INSURANCE COMPANY OF NORTH AMERICA, PLAINTIFF AND APPELLEE, VS. MANILA PORT SERVICE, ET AL, DEFENDANTS AND APPELLANTS.

On
May 21, 1957, the C. Itch & Co., Ltd., Tokyo, Japan, shipped at
Yokohama, Japan for Manila, Philippines, on board the steamer “CANADA
MAIL” of the American Mail Line, Ltd., and consigned to the Roxas-Kalaw
Textile Mills, Inc., Manila, “two cases containing one set welding
machine, various parts and accessories for textile machineries” for
which the Everett Steamship Corporation, the Yokohama agent of the
steamer “CANADA MAIL” issued Bill of Lading No. X-13-M. This shipment
was insured by the shipper with the Insurance Company of North America.
Upon arrival of said shipment at the Port of Manila on May 28, 1957,
the shipment was unloaded and placed in the custody of the Manila Port
Service which, in turn, delivered the same to the consignee Roxas-Kalaw
Textile Mills, Inc. “short of 1 case containing 1 set of welding
machine, various parts and accessories of captioned shipment valued in
the amount of P1,608.05.”

When the consignee filed its
claim for the loss with the insurance firm, the latter paid the same
thereby subrogating itself into the rights of the consignee with regard
to said loss. As the Manila Port Service failed and refused to
indemnify it for the loss in spite of repeated demands, the insurance
firm commenced the present action before the Court of First Instance of
Manila to recover the loss suffered by it in the amount of P1.608.05,
with interests thereon from the filing of the complaint, plus the sum
of P536.02 as attorney’s fees and costs.

Defendant in its
answer admitted the material allegations of the complaint respecting
the latter’s functions as operator of the arrastre service of the Port
of Manila and that it is “charged with the custody and care of all
cargoes discharged in the government piers in the Port of Manila and
was authorized and required to deliver all said cargoes to their
respective owners upon presentation of the corresponding release papers
from the vessels, its agents and/or owners and from the Bureau of
Customs.” Defendant, however, averred that its functions are subject to
the terms, conditions and restrictions imposed by the management
contract entered into between said defendant and the Bureau of Customs
and justified its refusal to pay plaintiff’s claim with defendant
within the 15-day period therein mentioned from the date of the arrival
of the goods on May 28, 1957. Defendant further averred that since no
such claim was filed by plaintiff, defendant is relieved of all
liability for any such loss or shortage pursuant to the aforesaid
management contract and, in any event, defendant’s liability for the
cargo’s loss or damage is limited to the invoice value of the cargo
which in no case shall exceed P500.00 for each package.

On
September 24, 1958, without holding any trial, the parties submitted a
stipulation of facts, and on the strength thereof, the court a quo
rendered judgment in favor of the plaintiff ordering the Manila Port
Service and the Manila Railroad Co. Inc., jointly and severally, to pay
plaintiff the sum of P1,608.05 with legal interest from May 10, 1958
and costs.

Defendant has appealed, but because the errors
assigned only raised questions of law, the case was certified to us by
the Court of Appeals.

It is admitted that a management
contract was entered into by and between the Bureau of Customs and the
Manila Port Service, a subsidiary of the Manila Railroad Company, on
February 29, 1956 for the operation of the arrastre service in the Port
of Manila, to which neither the plaintiff nor its predecessor-interest
is a party. And among the important terms and conditions therein
stipulated are that the Manila Port Service shall be responsible to the
steamship company, consignee, consignor, or other interested parties
for the invoice value of each package in case of loss but which in no
case shall be more than P500.00 for each package unless the value is
otherwise specified or manifested therein, and that in any event the
Manila Port Service shall be relieved of its liability for loss unless
suit in the proper court is brought “within a period of one (1) year
from the date of the arrival of the goods, or from the date when the
claim for the value of such goods has been rejected or denied by the
CONTRACTOR, provided that such claim shall have been filed with the
contractor within fifteen (15) days from the date of the arrival of the
goods.” Other facts admitted by the parties are: that no claim was
filed with the Manila Port Service for the missing shipment or its loss
within the 15-day period from the date of the discharge of the last
package from the carrying vessel, even if it appears that the present
suit was filed in court within the period of one year from the date of
the arrival of the shipment; and that the pertinent portion of the
management contract id reproduced in the gate pass used for the
withdrawal of the shipment on which the signature of both the
consignee’s broker and the representative of the Kanila Port Service
appeared showing actual delivery of the shipment without which
plaintiff could not have been able to withdraw the shipment, and that,
likewise, the same pertinent portion also appears at the back of the
delivery permit used in withdrawing the shipment.

The main
question to be determined is whether the provisions of the management
contract entered into by and between the Manila Port Service and the
Bureau of Customs relative to the limitation of the liability of the
Manila Port Service for the transportation of cargo and its delivery
from the vessel to the owner or consignee can be considered binding
upon said owner or consignee or their successor-in-interest
notwithstanding the fact that the latter is not a party thereto nor has
had any participation in its execution. The trial court answered the
question in the negative invoking Article 1311 of the new Civil Code
which provides, among others, that a contract as a rule takes effect
only between the parties, their assigns, and heirs, except where it
contains a stipulation in favor of a third person who may demand its
fulfillment if he communicates his acceptance to the obligor before its
revocation. This is now assigned as error.

While there may be
much room for argument on the question raised when this case was
submitted to the trial court for decision and the briefs of both
parties were submitted to us in connection with this appeal because it
was then a case of first impression, the doubt, however, has now been
dispelled considering the several cases of similar nature that since
than had been decided by this Court wherein it was underscored the
proper interpretation that should be placed on the extent and
application of the pertinent provisions contained in the management
contract. Thus, in the case of Villanueva vs. Barber-Wilhelmsem Line, et al., 110 Phil., 34 this Court said:

“The
question whether the above-quoted paragraph of the management contract
is binding to a consignee, who, though not a party thereto, has taken
delivery of the goods upon presentation of a pass and a delivery permit
making reference to said paragraph and reproducing substantially the
provisions thereof, as one of the conditions of Said pass and delivery
permit, has already been settled in several decisions of this Court. In
Northern Motors, Inc. vs. Prince Line, (107 Phil., 262), we said:

‘Even therefore, if appellant was not a signatory to said Management Contract,
it legally become a party thereto when it (through its broker, the
Luzon Brokerage Co., Inc.) obtained the delivery permit and gate pass
in the above manner prescribed by law and, making use of them, demanded
from appellee the delivery of the SS eases, pursuant to appellee’s
undertaking in virtue of the very same Management Contract. Again, it
became bound when it brought court action against appellee, also by
virtue of the tatter’s obligations as the arrastre contractor under the
same Management Contract, for the purpose of recovering the reasonable
value of the missing ease of auto spare parts and accessories. * * *’

“This view was reiterated in Tomas Grocery vs. Delgado Brothers, 105 Phil., 549; 56 Off. Gaz., [27] 4422; Bernabe vs. Delgado Brothers, 107 Phil., 287; Bernabe vs. Delgado Brothers, 107 Phil., 679; 58 Off. Gaz., [6] 1104; Delgado Brothers vs. Li Yao & Co., 107 Phil., 939; 57 Off. Gaz., [38] 6774; Sun Brothers vs. Manila Port Service, 107 Phil., 988; 58 Off. Gaz., [9] 1722; and Juan Ysmael & Co., Inc. vs. United States Lines Co., L-14384 (April 30, 1960).”

Considering
that appellee herein, or its predecessor-in-interest, even if not a
signatory to the management contract, obtained thru its broker the
delivery permit and gate pass in the manner prescribed by law and,
making use of them, demanded from appellant the delivery of the
shipment in question and obtained possession thereof pursuant to the
pertinent stipulation in the management contract, we have no other
alternative than to declare that said contract is applicable and
binding upon appellee in the light of our ruling in the aforecited
cases.

It is true that the present action was instituted by
appellee within the period of one year from the date of arrival of the
shipment in view of the failure of appellant to pay the value of the
missing article, but such step is not sufficient it appearing that
appellee has failed to file a claim therefor with appellant within the
15-day period from the date of the discharge of the last package from
the carrying vessel as provided in section 15 of the management
contract; and it is preposterous to contend, as appellee now claims,
that such provisional claim is not necessary because appellee has
already filed an action in court within the one-year period not only
because the provisions of the management contract on the point seem to
be clear but also because of the interpretation already placed thereon
by this Court in another similar case involving a similar issue. We
refer to the case of David Consunji, et al. vs. The Manila Port Service, et al., (110 Phil., 233; Off. Gaz.; [3] 256) wherein this Court made the following comment:

“We
do not think this interpretation may be sustained. Carriers or
depositories sometimes require presentation of claims within a short
time after delivery as a condition precedent to their liability for
losses. Such requirement is not empty formalism. It has a definite
purpose, i.e. to afford the carrier or depositary a reasonable
opportunity and facilities to check the validity of the claims while
the facts are still fresh in the minds of the persons who took part in
the transaction and the documents are still available. Now, we see no
reason why Manila Port Service—for whose benefit the provision was
evidently inserted—should require prompt presentation of claim in one
instance, while waiving it in the other. Bearing this in mind, we hold
that the proviso about presentation of claim was intended to
apply both to the case where suit is brought within one year from the
date of discharge of the goods, and to the case where suit is brot
within one year from the date when such claim is rejected. It is clear
that the paragraph, while imposing a condition precedent to the filing
of any suit for losses, at the same time gave the demandant
(who has filed the claim) the option either to bring his action (in one
year) without waiting for the contractor’s resolution on his claim, or
to wait for such resolution and then sue if it is unfavorable (in one
year).”

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

Bengzon, C. J., Padilla, Labrador, Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon and De Leon, JJ., concur.