G.R. No. L-23124; October 11, 1967
INSURANCE COMPANY OF NORTH AMERICA, plaintiff-appellee, vs. MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, defendants-appellants.

FACTS

The plaintiff, Insurance Company of North America, as insurer-subrogee, filed an action to recover P4,305.55, representing the value of a partially damaged shipment of 351 cartons of medicine consigned to Philex Mining Corporation. The shipment, insured against all risks, arrived in Manila on June 23, 1961, on board the SS “Japan Bear” and was discharged into the custody of the Manila Port Service on June 28, 1961, in good order. The cargo vans containing the shipment were owned by the carrier, and their padlock and key remained with the vessel’s operators. On July 19, 1961, upon the consignee’s request, the shipping agent opened the vans, revealing that 50 cartons were wet. A “Bad Order Examination Report” was prepared. The consignee filed a provisional claim on June 27, 1961 (one day before discharge) and a formal claim on July 31, 1961, for P4,305.55, which the arrastre contractor denied. The insurer paid the consignee P4,700.86. The Court of First Instance of Manila ruled in favor of the plaintiff, holding the defendants jointly and severally liable for P4,305.55 plus attorney’s fees and costs. The defendants appealed.

ISSUE

1. Whether the arrastre contractor (Manila Port Service) is liable for the damage to the goods while in its custody.
2. Whether the claim was filed within the 15-day period required under the management contract.
3. Whether the amount of liability and the award of attorney’s fees were proper.

RULING

1. On Liability: Yes, the arrastre contractor is liable. The court found that the cargo vans were received in good order by the arrastre contractor, which had custody from discharge until delivery. The defendants failed to prove that the damage existed prior to discharge or was not attributable to them. Possession of the keys by the vessel’s operators was not decisive; custody of the goods at the time of damage was the critical factor.
2. On Timeliness of Claim: Yes, the formal claim filed on July 31, 1961, was timely. The provisional claim filed on June 27, 1961, was premature and speculative. However, the 15-day period for filing a claim under the management contract commences from the date the consignee learns of the damage or could have learned of it with reasonable diligence, not necessarily from the date of discharge. The record did not show that the consignee knew of the discharge or damage before July 19, 1961. Thus, the claim filed on July 31 was within 15 days from July 19.
3. On Amount and Attorney’s Fees: The recoverable amount was reduced to P3,989.70, the invoice value of the damaged goods, as conceded by the plaintiff. The award of P500 in attorney’s fees was upheld under Article 2208 of the New Civil Code, as the court deemed it just and equitable, consistent with precedent in similar cases.
The judgment was affirmed with the modification reducing the award to P3,989.70. No costs were awarded on equitable considerations.