Citadel Lines v. Court of Appeals

Summary

This case involves the liability of Citadel Lines, Inc. as common carrier for 90 missing cartons of Dunhill cigarettes worth P312,480.00 during transportation from England to Manila in 1979. The Supreme Court affirmed the carrier's liability, finding that the cargo was lost while still in the carrier's custody since it was never formally turned over to the arrastre operator E. Razon, Inc. The Court applied Civil Code provisions requiring extraordinary diligence from common carriers and the presumption of negligence when goods are lost. However, the Court significantly reduced damages from P312,480.00 to US$4,467.60 based on the limitation of liability clause in the bills of lading restricting carrier liability to $2.00 per kilogram. The decision established that such contractual limitations are valid when they are just, reasonable, and fairly agreed upon, giving shippers the option to declare higher values.