TRANSPO DEC.

4, 2014

!
!

proximate and only cause. And that aside

STIPULATIONS LIMITING LIABILITY; ART.

1744-1750

from that, they must show that no

negligence intervened which may have

As we have discussed last meeting, Article

caused the loss, destruction or deterioration

1732 provides for who common carriers are

of the goods. Otherwise, if negligence

and that in case of loss there is a

intervened , the common carrier cannot

presumption that the common carriers are

exempt itself from liability. Again, even if the

negligent and are at fault because by the

common carrier has already proven that the

nature of their business the law provides

exempting circumstance is the only and

that they should exercise extraordinary

proximate cause, it has to also further prove

diligence.

that

So, 1734 provides for the exempting

goods. When? before, during, or after the

circumstances, while the law establishes

happening of the said circumstances. That

that presumption of negligence on the part

could exculpate the common carrier from

of the common carriers, the law also

liability. and also, the common carrier

provides for provision that the common

should not be in delay. Because of the

carrier can rebut the presumption to prove

common carrier is already in delay, he can

that the loss or the deterioration of the

no longer may hide behind any of the

goods were caused by natural disaster, or

exempting circumstances available to it.

by force majeure or

by an act competent

However we said that the law provides for

authority, as enumerated under 1734 and

stringent rules governing common carriers.

that enumeration is exclusive but which the

The civil code provides for a situation where

exemption includes as declared under the

parties to a contract of carriage of goods

SC and also provided under the rules, that

can agree to limit their liability for the

hijacking must be accompanied with grave

deterioration, destruction, or loss of the

irresistible force to be considered as an

goods to a degree less than extraordinary

exempting circumstance. However, while

provided that it is reasonable, just and not

the common carrier is allowed or can

contrary to public policy as provided under

exempt itself under any of the

1744 and 1750.

they had exercised due diligence to

prevent the minimize further loss of the

circumstances provided under 1734, that

common carrier must have to show proof
not only the existence of the exempting
circumstance and that they had exercised

!
! !
!

extraordinary diligence but also prove that

the exempting circumstance be the

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

Article 1744. A stipulation between the

common carrier and the shipper or
owner limiting the liability if the
former for the loss, destruction, or
deterioration of the goods to a degree
less than the extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or

!!
!
Q: Now what do you understand by
the second requirement, supported by
a valuable consideration other than
the service rendered by the common
carrier?

owner;
A: This part of the provision means
(2) Supported by a valuable

that the common carrier should pay

consideration other than the service

the shipper for purposes of reducing

rendered by the common

the liability in case of a loss.

carrier;

and
Q: So what would be the basis there?
(3) Reasonable, just and not contrary to

What do you mean pay? What would

public policy.

be the basis of the payment?

Belgian Overseas Chartering &

A: The bill of lading.

Shipping et.,al. vs. Philippine First

Insurance Co., Inc

Q: No, What does the shipper have to

do? Because remember it has to be

Q: What was provided under the bill of

supported by a valuable consideration.

lading? Why was the provision under

What would be the basis of that

the bill of lading serve as basis? What

consideration? Consideration is the

was that the reason? They are saying

payment right? Payment for what?

that the liability should to exceed under

Okay if you ship something very

that was provided under the bill of

expensive, something that is very

lading. What was provided under the

mahal and you send it through a

bill of lading?

shipping company, how would you

have the assurance that you will be

A: Under the bill of lading, it is provided

paid wight the goods that you have

that. Because under the law, that under

sent? What do you need to declare?

the bill of lading that the liability.

A: The value of the cargo.
Q: What does Article 1744 provide?
A: <refer o provision.

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

Q: Okay, the value of the cargo, of

liability in the absence of a

the goods. Because that will be the

declaration of a higher value of the

basis of the payment of the charges

goods by the shipper in the bill of

or the freight. For instance, the value

lading. If there is no stipulation in the

of cargo is P1M, accordingly you will

respective bills of lading limiting the

have to pay a valuable consideration

carriers liability for the loss or

for the value of the cargo.

destruction of the goods nor is there

Q: Why is is important to declare the

value of the cargo to the common
carrier here? What is the rationale
here?
A: It is important for the shipper to
declare the value of the goods to be
shipped in order for the carrier to be
apprised(?) with respect to the value
of the goods and that in case of their
loss for the value declared by the
shipper is binding.
CF: Article 1749. A stipulation that the
common carriers liability is limited to
the value of the goods appearing in
the bill of lading, unless the shipper
or owner declares a higher value, is
binding.
It is to be noted that the Civil Code
does not itself limit the liability of the
common carrier to a fixed amount per
package although the Code
expressly permits a stipulation
limiting such liability. The COGSA
which is suppletory to the provisions
of the Civil Code establishes a
statutory provision limiting the carrier

a declaration of higher value of the

goods, the carriers liability should
not exceed $500 per package, or its
per equivalent at the time of payment
of the value of the goods lost, but in
no case more than the amount of the
damages sustained. (EASTERN
SHIPPING LINES, INC. v. IAC)
*If the shipper did not declare higher
valuation, it had itself to blame for not
complying with the stipulations.
(Chavez, Transportation Laws)
For any cargo, there is an insurance,
also for the benefit of the carrier. So
on the basis of the value as declared
by the carrier because if the shipper
did not declare any value higher than
that found in the bill of lading, the bill
of lading also provides for a
stipulation limiting the liability.
Q: Why was that the common
carriers contention? saying that
there is a stipulation of limitation of
liability found also in the bill of lading,
which is how much?
A: $500incorporated in the bill of
lading.

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

Atty. V: So in this case, that is why

Q: Can the letter of credit be used as

the common carrier is saying that it

basis to claim damages for the value

cannot be liable beyond $500. SO

of the goods?

why was that the argument of the

common carrier?

A: In this case, the SC held that the

letter of credit attached to the bill of

A: It is provided for in the COGSA,

lading may NOT be the basis for

Carriage of Goods Sea Act that the

claim of damages for the value of the

liability of the carrier be limited to

goods lost. However, if it was

$500 in the absence of a declaration

stipulated in the bill of lading that the

of a value higher than that, which is

value of the goods is that provided for

the value of the goods.

in the letter of credit, then can it only

Q: What was the claim of the

shipper? How much was the value of
the goods as she (the shipper)
claims?
A: She claimed that the value of the
goods is more than $500 specifically
P 500,000.

be used as a basis for claim of

damages. In absence of such
stipulation, the provisions of COGSA
limiting the liability of the carrier to
$500 applies. Moreover, in this case
the SC noted that the letter of credit
was between the shipper and the
bank, which the carrier is not a party
to. And that if indeed it was the

Q: What was the basis of that value

intention between the parties (carrier

(which is P 500K) being claimed by

and shipper) to use said letter of

the shipper here?

credit as the declaration for the value

of the goods, the carrier would have

A: It is based on the letter of credit

imposed a higher charge due to the

presented by the shipper which was

higher value of the goods accdg. to

attached to the bill of lading.

the letter of credit, the carrier would

have asked the shipper to pay a
higher amount in consideration of the
value found in therein. Hence, failure
of the shipper to declare said value in
the bill of lading, the shipper cannot
claim damages for the goods valued
on the letter of credit. Petitionershipper is only liable for $500

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

Q: Insofar as stipulation limiting

in the Bill of Lading is taken from the

liability here, to what extent should

COGSA. Since there is no provision on the

the common carrier be liable? What

package limitation found in the Civil Code

is the extent of the liability here if the

and in the Code of Commerce. Therefore,

letter of credit cannot be used as

that specific COGSA provision is

credit for the value of the goods?

incorporated in all the Bill of Ladings in

shipping companies as taken from Sec.4,

A: In this case maam, as to the

Article 5 of the COGSA.

extent of the liability of the common

carrier here, the provisions under

So also take note, that the agreement with

COGSA should be applied which

respect to the stipulation of liabilities

provides that the liability should not

between the parties is premised on the

exceed $500 per package.

freedom of choice between the parties

which is why it must be:

Q: Per package, so how many

packages are there? In this case they
were not packaged right? What was
used?

(1) in writing
(2) supported by a valuable
consideration other then the services

A: Yes maam. the steel sheets were

rendered by the

in coils.

common carrier

So in this case as they were not packaged,

the entire cargo here is considered as the
package in which case the common carrier
can only be label to a maximum of $500.

(3) it must be reasonable, just and

not contrary to public policy
The validity and enforceability of a
stipulation limiting the liability of a carrier to
an agreed valuation as provided for under
Article 1749 & 1750 is anchored on the free

Take note that while we said earlier on the

and unhampered exercise in the shippers

matters of the applicability of the provisions

will in consenting to it. There must be no

of the Civil Code vis a vis the COGSA,

vitiation of consent on the part of the

Carriage of Goods by Sea Act that in all

shipper. But of course under the rules, if the

matters not regulated by the civil code

carrier enjoys monopoly, as when there is

provisions then the provisions of the Code

no other carrier for that particular

of Commerce and the COGSA be applicable

destination, that will be considered by the

suppletorily. So based on this the package

court in determining whether the stipulation

limitation as provided, which is incorporated

limiting the liability is reasonable, just and

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

not contrary to public policy. That fact of

packages inside that container van. Anyway,

monopoly, the shipper has no other choice

what is the case of Edgar Cokaliong

but to hire that shipper and, if for instance,

Shipping Lines, Inc. v. UCPB?

the carrier would refuse to ship the goods

on account that the shipper must pay to a

EDGAR COKALIONG SHIPPING

certain value he charges or agree to the

LINES, INC. v. UCPB

carriers own stipulations, then the shipper

can have that stipulation annulled by the
Courts.
Article 1749. A stipulation that the

Q: Who are the parties here? Who is

Feliciano Legaspi?
A: She is the owner of the goods
insured by respondent UCPB.

common carriers liability is limited to

Q: And who is Angelia and Mercado?

the value of the goods appearing in the

A: Angelia and Mercado were the

buyers of the Christmas decors owned
or supplied by Feliciano Legaspi.

bill of lading, unless the shipper or

owner declares a higher value, is
binding.

Q: So separately Angelia and Mercado

Article 1750. Article 1750. A contract

cargos that they purchased from

fixing the sum that may be recovered.

legaspi right? So maybe this was a debt

by the owner or shipper for the loss,

or credit because why would Legaspi

destruction, or deterioration of the

insure itanyway, two different bill of

goods is valid, if it is reasonable and

ladings were issued to Angelia and

just under the circumstances, and has

Mercado and the value was based or

been fairly and freely agreed upon.

each declared by them. How much is

shipped their respective goods or

the total Angelia declared? And

However, on this package limitation rule,

Mercado?

which is $500 per package, the ruling of the

court varies. Does the package mean by
100 boxes is to 1 package? Is it one
container ? or is it the number of packages
inside a container be considered as basis?
So would that mean that if there are 100
boxes inside the container van would that

A: P 6,500 by Angelia and P 14,000 by

Mercado in separate bill of lading.
Q: So on the other hand, Legaspi
insured the two bill of ladings for a total
of?
A: P 110, 000 and P 60,000.

mean $500 x 100 boxes? There are other

rulings of the SC that the entire van is
considered as one package without taking
to consideration the actual number of
This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.

TRANSPO DEC. 4, 2014

Q: Who is the respondent?

A: UCPB, the insurer.
Q: What was the basis for the loss?
Why was the goods lost?
A: The fire that ensued in one of the
engine rooms which resulted to the
destruction and loss o the goods due to
the negligence of the ships crew.
Q: What was the basis for the loss?
Why was the goods lost?
A: The fire that ensued in one of the
engine rooms which resulted to the
destruction and loss o the goods due to
the negligence of the ships crew.
Q: What was the ruling of the SC? Did it

Q: So as to the second issue, what is

the extent of liability of the common
carrier?
A: As to the second issue, the records
show that the bill of lading covering the
loss of goods or damage the liability
shall not exceed the value of the goods
written in the bill of lading.
Q: Okay so what was the amount in bill
of lading?
A: As to Angelia P 6,500. As to Mercado
P 14,000.

consider the fire to be force majuere to

exempt it from liability?
A: No. Contrary to petitioner-carriers
contention that there was force
majuere, the SC is not persuaded. It
was said that the cause of the fire was
due to the lack of attention or the
negligence of the officers of the ship.
Hence, the carrier cannot exempt itself
from liability. Moreover, the SC ruled
that the existence of fire itself is not
considered as a fortuitous event based
on the ruling on Eastern Shipping Lines
v. IAC.

!
!

This document is for INTELLIGENT TRANSCRIBERS WHO ARE NOT DULL AND LAZY.