G.R. No. L-21497; April 16, 1968
AMERICAN MACHINERY and PARTS MANUFACTURING, INC., plaintiff-appellee, vs. HAMBURG-AMERIKA LINIE, ET AL., defendants. MANILA RAILROAD CO. and/or MANILA PORT SERVICE, defendants-appellants.

FACTS

On June 22, 1961, 132 lifts (96 of hot rolled round bars and 35 of seamless steel tubes) consigned to plaintiff American Machinery & Parts Manufacturing, Inc. were loaded on board the SS “Frankfurt” in Bremen, West Germany. The vessel arrived in Manila on August 3, 1961. On August 4, 1961, the shipment was unloaded and delivered into the custody of the arrastre contractor, Manila Port Service. On August 15, 1961, plaintiff’s broker filed a provisional claim with Manila Port Service for short delivery, shortlanding, and/or goods landed in bad order, with notice also given to the vessel’s agent, C.F. Sharp & Co., Inc. Upon delivery, only 129 lifts were received, and Manila Port Service issued a short-landed certificate for the missing 3 lifts. On February 20, 1962, plaintiff filed a formal claim for P4,264.95, the value of the missing lifts. After refusal to pay, plaintiff filed a complaint on June 2, 1962, against the carrier (Hamburg-Amerika Linie and its agent) and the arrastre operator (Manila Railroad Co. and Manila Port Service). The carrier defendants, in their answer, alleged complete delivery to Manila Port Service and filed a cross-claim against the arrastre operator. The arrastre operator defendants, in their answer, invoked the provisions of their management contract with the Bureau of Customs, particularly Section 15, limiting their liability to P500 per package unless the value is specified and corresponding arrastre charges paid. The trial court rendered a decision ordering the arrastre operator defendants to pay plaintiff the full sum of P4,264.95, dismissing the carrier’s cross-claim. The arrastre operator defendants appealed directly to the Supreme Court.

ISSUE

Whether the liability of the arrastre operator (Manila Port Service and Manila Railroad Co.) for the loss of the three lifts is limited to P500 per package pursuant to Section 15 of the management contract between the Bureau of Customs and Manila Port Service.

RULING

Yes. The Supreme Court modified the decision of the lower court, limiting the liability of the appellants to P1,500.00 (P500 per lift). The Court held that the provision of Section 15 of the management contract is binding on the consignee. Although the copy of the delivery permit furnished to the plaintiff did not contain a reference to Section 15, the gate passes (Exhibits N, N-1, N-2) used by the plaintiff to secure and remove the goods from the customs area contained a printed paragraph expressly referring to the terms and conditions of the management contract, “particularly but not limited to paragraph 15 thereof limiting the Company liability to P500.00 per package.” Since the plaintiff had to use both the delivery permit and the gate passes to obtain delivery, the notice on the gate passes was sufficient to bind the plaintiff to the management contract’s terms, including the liability limitation. The Court found that the lower court erred in not considering the gate passes. Furthermore, the bill of lading did not declare the value, and there was no showing that the plaintiff declared the invoice value for arrastre charge purposes. Therefore, appellants’ liability is limited to P500 per package, for a total of P1,500.00 for the three missing lifts.