G.R. No. L-50242 May 21, 1988
E. RAZON, INC., petitioner, vs. THE COURT OF APPEALS and PIONEER INSURANCE & SURETY CORPORATION, respondents.

FACTS

Respondent Pioneer Insurance, as insurer-subrogee, filed a complaint to recover the value of three missing cases of radio and phonograph parts from a shipment of eighty-six cases. The shipment was transported by Northern Lines, Inc. aboard the SS “Don Jacinto II” and, upon arrival in Manila, was discharged into the custody of petitioner E. Razon, Inc., an arrastre operator. E. Razon certified that only eighty-three cases were delivered to the consignee, MGM Importers Corporation. Pioneer Insurance indemnified the consignee and sought recovery from either the carrier or the arrastre operator.
The parties entered into a Stipulation of Facts wherein E. Razon admitted receiving the entire shipment of eighty-six cases from the vessel. The trial court dismissed the complaint against Northern Lines, Inc., holding the carrier free from liability as the goods were completely unloaded and received by the arrastre operator. The court, however, held E. Razon liable but limited the award to P10,899.28. The Court of Appeals affirmed this decision in toto.

ISSUE

Whether the liability of the arrastre operator, E. Razon, Inc., for the lost cargo is limited to P2,000 per package as stipulated in its Revised Management Contract with the Bureau of Customs.

RULING

The Supreme Court affirmed the decision of the Court of Appeals, holding that the liability limitation of P2,000 per package under the Revised Management Contract was inapplicable. The Court explained that the contractual stipulation limiting liability to P2,000 per package applies only if the arrastre operator is not notified in writing of the actual invoice value before the goods’ arrival. This requirement is designed to allow the operator to assess the risk and obtain commensurate compensation, not to determine the degree of care it must exercise.
The Court rejected E. Razon’s argument that the notice requirement was meant to alert it to exert extraordinary care for high-value goods. It emphasized that as a public service operator and depositary, E. Razon is bound by law to observe the diligence of a good father of a family in safeguarding the goods in its custody, regardless of their declared value. The duty of care is uniform and not contingent upon prior notification of value. Since the consignee did not provide the advance written notice specifying a value exceeding P2,000, the general limitation clause was effectively invoked. However, the awarded amount of P10,899.28 was deemed consistent with the evidence and the application of the contractual limit to the lost packages, not their full invoice value. The petition was dismissed.