GR L 22382; (April, 1969) (Digest)
G.R. No. L-22382; April 30, 1969
Republic Manufacturing Co., Inc., plaintiff-appellee, vs. Manila Railroad Company, as Operator of the Manila Port Service, defendant-appellant.
FACTS
The plaintiff-appellee, Republic Manufacturing Co., Inc., filed a case against the defendant-appellant, Manila Railroad Company (as operator of the Manila Port Service), for its failure to deliver one out of four bales of rayon and cotton remnants, with a claimed value of P3,770.84. The parties submitted a stipulation of facts wherein the plaintiff admitted the existence of a management contract between the Manila Port Service and the Bureau of Customs. Paragraph 15 of this contract limits the liability of the arrastre operator (Manila Port Service) to P500.00 for each package, unless a higher value is specified and corresponding arrastre charges are paid. This limitation was also reproduced in the gate pass and delivery permit issued by the Bureau of Customs in the name of the plaintiff’s broker. The Court of First Instance ruled in favor of the plaintiff, ordering the defendant to pay the full amount, on the ground that the defendant failed to plead this limited liability defense before the Municipal Court, thus precluding it from being raised on appeal.
ISSUE
Whether the defendant-appellant Manila Railroad Company’s liability for the undelivered package is limited to P500.00 pursuant to paragraph 15 of the management contract, despite the plaintiff not being a direct signatory to said contract.
RULING
Yes. The Supreme Court reversed the decision of the lower court and limited the defendant’s liability to P500.00. The Court held that the stipulation in the management contract is controlling, as consistently upheld in prior jurisprudence. The plaintiff, by taking delivery of the shipment through a permit that incorporated the provisions of the management contract by reference, became bound by its terms, including the liability limit. The plaintiff could have avoided this limit by declaring a higher value and paying the corresponding arrastre charges, which it failed to do. The defense of limited liability was properly raised as the management contract was part of the documentary evidence before the municipal court and was expressly admitted in the stipulation of facts on appeal. The decision was modified accordingly.