Sea Land Services, Inc. v. Intermediate Appellate Court

G.R. No. 75118, 31 August 1987, 153 SCRA 552

FACTS:

On or about January 8, 1981, Sea-Land Service, Inc. (Sea-Land), a foreign shipping and forwarding company licensed to do business in the Philippines, received from Seaborne Trading Company in Oakland, California a shipment consigned to Sen Hiap Hing the business name used by Paulino Cue in the wholesale and retail trade which he operated out of an establishment located on Borromeo and Plaridel Streets, Cebu City. The shipper did not declare the value of the shipmen and no value was indicated in the bill of lading. The bill described the shipment only as “8 CTNS on 2 SKIDS-FILES.”

The shipment arrived in Manila on February 12, 1981, and there discharged into the custody of the arrastre contractor and the customs and port authorities. Sometime between February 13 and 16, 1981, after the shipment had been transferred near Warehouse 3 at Pier 3 in South Harbor, Manila, awaiting trans-shipment to Cebu, it was stolen by pilferers and has never been recovered. On March 10, 1981, Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to P179,643.48. Sea-Land offered to settle for US$4,000.00, or its then Philippine peso equivalent of P30,600.00, asserting that said amount represented its maximum liability for the loss of the shipment under the package limitation clausein the covering bill of lading. Cue rejected the offer and thereafter brought suit for damages against Sea-Land in the then Court of First Instance of Cebu.

The trial court rendered judgment in favor of Cue, sentencing Sea-Land to pay him P186,048.00 representing the Philippine currency value of the lost cargo, P55,814.00 for unrealized profit with one (1%) percent monthly interest from the filing of the complaint until fully paid, P25,000.00 for attorney’s fees and P2,000.00 as litigation expenses. The Intermediate Appellate Court affirmed said decision.

ISSUE:

Whether or not the “package limitation clause,” a stipulation limiting the liability of the carrier for loss and damage to the shipment to the amount fixed in the bill of lading, is valid and binding against the shipper and the consignee in view of the shipper’s failure to declare the actual value of the shipment.

HELD:

Yes. There is nothing in the Civil Code which absolutely prohibits agreements between shipper and carrier limiting the latter’s liability for loss of or damage to cargo shipped under contracts of carriage. The Civil Code in fact has agreements of such character in contemplation in providing, in its Articles 1749 and 1750, that:
ART. 1749 A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
ART. 1750. 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.

Here, the just and reasonable character of the questioned stipulation is implicit from the fact that the shipper or owner is given the option under Article 1749 of avoiding accrual of liability limitation by simply declaring the nature and value of the shipment in the bill of lading. Also, the shipper here did not complain of having been “rushed,” imposed upon or deceived in any significant way into agreeing to ship the cargo under a bill of lading carrying such a stipulation; therefore, there is no ground to assume that its agreement to the said stipulation was not freely and fairly sought and given.

Furthermore, since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of petitioner Sea-Land to the respondent consignee while governed primarily by the Civil Code may suppletorily be governed, in all matters not determined thereby, by the Code of Commerce and special laws. One of these suppletory special laws is the Carriage of Goods by Sea Act (COGSA) and Sec. 4(5) of the said act provides that:
“Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.”

Therefore, there can be no doubt or equivocation about the validity and enforceability of freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said contract or bill. This pro position, moreover, rests upon an almost uniform weight of authority.

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

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