permit. The consignee filed her claim the day after delivery of the shipment minus the missing cases and had previously filed a provisional claim. The consignee did all that could be expected, and requiring strict compliance was unjustified.