G.R. No. 88092, 25 April 1990, 184 SCRA 544


Petitioner Citadel Lines, Inc. (carrier) is the general agent of the vessel Cardigan Bay/Strait Enterprise. Respondent Manila Wine Merchants, Inc. (consignee) is the importer of the subject shipment of Dunhill cigarettes from England. On March 17, 1979, the vessel loaded on board at England 180 Filbrite cartons of mixed British manufactured cigarettes. The shipment arrived at the Port of Manila Pier in container vans received by E. Razon Inc (arrastre). Due to lack of space, the representatives of the carrier kept the cigarettes in containers, padlocked and sealed. The next morning, the head checker of the carrier discovered that 90 cases of imported British manufactured cigarettes were missing.

The consignee sought to recover from the carrier the market value of the missing cargoes in the amount of Php 315,000 but the carrier argued that the arrastre operator should be held liable as the incident occurred in an area absolutely under the control of the latter. The trial court rendered a decision exonerating the ARRASTRE of any liability on the ground that the subject container van was not formally turned over to its custody, and adjudging the CARRIER liable for the principal amount of P312,480.00 representing the market value of the lost shipment, and the sum of P30,000.00 as and for attorney’s fees and the costs of suit. The court of Appeals affirmed the decision of the court a quo but deleted the award of attorney’s fees and costs of suit.


1. Whether the loss occurred while the cargo in question was in the custody of Citadel Lines

2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee


1. Yes. On the basis of the evidence presented, further bolstered by the testimonies of Citadel’s Claims Manager and Head Checker, 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 having been no formal turnover of the cargo to the arrastre. Considering, therefore, that the subject shipment was lost while it was still in the custody of herein petitioner carrier, and considering further that it failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion is that the carrier was negligent and should be held liable therefor.

2. Yes. Basic is the rule, long since enshrined as a statutory provision, 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. The consignee itself admitted in its memorandum that the value of the goods shipped does not appear in the bills of lading. Hence, the stipulation on the carrier’s limited liability applies.

The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the CARRIER’s liability amounts to only US$4,467.60.
WHEREFORE, the judgment of respondent court is hereby MODIFIED and petitioner Citadel Lines, Inc. is ordered to pay private respondent Manila Wine Merchants, Inc. the sum of US$4,465.60. or its equivalent in Philippine currency at the exchange rate obtaining at the time of payment thereof. In all other respects, said judgment of respondent Court is AFFIRMED.

*Case digest by Russel Vinvent T. Saracho, LLB-IV, Andres Bonifacio Law School, SY 2018-2019