REPUBLIC MANUFACTURING CO., INC., PLAINTIFF-APPELLEE, VS. MANILA RAILROAD COMPANY, AS OPERATOR OF THE MANILA PORT SERVICE, DEFENDANT-APPELLANT.

In this appeal by defendant Manila Railroad Company, as operator
of the Manila Port Service, from a decision of the Court of First Instance
ordering it to pay plaintiff Republic Manufacturing Co., Inc. the sum of P3,770.84
because it could deliver only three out of the four bales of rayon and cotton
remnants, the sole question is whether or not such liability was legally
incurred considering that in the stipulation of facts plaintiff did admit that
under paragraph 15 of the management contract entered into between the Manila
Port Service and the Bureau of Customs the amount for which the former is
liable should not exceed Five Hundred Pesos (P500.00) “for each package
unless the value is otherwise specified or manifested, and the corresponding arrastre charges had been paid.” There was like­wise
the admission that the above paragraph 15 of the management contract was in
substance reproduced in the gate pass and did appear in the permit to deliver
imported goods issued by the Bureau of Customs in the name of plaintiff’s
broker.  Notwithstanding the above
admission, plaintiff prevailed.  Hence
this appeal.  We reverse.

It is not that the lower court is unaware of the repeated
pronouncements of this Tribunal that under the aforesaid paragraph 15, the
liability cannot exceed P500.00 for each package.  Such a provision was not, however, applied by
it in view of what it considered the failure of defendant to plead its limited
liability before the Municipal Court of Manila, thus precluding from setting it
up on appeal, to the Court of First Instance. 
Hence its decision.

Defendant Manila Railroad Company would argue in this appeal that
before the municipal court the matter was adjudged solely on the basis of
documentary evidence, included among which was the management contract.  It could not be said then that there was such
a failure to set up the defense of limited liability.  Attention is likewise invited to the fact
that the case was submitted to the Court of First Instance on stipulation of
facts, wherein, as above pointed out, plaintiff did admit the execution of such
a management contract by and between the Manila Port Service and the Bureau of
Customs, including paragraph 15 thereof as indicated above.

Even plaintiff is not insensible to the force of the above argument
for in its brief as appellee what it stressed was not
such failure to plead but its not being bound by such stipulation considering
that it was not a party to the management contract not being a signatory
thereto nor to the gate pass issued by the Bureau of Customs.  Such a disclaimer, however, is far from
persuasive.  The stipulation in the
management contract should be considered as controlling in the light of our
unwavering line of decisions.

It suffices to quote Atlantic Mutual Insurance Company v. Manila
Port Service,^[1]
where this Court, through the then Justice, now Chief Justice, Concepcion, stated: 
“Plaintiff maintains that, not being a party to the manage­ment
contract, the consignee – into whose shoes plaintiff had stepped in consequence
of said payment – is not subject to the provisions of said stipulation, and
that the same is furthermore invalid. 
The lower court correctly rejected this pretense because, having taken
delivery of the ship­ment aforementioned by virtue of a delivery permit,
incorpo­rating thereto, by reference, the provisions of said management
contract, particularly paragraph 15 thereof, the gist of which was set forth in
the permit, the consignee became bound by said provisions, and because it could
have avoided the application of said maximum limit of P500.00 per package by
stating the true value thereof in its claim for delivery of the goods in
question, which, admittedly, the consignee failed to do * * *.” That is
still good law.^[2]

WHEREFORE, the decision of the lower court of December 3,
1963 is modified in the sense that the liability of defendant Manila Railroad
Company is limited to P500.00.  Costs
against Republic Manufacturing Co., Inc.

Reyes, J.B.L., Acting C.J., Dizon, Makalintal, Zaldivar, Sanchez, Teehankee, and Barredo, JJ., concur.

Concepcion, C.J., and Castro, J., on
official leave.

Capistrano, J., did not take part.

^[1] L-16271,
October 31, 1961.

^[2]
Two of the recent decisions reiterating such a doctrine are Rizal
Surety & Insurance Co. v. Manila Railroad Company, 23 SCRA 205 (1968)
and Philippine Education Co. v. Manila Port Service, 23 SCRA 557 (1968).