AMERICAN MACHINERY & PARTS MANUFACTURING, INC., PLAINTIFF-APPELLEE, VS. HAMBURG-AMERIKA LINIE, ET AL., DEFENDANTS, MANILA RAILROAD CO. AND/OR MANILA PORT SERVICE, DEFENDANTS-APP…

On June 22, 1961, there were loaded on board the vessel SS
“Frankfurt” at the Port of Bremen, West Ger­many, 96 lifts of hot
rolled round bars and 36 lifts of seamless steel tubes, consigned to plaintiff
American Machinery & Parts Manufacturing, Inc., in Manila.  The SS “Frankfurt” is owned by the
Hamburg Amerika Linie,
whose agent in the Philippines is the C. F. Sharp & Company, Inc.  The SS “Frankfurt” arrived in
Manila on August 3, 1961.  On August 4,
1961, the shipment of 132 lifts were unloaded from the
carrying vessel and delivered into the
custody of the Manila Port Service, the arrastre
contractor in the Port of Manila.  On
August 15, 1961, the Luzon Brokerage Co., as the broker of the plaintiff, filed
a provisional claim with the Manila Port Service for short delivery, shortlanding and/or landed in bad order, of the goods
constituting the shipment.  The C.
F. Sharp & Co., Inc., agent of the car­rying vessel,
was also given notice of the provisional claim.

When the plaintiff took delivery of the shipment through its
broker from the Manila Port Service, only 129 out of the 132 lifts were
delivered.  The Manila Port Service, in
fact, issued a short-landed certificate stating therein that the shipment
delivered to it by the C. F. Sharp & Co., Inc. was short of 3 lifts.  On February
20, 1962, plaintiff filed a formal claim with the Manila Port Service
and/or the C. F. Sharp & Co., Inc. for the payment of the sum of P4,264.95
re­presenting the value of the missing 3 lifts. 
In view of the refusal of the Manila Port Service and the C. F. Sharp
& Co., Inc. to pay, the plaintiff filed, on June 2, 1962, a complaint in the Court of First Instance
of Manila for the recovery of the said sum of P4,264.95
plus attorney’s fees and the costs. 
Named defendants in the case, which is docketed as Civil Case No.
50711, are the Hamburg-Amerika Linie
and its Philippine agent C. F. Sharp & Co., Inc, and the Manila Railroad
Co. and the Manila Port Service, the latter being the subsidiary of the Manila
Railroad Co.

In their answer, the defendants Hamburg-Amerika
Linie & C. F. Sharp & Co., Inc. alleged,
among others, that the 132 lifts, constituting the full shipment were delivered
complete to the defendant Manila Port Service. 
These defendants disclaim any liability to the plaintiff.  At the same time these defendants filed a
cross-claim against the Manila Port Service and the Manila Railroad Co.

Defendants Manila Railroad Co. and Manila Port Service, in their
answer to the complaint, implead the provisions of
the management contract entered into by and between the Bureau of Customs and
the Manila Port Service governing the operation of the arrastre
service in the Port of Manila, and especially allege that if they have any
liability at all for the alleged shortage of the shipment in question, their
liability is limited to the invoice value of the shortage but in no case shall
it be more than P500.00 per package in accordance with section 15 of the said
management contract.

After trial, the Court of First Instance of Ma­nila rendered a
decision, dated April 29, 1963,
order­ing defendants Manila Port Service and Manila Railroad Co. to pay
plaintiff the sum of P4,264.95 with interest at the
legal rate from the date of demand on February
20, 1962 until said amount is fully paid and to pay the costs.  The lower court dismissed the cross-claim of
de­fendants Hamburg-Amerika Linie
and C. F. Sharp & Co., Inc. against defendants Manila Port Service and
Manila Railroad Co.

Not satisfied with the decision of the lower court, defendants
Manila Port Service and Manila Railroad Co. have appealed directly to this
Court on questions of law.

The main contention of appellants Manila Port Ser­vice and Manila
Railroad Co. in their present appeal which is the question to be settled – is
that the Court of First Instance of Manila erred in not declaring that the
liability of the said appellants should be limited to P500.00 per lift, or in
the total sum of P1,500.00, pursuant to the pertinent provision of section 15
of the management contract entered into by and between the Bureau of Customs
and the Manila Port Service, which reads as follows:

“Sec. 15.  x x x and the CONTRACTOR shall be solely responsible as an inde­pendent
contractor, for, and promptly pay to the steamship company, consignee,
consignor, or other interested party or parties the invoice value of each
package but which in no case shall be more than five hundred pesos (P500.00)
for each package unless the value is otherwise spe­cified or manifested, and
the correspond­ing arrastre charges had been paid, x x x.”

It is the settled ruling of this Court that the aforequoted provision of section 15 of the management
contract between the Bureau of Customs and the arrastre
contractor is binding to the consignee, who, though not a party in said contract, has taken delivery of the goods upon
presentation of a pass and delivery permit making reference to the said section
15 and reproducing sub­stantially the provisions thereof, as one of the conditions
of said pass and delivery permit.^[1]

In the case now before Us the lower
court made a finding in its decision that “the copy of the deli­very
permit, Exh. I, which was furnished the plaintiff does not contain any reference to paragraph 15 of
the management contract Exh. 5-MPS.”
On the basis of this finding the lower court ruled that the appellee
was not given sufficient notice of the pertinent provision of section 15 of the
management contract, and so it was not bound by said management contract, and
the defense of limited liability is, therefore, not available to the
appellants.

We have noted, however, that on the gate passes, marked as Exhibits
N, N-1 and N-2 for the appellee – which are also
marked as Exhibits
3, 3-A and 3-B for the appellants – there appears printed a paragraph which
reads as follows:

“The undersigned, duly authorized to
respectively represent the Bureau of Cus­toms, the above named CONSIGNEE, and
the Arrastre Service Operator, hereby certify to the
correctness of the above descript­ion of the goods covered by this Gate
Pass.  Issuance of this Gate
Pass constitutes delivery to, and
receipt by CONSIGNEE of the goods as described herein.  The pre­sentation of the permit to deliver
the shipment consisting, wholly or partly of the above goods, is subject to all
the terms and conditions contained in the Management Contract between the
Bureau of Customs and Manila Port Service and all amendments thereto or
alterations thereof, particularly but not limited to Paragraph 15 thereof limiting the Company liability to
P500.00 per package, unless the value of the goods is otherwise specified or
manifested, providing exemptions from liability and releasing the Company from
liability unless suit is brought within one (1) year from the date of discharge
of the goods, or from date when the claim for the value of the goods has been
re­jected, provided such claim shall have been filed with the Company within 15
days from the date of discharge of the last package from the carrying
vessel.”

The gate passes, above-mentioned, are signed by the
representative of the consignee, as well as
by the representatives of the Bureau of Customs and the Manila Port
Service.  In order to secure delivery of
the goods, and bring those goods out of the customs area or from the warehouses under the
control of the Bureau of Cus­toms, the appellee had
to use both the delivery permit as well as the gate passes.  We consider that when the appellee
used the gate passes on which is printed a re­ference to the provision of
section 15 of the managment contract, it was thereby
given notice of the provision of the management contract which refers to the
limited liability of the arrastre contractor, and it
is bound by that provision of the management contract.  We accept the finding of the lower court that
the copy of the delivery permit which
was given to the appellee does not contain any
reference to section 15 of the management contract.  The lower court, however, did not make any
mention about the gate passes that were submitted as evidence in the present
case by both the appellee and the appellants.  There is nothing in the
decision of the lower court which explains why these gate passes were not taken
into consideration in determining whether or not the consignee – appellee herein – had notice of the provision of section 15
of the management contract, since there is printed on the gate passes a
paragraph which makes reference to said section 15 of the manage­ment contract.

In their brief, the appellants call attention to this printed
paragraph on the gate passes, which
precisely refers to the limited liability clause.  It is our considered view that because both
the delivery per­mit and the gate passes had to be used by the appellee in obtaining delivery of the goods, the paragraph
print­ed on the passes which makes reference to section 15 of the management
contract is sufficient to give notice to the appellee
about the pertinent provision of section 15 of the management contract, thereby
rendering him bound by the management contract, notwithstanding the fact that
on the delivery permit there is no reference to said section 15 of the
management contract.  We de­clare that
the lower court erred when it did not consi­der what appears on the gate passes
as sufficient notice to the appellee regarding the particular provision of section 15
of the management contract.  We,
therefore, find merit in the defense of the appellants that if they are liable
at all to the appellee for the loss of the three
missing lifts in question, their
liability should be limited to P500.00 per lift, or to a total liability of P1,500.00.  This is, as
it should be, because in the bill of lading of the shipment in question
(Exhibit A-1) the value is not declared, and it does
not appear in the record that the appellee had
declared the invoice value of the shipment to serve as the basis for
determining the arrastre charges.

WHEREFORE, the decision appealed from is modified, and
appellants Manila Port Service and Manila Railroad Co. are hereby ordered to
pay appellee American Machinery & Parts
Manufacturing, Inc. the sum of One Thousand Five Hundred (P1,500.00) Pesos,
with legal interest from the date of the filing of the complaint until paid sum
is fully paid.  No pronouncement as to
costs.

IT IS SO ORDERED.

Reyes, J.B.L., (Acting C.J.), Dizon, Makalintal, Bengzon, J.P., Sanchez,
Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
Villanueva v. Barber-Wilhemsen Lines, et al.,
L-14764, November 23, 1960.  See also Tomas Grocery v. Delgado
Brothers, L-11154, April 29, 1959;
Bernabe v. Delgado Brothers, L-14360, February 29, 1960; Bernabe v. Delgado Brothers, L-12058, April 27, 1960; Delgado Brothers v.
Li Yao & Co.,
L-12872, April 29, 1960;
Sun Brothers v. Manila Port Service, L-13500, April 29, 1960; and Juan Ysmael
& Co., Inc. v. United States Lines Co., L-14384, April
30. 1960.