Myline Cordial

Citadel Lines, Inc. vs Court of Appeals and Manila Wine Merchants, Inc.
G.R. No. 88092, April 25, 1990
184 SCRA 544

FACTS:
Parties
Carrier – Citadel Lines, Inc., general agent of the vessel
Consignee – Manila Wine Merchants, Inc.
Arrastre – E. Razon, Inc. (later known as Metro Port Service, Inc.)

Consignee imported Dunhill cigarettes from England. The shipment evidenced by a bill of lading was loaded on board the vessel Cardigan Bay/Strait Enterprise for carriage to Manila. The value of the goods shipped does not appear in the bills of lading.

The shipment arrived in container van which was received by the arrastre under a cargo receipt. Twelve days later, the container van, which contained two shipments was stripped. One shipment was delivered and the other shipment consisting of the imported British manufactured cigarettes was palletized. Due to lack of space at the Special Cargo Coral, the said cigarettes were placed in two containers (2 pallets in original container and the other 4 in another container). These two containers were duly padlocked and sealed by the representative of the carrier. The next day, it was discovered that the contents of the other container were missing.

The consignee filed a complaint demanding for payment of the value of the lost goods against the carrier and the arrastre but said claim was denied.

RTC’s decision: Carrier was liable but exonerated the arrastre of any liability on the ground that the subject container van was not formally turned over to its custody.

CA’s decision: Affirmed the decision of the lower court.

ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of the arrastre or of the carrier; and
2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee.

RULING:
1. The loss occurred while the cargo was in the custody of the carrier. The evidence showed that the subject cargo which was placed in a container van, padlocked and sealed by the representative of the carrier was still in its possession and control when the loss occurred. There was no formal turnover of the cargo to the arrastre.
Note that when cargo is lost, destroyed or damaged, the carrier is presumed at fault or negligent. If the carrier fails to prove that the loss was due to an excepted cause, then the carrier is negligent and should be held liable therefor.

2. An stipulation, as long as it is just and reasonable, limiting the liability of the carrier contained in the bill of lading is binding on the consignee.
The award of damages is modified by the Court based on the provision of the bill of lading. Clause 6 of the bills of lading issued by the carrier limits its liability to $2.00 per kilo. The consignee admits that the value of the goods shipped does not appear in the bills of lading so the stipulation of the carrier’s limited liability applies. Basic is the rule that a stipulation limiting the liability of the carrier to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Further, a contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

NOTES:
Presumption of fault or negligence of common carrier
Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. If the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extra ordinary diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence required by law. And, its extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has the right to receive them.

Full text: Citadel Lines, Inc. vs CA G.R. No. 88092, April 25, 1990 184 SCRA 544