Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24166               April 25, 1969

FIREMAN'S FUND INSURANCE COMPANY, plaintiff-appellee,

vs.
MANILA RAILROAD COMPANY and its Subsidiary MANILA PORT SERVICE, defendants-appellants.

Paul Santaromana for plaintiff-appellee.

D. F. Macaranas and Antonio G. Holgado for defendants-appellants.

BARREDO, J.:

Appeal by the Manila Railroad Company and its subsidiary, Manila Port Service, from the decision of the Court of First Instance of
Manila in its Civil Case No. 53510, holding them liable to pay appellee Fireman's Fund Insurance Company the sum of P3,000.32 —
the invoice value of 15 bales of crude natural rubber which appellants failed to deliver to the consignee thereof.

In a nutshell, the antecedent facts are as follows: On March 25, 1962, the SS "ZEELAND" arrived at the port of Manila. On the same
date, it unloaded unto the custody of the Manila Port Service, subsidiary of the arrastre operators Manila Railroad Company, 858 bales
of crude natural rubber shipped under four (4) separate invoices from the ports of Swettenham and Singapore, consigned to B. F.
Goodrich (Phil.), Inc. Of the shipment, only 832 bales were thereafter delivered by appellant Manila Port Service to said consignee
thereof who, within 15 days from the discharge of the last bale or package of the goods from the above-named carrying vessel, filed
with said appellant "provisional claim" concerning 15 of the total of 26 bales undelivered. 1 About three months later, or on July 23, 1962,
the said consignee then presented a "formal claim" particularly indicating the quantity, marks, counter-marks and value of its lost
merchandise.

Appellee Fireman's Fund Insurance Company, insurer of the goods, was obliged to pay the value of the lost merchandise, and was
thereby subrogated to the rights of said consignee. It then commenced action against appellants in the court a quo  to recover the loss,
along with claims for damages and attorney's fees. Upon joining of issues, the parties entered into a stipulation of facts containing the
circumstances already set forth above, on the basis of which, the court, on December 24, 1964, issued the decision appealed from; and
as earlier stated, the Manila Railroad and its subsidiary, Manila Port Service, interposed the present appeal.lawphi1.nêt

The lone law question posed for resolution is: whether or not the so-called "provisional claim" ... without any statement of the marks,
number of packages, contents, nor their value 2 ... is a sufficient compliance with the provisions of Section 15 of the Management
Contract providing as follows:

... in any event the CONTRACTOR shall be released of any and all responsibility for loss, damage, misdelivery, and/or non-
delivery of goods, unless suit in the court of proper jurisdiction is brought within a period of one (1) year from the date of the
discharge of the goods, or from the date when the claim for value of such goods have 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 discharge of the last package from the carrying vessel.....

No elaborate discussion is necessary to show that the instant appeal cannot prosper. It is definitely settled by this Court that upon facts
parallel to the present, the so-called provisional claim is a sufficient compliance with the provisions of the Management Contract above-
quoted. Suffice it to quote here, for purposes of emphasis, the holding of this Court in one of the latest of these precedent:3

It thus appears that the provisional claims in connection with each one of these seven shipments were filed within 15 days
from the discharge of the last package. Defendants maintain, however, that inasmuch as said period had expired before the
filing of the formal claims, plaintiff should be deemed barred from recovering the corresponding indemnity. This pretense is
predicated upon the theory that the aforementioned provisional claims are not claims 'for the value' of the goods lost, damaged
or not delivered to the plaintiff.

Such a theory is manifestly untenable, for: (1) it assumes that the claim must state the value of said goods, which the above-
quoted paragraph 15 does not require; and (2) a provisional claim may be sufficient, even if the value of the goods involved
were not stated therein, if it describes said foods sufficiently to permit its identification by the operator and the determination by
the latter of the facts relevant thereto, such as the name of the carrying vessel, its date of arrival, the corresponding bill of
lading or other shipping documents in which the value of the goods is set forth, etc., "while the facts are still fresh in the minds
of the persons who took part in the transaction and while the pertinent documents are still available."4
 Thus, in Domestic Insurance Co. vs. Manila Railroad Co. (L-24066, August 30, 1967), We explicitly declared that "... The
circumstances that the provisional claim did not specify the value of the loss" does not detract from the fact that said claim "still
substantially fulfills the requirements of the contract aforementioned (State Bonding & Insurance Co. vs. Manila Port
Service, supra) and is not a defense against the claim of the consignee for recovery after it shall have ascertained later its
actual loss or damage." ....

It is not pretended by appellants that in the form the provisional claim was presented said claim did not contain sufficient information to
permit them to identify the goods involved and to determine the facts relative to said claim. Very aptly, the trial court pointed out that the
said provisional claim "is a sufficient notice or warning to the defendant, and affords him the opportunity to check up the claim for loss.
To require the consignee to state in detail the description, nature, and value of the goods missing, or short delivered, would require
consignee to do the impossible as it is a matter of public knowledge that before the goods are released by the Bureau of Customs,
more than 15 days elapsed from the time that they are delivered to the arrastre service."

WHEREFORE, the instant appeal is dismissed, with costs against appellants.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando and Teehankee, JJ., concur.
Castro and Capistrano, JJ., took no part.

Footnotes

1
The consignee failed to file any claim, written or oral, with respect to the other 11 bales that were not delivered to it,
apparently because they were shipped under a separate invoice. At any rate, these 11 bales are not involved in this case.

2
The goods appear to be identified in the "provisional claim" (pp. 9-10, Appellee's Brief) by means of the name of the carrying
vessel, Reg. No., and B/L No.

3
Filipro, Inc. vs. Manila Port Service and/or Manila Railroad Company, L-25724, October 8, 1968, 25 SCRA 457.

4
Id. citing Liverpool & London & Globe Insurance vs. Manila Port Service, L-23338, Nov. 18, 1967; Tabacalera vs. Manila
Railroad, L-23636, Oct. 31, 1967; Phil. Education Co. vs. Manila Port Service, L-24091, Sept. 20, 1967; Atlantic Mutual
Insurance vs. Manila Port Service, L-21907, April 29, 1966; United Insurance vs. Royal Inter Ocean Lines, L-22688, April 27,
1967; State Bonding Inc. vs. Manila Port Service, L-21833, Feb. 28, 1966; Yu Kimteng Construction Corp. vs. Manila Railroad,
L-17027, Nov. 29, 1965; GSIS vs. Manila Railroad, L-20342, 29, 1965; Bernabe vs. Delgado Brothers, 58 O.G. 1104.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 66253 August 31, 1992

METRO PORT SERVICE, INC. (FORMERLY E. RAZON, INC.), petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT and THE HOME INSURANCE COMPANY, respondents.

De Leon Law Office for petitioner.

Zapa Law Office for private respondent.

NOCON, J.:
This is a petition for review on certiorari seeking the review of the decision dated October 25, 1983 of the respondent Intermediate
Appellate Court and which affirmed the decision of the lower court adjudging petitioner liable, to pay private respondent the sum of
P16,381.97 with interest at the legal rate, the sum of P1,000.00 as attorney's fees and its proportionate share of the costs, as well as
said court's Resolution dated January 12, 1984 which denied petitioner's motion for reconsideration.

The facts of the case are simple enough.

As insurer-subrogee, private respondent instituted Civil Case No. 90186 before the Court of First Instance of Manila, entitled "The
Home Insurance Co. versus Marchessini Lines, Citadel Lines, Inc., and/or E. Razon, Inc. and/or Ajax Customs Brokerage."

The action was to recover from the defendants the amount that private respondent paid American Wire and Cable Co., Inc. (consignee)
under its policy for losses and damages to an insured shipment, the transportation of which was handled by defendants, one after the
other.

The shipment, which was transported from New York to Manila on board the S/S "BURYBATES", consisted of synthetic resins,
insulating materials, machinery and copper wire, contained in several packages. It arrived in Manila on March 18, 1972 and was
discharged dockside unto the care and custody of petitioner, the arrastre operator in the Port of Manila.

At the time of the discharge of the shipment from the carrying vessel, it was noted that said cargo had already sustained shortages and
that some packages were in bad order and damaged condition. So when the shipment was turned over to the petitioner, turn-over
surveys were jointly prepared and accomplished by checkers of both the vessel and the arrastre operator. 1

From March 29 to June 1, 1972, deliveries of the shipment were made by petitioner to the consignee's broker, the defendant Ajax
Customs Brokerage. At this stage of the cargo handling, the shipment had already sustained a shortage of 11 pallets and 28 of the
packages delivered to the broker were already in bad order and damaged condition.

The shortage of 11 pallets was covered by a certificate of delivery 2 issued by petitioner and the 28 bad order packages were covered
by bad order certificates 3 also issued by petitioner.

In the meantime, on March 24, 1972, the consignee presented to petitioner a "provisional" claim for the full value of the shipment.

On September 16, 1972, the consignee submitted to petitioner a "formal" claim for the actual value of the loss sustained by the
shipment.

In the course of the proceedings before the trial court, defendants Marchessini Lines and Citadel Lines settled the claim for the loss
attributed to the vessel. The case, therefore proceeded only against remaining defendants E. Razon, Inc. (now petitioner) and Ajax
Brokerage Corp. who were adjudged liable to plaintiff, now private respondent.

On appeal to the Intermediate Appellate Court, the decision appealed from was affirmed.

Petitioner E. Razon, Inc. manifested before the Court a quo on November 8, 1975 that its liability, if any, should be P16,381.97 — per
private respondent's computations — instead of P19,931.15 as per its own
computations. 4

This was taken into consideration in the Court a quo's decision, thus:

With the view thus taken the next in point of inquiry is the extent of E. Razon's liability in the premises. On this score,
it is noteworthy that said defendant does not seriously dispute that the cargo sustained spillages
and short-delivery while it was in its custody. In fact, by its own computation — and, on the basis of the invoice value
which it correctly claims to be the reckoning point for its liability — it would fix its liability, if found to be so liable, at
P19,930.15. This, significantly, is even much more than the mere P16,381.97 that plaintiff if is claiming from it.
Evidently, therefore, the liability of defendant E. Razon, Inc. for shortages and spillages imputable to it should be
pegged at the latter amount. 5

At any rate, petitioner disclaims any liability due to the fact that private respondent did not file a "formal claim" within 30 days from the
filing of entry on March 20, 1972 6 as the "formal" claim was filed on September 16, 1972. Petitioner disregarded the filing of a
"provisional" claim on March 24, 1972 on the ground that it is not the claim demanded by the Revised Management Contract, 7 which E.
Razon, Inc. as Arrastre Contractor, entered into with the Bureau of Customs on the 27th day of January, 1967.

Private respondent, on the other hand, claims that despite the change introduced in the matter of filing claims, i.e., "formal" claims have
to be filed, the purpose is still the same — to afford the arrastre operator the opportunity to check the validity of the claims.

We find the petition unmeritorious.

The only legal issue to be resolved by this Court is whether under the Revised Management Contract, the words "formal claim" exclude
any "provisional claim".

The Revised Management Contract was the contract applicable as the shipment arrived on March 18, 1967.

Its paragraph . . states:

. . . [B]ut said CONTRACTOR shall not be responsible for the condition of the contents of any package received nor
for the weight, nor for any loss, injury or damage to the said cargo before or while the goods are being received or
remain on the piers or wharves if the loss, injury or damage is caused by force majeure, or other causes beyond the
CONTRACTOR's control, or capacity to prevent or remedy; PROVIDED, that a formal claim together with the
necessary copies of the bill of lading, invoice, certified packing list, bank certificate showing the rate of exchange at
the time of purchase or opening of letter of credit, and the computation arrived at covering the loss, damage, or non-
delivery of such goods shall have been filed with the CONTRACTOR within thirty (30) days from the date of filing of
entry; PROVIDED FURTHER, that if the loss, injury or damage is discovered within the last fifteen (15) days of said
period of thirty (30) days, then the formal claim shall be filed within fifteen (15) days from the date of discovery of the
loss, injury or damage. 8 (Emphasis supplied)

In the case at bar, the shipment in question arrived in Manila on March 18, 1972. 9 The import entry was filed March 20, 1972. 10 The
deliveries of this shipment started March 29, 1972 11 and ended on June 1, 1972. 12 Since the delivery of the last package was made on
June 1, 1972 — 73 days after the filing of the import entry — then a literal compliance under paragraph XX of the Revised Management
Contract would mean that American Wire and Cable Co. (consignee insured by private respondent) had only until April 20, 1972 to file a
"formal claim" for damaged goods. But said ''formal claim'' would cover only goods delivered as of April 20, 1972 — the cost of goods
delivered after said date (Exhs. 69-72, pp. 125-128, Folder of Exhibits) in a damaged condition or lost — would be for the consignee's
own account.

The Court must stress that petitioner Metro Port Service, Inc. is a public utility, discharging functions which are heavily invested with a
public interest. This provision limiting the liability of said petitioner through the imposition of a requirement that a "formal claim" must be
made within thirty (30) days from filing of entry must be carefully scrutinized and reasonably construed so as to protect the legitimate
interest of the public which the public utility must serve. 13 It is the Court's duty to tone down this harsh and unreasonable provision and
give it a reasonable interpretation. 14

The filing by the consignee of this "provisional claim" on March 24,

1972 15 — 4 days after the filing of the entry — is substantial compliance with the demand for a "formal claim" because as of that date
the arrastre operator was given the reasonable opportunity to check the validity of the claim while the facts were still fresh in the minds
of the persons who took part in the transaction and while the pertinent documents were still available. 16 It did not matter that the
provisional claim was for the whole amount of the invoice as a provisional claim — without the value of the goods stated therein — is
sufficient as long as the name of the carrying vessel, its date of arrival and the corresponding bill of lading are attached. 17 Consignee's
"provisional claim" — aside from the entire value of the invoice — had all three other requirements. 18

WHEREFORE, the petition is hereby DISMISSED. The questioned Decision and Resolution of the appellate court are affirmed in toto.
Costs against the petitioner.

SO ORDERED.