G.R. No. 75118 - Sea-Land Service, Inc. vs. Intermediate Appellate Court

On or about January 8, 1981, Sea-Land Service, Inc.—a foreign shipping and forwarding company licensed to operate in the Philippines—received a shipment from Seaborne Trading Company in Oakland, California.
The shipment was consigned to Sen Hiap Hing, the trade name under which Paulino Cue operated his wholesale and retail business in Cebu City.
The shipper did not declare the value of the shipment; hence, no value was indicated in the bill of lading.
The bill of lading described the shipment succinctly as “8 CTNS on 2 SKIDS-FILES” and was prepared without the intervention of the consignee.

Based on volume measurements, Sea-Land charged the shipper a total of US$209.28 for freight and related charges.
The shipment was loaded onboard the MS Patriot, a vessel owned and operated by Sea-Land, for discharge at the Port of Cebu.
The shipment arrived in Manila on February 12, 1981, was discharged into Container No. 310996, and then transferred along with other cargoes to Container No. 40158 near Warehouse 3 at Pier 3 in South Harbor, Manila.

Between February 13 and 16, 1981, after transshipment to Container No. 40158 and while awaiting further shipment to Cebu, the cargo was pilfered and never recovered.
On March 10, 1981, consignee Paulino Cue made a formal claim against Sea-Land for the lost shipment, valuing it at P179,643.48.
Sea-Land offered to settle for US$4,000.00 (or its Philippine peso equivalent of P30,600.00), asserting that its maximum liability was limited by the package limitation clause in the covering bill of lading.

Paulino Cue rejected Sea-Land’s settlement offer and filed a suit for damages in the Court of First Instance of Cebu, Branch X.
After trial, the lower court rendered judgment in favor of Cue, awarding him damages for the lost shipment, unrealized profit, attorney’s fees, and litigation expenses.
The Intermediate Appellate Court affirmed the trial court’s decision in all respects.
Sea-Land subsequently petitioned for review on the ground that its liability should be limited to US$500.00 per package as stipulated in the bill of lading, totaling US$4,000.00 for the eight cartons involved.

The bill of lading contained a package limitation clause, specifically limiting liability to US$500 per package unless a different higher value was declared by the shipper and duly inserted in writing.
This clause was akin to provisions in section 4(5) of the Carriage of Goods by Sea Act, which limits a carrier’s liability to $500 per package, unless otherwise declared.
The controversy centered on whether such stipulations, appearing on the long form of the bill of lading, bind a consignee who later claims loss or damage despite not being a party to the original contract between the shipper and carrier.

Whether the consignee, Paulino Cue, is bound by the limitation of liability clause in the bill of lading that limits Sea-Land’s liability to US$500 per package.
Whether the limitation clause, even though printed in fine print on the bill of lading and possibly only appearing on the long form, is valid and enforceable against the consignee.
Whether the contractual acceptance of the bill of lading by the consignee (either expressly or by conduct) binds him to all stipulations contained therein, despite not participating directly in the contract of carriage.
Whether the transshipment and deviation from the original port of destination affect the enforceability of the liability limitation clause.