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stipulation that limits liability is valid as long as it is not

against public policy. In Everett Steamship Corporation v.
Court of Appeals the Court stated: “A stipulation in the bill of
lading limiting the common carrier’s liability for loss or
destruction of a cargo to a certain sum, unless the shipper or
owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code.
706 SUPREME COURT REPORTS ANNOTATED
Same; Same; Same; Same; Petitioner should not be held
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
liable for more than what was declared by the
General Insurance Company, Inc.
shippers/consignees as the value of the goods in the bills of
* lading.—In Aboitiz Shipping Corporation v. Court of Appeals,
G.R. No. 146018. June 25, 2003. the description of the nature and the value of the goods
shipped were declared and reflected in the bill of lading, like
EDGAR COKALIONG SHIPPING LINES, INC., in the present case. The Court therein considered this
petitioner, vs. UCPB GENERAL INSURANCE declaration as the basis of the carrier’s liability and ordered
COMPANY, INC., respondent. payment based on such amount. Following this ruling,
petitioner should not be held liable for more than what was
Civil Law; Damages; Force Majeure; Broadly speaking, declared by the shippers/consignees as the value of the goods
force majeure generally applies to a natural accident, such as in the bills of lading.
that caused by a lightning, an earthquake, a tempest or a
public enemy.—Having originated from an unchecked crack _______________
in the fuel oil service tank, the fire could not have been
* THIRD DIVISION.
caused by force majeure. Broadly speaking, force majeure
generally applies to a natural accident, such as that caused 707
by a lightning, an earthquake, a tempest or a public enemy.
Hence, fire is not considered a natural disaster or calamity.
VOL. 404, JUNE 25, 2003 707
Same; Same; Negligence; Common Carriers; A common
carrier is presumed to have been negligent if it fails to prove Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
that it exercised extraordinary vigilance over the goods if General Insurance Company, Inc.
transported.—The law provides that a common carrier is
presumed to have been negligent if it fails to prove that it PETITION for review on certiorari of the Court of
exercised extraordinary vigilance over the goods it Appeals.
transported. Ensuring the seaworthiness of the vessel is the
first step in exercising the required vigilance. Petitioner did The facts are stated in the opinion of the Court.
not present sufficient evidence showing what measures or           Gutierrez, Sundiam, Villanueva & Doronila for
acts it had undertaken to ensure the seaworthiness of the petitioner.
vessel.           Linsangan, Linsangan, Linsangan Law Offices
for respondent.
Same; Same; Same; Same; A stipulation that limits
liability is valid as long as it is not against public policy.—A PANGANIBAN, J.:
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The liability of a common carrier for the loss of goods Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
may, by stipulation in the bill of lading, be limited to General Insurance Company, Inc.
the value declared by the shipper. On the other hand,
the liability of the insurer is determined by the actual On the other6 hand, the disposition of the Regional
7
value covered by the insurance policy and the Trial Court’s Decision, which was later reversed by
insurance premiums paid therefor, and not necessarily the CA, states:
by the value declared in the bill of lading.
“WHEREFORE, premises considered, the case is hereby
DISMISSED8 for lack of merit.
The Case “No cost.”
1
Before the Court is a Petition for Review under Rule
45 of the Rules of Court,2
seeking to set aside the
August 31,3 2000 Decision and the 4November 17, 2000 The Facts
Resolution of the Court of Appeals (CA) in CA-GR SP
The facts of the case are summarized by the appellate
No. 62751. The dispositive part of the Decision reads:
court in this wise:
“IN THE LIGHT OF THE FOREGOING, the appeal is
“Sometime on December 11, 1991, Nestor Angelia delivered
GRANTED. The Decision appealed from is REVERSED.
to the Edgar Cokaliong Shipping Lines, Inc. (now Cokaliong
[Petitioner] is hereby condemned to pay to [respondent] the
Shipping Lines), [petitioner] for brevity, cargo consisting of
total amount of P148,500.00, with interest thereon, at the
one (1) carton of Christmas decor and two (2) sacks of plastic
rate of 6% per annum, from date of this Decision of the
toys, to be transported on board the M/V Tandag on its
Court. [Respondent’s] claim for attorney’s fees [is]5
Voyage No. T-189 scheduled to depart from Cebu City, on
DISMISSED. [Petitioner’s] counterclaims are DISMISSED.”
December 12, 1991, for Tandag, Surigao del Sur. [Petitioner]
The assailed Resolution denied petitioner’s Motion for issued Bill of Lading No. 58, freight prepaid, covering the
Reconsideration. cargo. Nestor Angelia was both the shipper and consignee of
the cargo valued, on the face thereof, in the amount of
P6,500.00. Zosimo Mercado likewise delivered cargo to
_______________
[petitioner], consisting of two (2) cartons of plastic toys and
1 Rollo, pp. 10-34. Christmas decor, one (1) roll of floor mat and one (1) bundle
2 Id., pp. 36-60. of various or assorted goods for transportation thereof from
3 Id., p. 62. Cebu City to Tandag, Surigao del Sur, on board the said
4 First Division. Penned by Justice Romeo J. Callejo, Sr. (now a vessel, and said voyage. [Petitioner] issued Bill of Lading No.
member of this Court) and concurred in by Justices Salome A. 59 covering the cargo which, on the face thereof, was valued
Montoya (Division chair) and Martin S. Villarama (member). in the amount of P14,000.00. Under the Bill of Lading,
5 Assailed Decision, p. 7; Rollo, p. 36. Zosimo Mercado was both the shipper and consignee of the
cargo.
708 “On December 12, 1991, Feliciana Legaspi insured the
cargo, covered by Bill of Lading No. 59, with the UCPB
708 SUPREME COURT REPORTS ANNOTATED General Insurance Co., Inc., [respondent] for brevity, for the
amount of P100,000.00 “against all risks’ under Open Policy
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No. 002/91/254 for which she was issued, by [respondent], covered by Bill of Lading No. 58. She submitted to
Marine Risk Note No. 18409 on said date. She also insured [respondent] a Receipt, dated December 11, 1991 and Order
the cargo covered by Bill of Lading No. 58, with [respondent], Slips, purportedly signed by Nestor Angelia for the goods he
for the amount of P50,000.00, under Open Policy No. received from Feliciana Legaspi valued at P60,338.00.
002/91/254 on the basis of which [respondent] issued [Respondent] approved her claim and remitted to Feliciana
Marine Risk Note No. 18410 on said date. Legaspi the net amount of P49,500.00, after which she signed
“When the vessel left port, it had thirty-four (34) a Subrogation Receipt/Deed, dated March 9, 1992, in favor of
passengers and assorted cargo on board, including the goods [respondent].
of Legaspi. After the vessel had passed by the Mandaue- “On July 14, 1992, [respondent], as subrogee of Feliciana
Mactan Bridge, fire ensued in the engine room, and, despite Legaspi, filed a complaint anchored on torts against
earnest efforts of the officers and crew of the vessel, the fire [petitioner], with the Regional Trial Court of Makati City, for
the collection of the total principal amount of P148,500.00,
_______________ which it paid to Feliciana Legaspi for the loss of the cargo,
praying that judgment be rendered in its favor and against
6 Branch 146, Makati City.
the [petitioner] as follows:
7 Penned by Judge Salvador S. Tensuan.
8 RTC Decision, p. 4; Rollo, p. 66. ‘WHEREFORE, it is respectfully prayed of this Honorable Court
that after due hearing, judgment be rendered ordering [petitioner]
709 to pay [respondent] the following.

1. Actual damages in the amount of P148,500.00 plus interest

VOL. 404, JUNE 25, 2003 709
thereon at the legal rate from the time of filing of this
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General complaint until fully paid;
Insurance Company, Inc.
2. Attorney’s fees in the amount of P10,000.00; and
3. Cost of suit.
engulfed and destroyed the entire vessel resulting in the loss
of the vessel and the cargoes therein. The Captain filed the
‘[Respondent] further prays for such other reliefs and remedies
required Marine Protest.
as this Honorable Court may deem just and equitable under the
“Shortly thereafter, Feliciana Legaspi filed a claim, with
premises.’
[respondent], for the value of the cargo insured under Marine
Risk Note No. 18409 and covered by Bill of Lading No. 59. “[Respondent] alleged, inter alia, in its complaint, that the
She submitted, in support of her claim, a Receipt, dated cargo subject of its complaint was delivered to, and received
December 11, 1991, purportedly signed by Zosimo Mercado, by, [petitioner] for transportation to Tandag, Surigao del Sur
and Order Slips purportedly signed by him for the goods he under Bill of Ladings,’ Annexes ‘A’ and ‘B’ of the complaint;
received from Feliciana Legaspi valued in the amount of that the loss of the cargo was due to the negligence of the
P110,056.00. [Respondent] approved the claim of Feliciana [petitioner]; and that Feliciana Legaspi had executed
Legaspi and drew and issued UCPB Check No. 612939, dated Subrogation Receipts/Deeds in favor of [respondent] after
March 9, 1992, in the net amount of P99,000.00, in paying to her the
settlement of her claim after which she executed a
Subrogation Receipt/Deed, for said amount, in favor of 710
[respondent]. She also filed a claim for the value of the cargo

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710 SUPREME COURT REPORTS ANNOTATED Marketing filed claims for the values of the goods under Bills
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General of Lading Nos. 58 and 59 in behalf of the
Insurance Company, Inc. shippers/consignees, Nestor Angelia and Zosimo Mercado;
[petitioner] was able to ascertain, from the
value of the cargo on account of the Marine Risk Notes it shippers/consignees and the representative of the Legaspi
issued in her favor covering the cargo. Marketing that the cargo covered by Bill of Lading No. 59
“In its Answer to the complaint, [petitioner] alleged that: was owned by Legaspi Marketing and consigned to Zosimo
(a) [petitioner] was cleared by the Board of Marine Inquiry of Mercado while that covered by Bill of Lading No. 58 was
any negligence in the burning of the vessel; (b) the complaint purchased by Nestor Angelia from the Legaspi Marketing;
stated no cause of action against [petitioner]; and (c) the that [petitioner] approved the claim of Legaspi Marketing for
shippers/consignee had already been paid the value of the the value of the cargo under Bill of Lading No. 59 and
goods as stated in the Bill of Lading and, hence, [petitioner] remitted to Legaspi Marketing the said amount under
cannot be held liable for the loss of the cargo beyond the Equitable Banking Corporation Check No. 20230486 dated
value thereof declared in the Bill of Lading. August 12, 1992, in the amount of P14,000.00 for which the
“After [respondent] rested its case, [petitioner] prayed for representative of the Legaspi Marketing signed Voucher No.
and was allowed, by the Court a quo, to take the depositions 4379, dated August 12, 1992, for the said amount of
of Chester Cokaliong, the Vice-President and Chief P14,000.00 in full payment of claims under Bill of Lading
Operating Officer of [petitioner], and a resident of Cebu City, No. 59; that [petitioner] approved the claim of Nestor Angelia
and of Noel Tanyu, an officer of the Equitable Banking in the amount of P6,500.00 but that since the latter owed
Corporation, in Cebu City, and a resident of Cebu City, to be Chester Marketing, Inc., for some
given before the Presiding Judge of Branch 106 of the
711
Regional Trial Court of Cebu City. Chester Cokaliong and
Noel Tanyu did testify, by way of deposition, before the Court
and declared inter alia, that: [petitioner] is a family VOL. 404, JUNE 25, 2003 711
corporation like the Chester Marketing, Inc.; Nestor Angelia Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General
had been doing business with [petitioner] and Chester Insurance Company, Inc.
Marketing, Inc., for years, and incurred an account with
Chester Marketing, Inc. for his purchases from said purchases, [petitioner] merely set off the amount due to
corporation; [petitioner] did issue Bills of Lading Nos. 58 and Nestor Angelia under Bill of Lading No. 58 against his
59 for the cargo described therein with Zosimo Mercado and account with Chester Marketing, Inc.; [petitioner]
Nestor Angelia as shippers/consignees, respectively; the lost/[misplaced] the original of the check after it was received
engine room of the M/V Tandag caught fire after it passed by Legaspi Marketing, hence, the production of the microfilm
the Mandaue/Mactan Bridge resulting in the total loss of the copy by Noel Tanyu of the Equitable Banking Corporation;
vessel and its cargo; an investigation was conducted by the [petitioner] never knew, before settling with Legaspi
Board of Marine Inquiry of the Philippine Coast Guard which Marketing and Nestor Angelia that the cargo under both
rendered a Report, dated February 13, 1992 absolving Bills of Lading were insured with [respondent], or that
[petitioner] of any responsibility on account of the fire, which Feliciana Legaspi filed claims for the value of the cargo with
Report of the Board was approved by the District [respondent] and that the latter approved the claims of
Commander of the Philippine Coast Guard; a few days after Feliciana Legaspi and paid the total amount of P148,500.00
the sinking of the vessel, a representative of the Legaspi to her; [petitioner] came to know, for the first time, of the

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payments by [respondent] of the claims of Feliciana Legaspi 712 SUPREME COURT REPORTS ANNOTATED
when it was served with the summons and complaint, on
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
October 8, 1992; after settling his claim, Nestor Angelia x x x General Insurance Company, Inc.
executed the Release and Quitclaim, dated July 2, 1993, and
Affidavit, dated July 2, 1993 in favor of [respondent]; hence,
This is so because, in the first place, the goods were
[petitioner] was absolved of any liability for the loss of the
insured with the [respondent] for the total amount of
cargo covered by Bills of Lading Nos. 58 and 59; and even if
P150,000.00, which amount may be considered as the
it was, its liability should not exceed the value of the cargo as 11
face value of the goods.”
stated in the Bills of Lading. 12
Hence this Petition.
“[Petitioner] did not anymore 9
present any other witnesses
on its evidence-in-chief, x x x” (Citations omitted)
Issues

Petitioner raises for our consideration the following

Ruling of the Court of Appeals
alleged errors of the CA:
The CA held that petitioner had failed “to prove that
“I
the fire which consumed the vessel and its cargo was
caused by something other than its negligence in10 the “The Honorable Court of Appeals erred, granting arguendo
upkeep, maintenance and operation of the vessel.” that petitioner is liable, in holding that petitioner’s liability
Petitioner had paid P14,000 to Legaspi Marketing should be based on the ‘actual insured value’ of the goods and
for the cargo covered by Bill of Lading No. 59. The CA, not from actual valuation declared by the shipper/consignee
however, held that the payment did not extinguish in the bill of lading.
petitioner’s obligation to respondent, because there
was no evidence that Feliciana Legaspi (the insured) “II
was the owner/proprietor of Legaspi Marketing. The
CA also pointed out the impropriety of treating the “The Court of Appeals erred in not affirming the findings
claim under Bill of Lading No. 58—covering cargo of the Philippine Coast Guard, as sustained by the trial court
valued therein at P6,500—as a setoff against Nestor a quo, holding that the cause of loss of the aforesaid cargoes
Angelia’s account with Chester Enterprises, Inc. under Bill of Lading Nos. 58 and 59 was due to force majeure
Finally, it ruled that respondent “is not bound by and due diligence was [exercised] by petitioner prior to,
the valuation of the cargo under the Bills of Lading, x x during and immediately after the fire on [petitioner’s] vessel.
x nor is the value of the cargo under said Bills of “III
Lading conclusive on the [respondent].
“The Court of Appeals erred in not holding that
_______________ respondent UCPB General 13
Insurance has no cause of action
against the petitioner.”
9 Assailed Decision, pp. 1-5; Rollo, pp. 36-40; emphases in original.
10 Id., pp. 12 & 47. In sum, the issues are: (1) Is petitioner liable for the
loss of the goods? (2) If it is liable, what is the extent of
712 its liability?

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room walling, thus precluding constant inspection and

care by the crew.
This Court’s Ruling Having originated from an unchecked crack in the
The Petition is partly meritorious. fuel oil service tank, the fire could not have been
caused by force majeure. Broadly speaking, force
majeure generally applies to a natural accident, such
_______________
as that caused by a lightning, 14
an earthquake, a
11 Id., pp. 23 & 58. tempest or a public enemy. Hence, fire is not
12 The case was deemed submitted for decision on September 24, considered a natural disaster or calamity. In Eastern15

2001, upon receipt by this Court of respondent’s Memorandum, Shipping Lines, Inc. v. Intermediate Appellate Court,
which was signed by Atty. Bernard D. Sy. Petitioner’s Memorandum, we explained:
signed by Atty. Melvyn S. Florencio, was received by this Court on
“x x x. This must be so as it arises almost invariably from
August 31, 2001.
some act of man or by human means. It does not fall within
13 Petitioner’s Memorandum, pp. 12-13; Rollo, pp. 134-135.
the category of an act of God unless caused by lighting or by
Original in upper case.
other natural disaster or calamity. It may even be caused by
713 the actual fault or privity of the carrier.
“Article 1680 of the Civil Code, which considers fire as an
extraordinary fortuitous event refers to leases or rural lands
VOL. 404, JUNE 25, 2003 713 where a reduction of the rent is allowed when more than one-
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB half of the fruits have been lost due to such event,
General Insurance Company, Inc. considering that the law adopts a protective policy towards
agriculture.
“As the peril of fire is not comprehended within the
exceptions in Article 1734, supra, Article 1735 of the Civil
First Issue: Code provides that in all cases other than those mentioned in
Liability for Loss Article 1734, the common carrier shall be presumed to have
been at fault or to have acted negligently, unless it proves
Petitioner argues that the cause of the loss of the that it has observed the extraordinary diligence required by
goods, subject of this case, was force majeure. It adds law.”
that its exercise of due diligence was adequately
proven by the findings of the Philippine Coast Guard.
_______________
We are not convinced. The uncontroverted findings
of the Philippine Coast Guard show that the M/V 14 Pons y Compañia v. La Compañia Maritima, 9 Phil. 125,
Tandag sank due to a fire, which resulted from a crack October 26, 1907.
in the auxiliary engine fuel oil service tank. Fuel 15 Eastern Shipping Lines, Inc. v. Intermediate Appellate Court,
spurted out of the crack and dripped to the heating 150 SCRA 463, May 29, 1987, per Melencio-Herrera, J.
exhaust manifold, causing the ship to burst into
flames. The crack was located on the side of the fuel oil 714
tank, which had a mere two-inch gap from the engine

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714 SUPREME COURT REPORTS ANNOTATED merchandise or property, “[t]he liability of the common
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB carrier x x x shall not exceed the value of the goods as
General Insurance Company, Inc.
_______________

Where loss of cargo results from the failure of the 16 Ibid.

officers of a vessel to inspect their ship frequently so as 17 “Art. 1735. In all cases other than those mentioned in Nos. 1, 2,
to discover the existence of cracked parts, that loss 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or
cannot be attributed to force 16
majeure, but to the deteriorated, common carriers are presumed to have [been] at fault
negligence of those officials. or to have acted negligently, unless they prove that they observed
The law provides that a common carrier is extraordinary diligence as required in Article 1733.”
presumed to have been negligent if it fails to prove 18 See the Deposition dated September 30, 1996 of Chester C.
that it exercised extraordinary vigilance over the goods Cokaliong, petitioner’s vice president and chief operating officer.
it transported. Ensuring the seaworthiness of the Deposition, p. 16; Records, p. 276.
vessel is the first step in exercising the required
vigilance. Petitioner did not present sufficient evidence 715
showing what measures or acts it had undertaken to
ensure the seaworthiness of the vessel. It failed to
VOL. 404, JUNE 25, 2003 715
show when the last inspection and care of the auxiliary
engine fuel oil service tank was made, what the normal Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
practice was for its maintenance, or some other General Insurance Company, Inc.
evidence to establish that it had exercised
19
extraordinary diligence. It merely stated that constant appearing in the bill of lading.” The attempt by
inspection and care were not possible, and that the last respondent to make light of this stipulation is
time the vessel was dry-docked was in November 17
1990. unconvincing. As it had the consignees’ copies of the
20
Necessarily, in accordance with Article 1735 of the Bills of Lading, it could have easily produced those
Civil Code, we hold petitioner responsible for the loss copies, instead of relying on mere allegations and
of the goods covered by Bills of Lading Nos. 58 and 59. suppositions. However, it presented mere photocopies
thereof to disprove petitioner’s evidence showing the
existence of the above stipulation.
Second Issue: 21
A stipulation that limits liability is valid as long as
Extent of Liability
it is not against public policy.22In Everett Steamship
Respondent contends that petitioner’s liability should Corporation v. Court of Appeals, the Court stated:
be based on the actual insured value of the goods,
“A stipulation in the bill of lading limiting the common
subject of this case. On the other hand, petitioner
carrier’s liability for loss or destruction of a cargo to a certain
claims that its liability should be limited to the value
sum, unless the shipper or owner declares a greater value, is
declared by the18shipper/consignee in the Bill of Lading.
sanctioned by law, particularly Articles 1749 and 1750 of the
The records show that the Bills of Lading covering
Civil Code which provides:
the lost goods contain the stipulation that in case of
claim for loss or for damage to the shipped

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‘Art. 1749. A stipulation that the common carrier’s liability is declaring the nature and value of the shipment in the bill of lading.’
limited to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is binding.’
“Pursuant to the afore-quoted provisions of law, it is
‘Art. 1750. A contract fixing the sum that may be recovered by
required that the stipulation limiting the common carrier’s
the owner or shipper for the loss, destruction, or deterioration of the
liability for loss must be ‘reasonable and just under the
goods is valid, if it is reasonable and just under the circumstances,
circumstances, and has been freely and fairly agreed upon.
and has been freely and fairly agreed upon.’
“The bill of lading subject of the present controversy
specifically provides, among others:
“Such limited-liability clause has also been consistently
‘18. All claims for which the carrier may be liable shall be adjusted
upheld by this Court in a number of cases. Thus, in Sea-Land
and settled on the basis of the shipper’s net invoice cost plus freight
Service, Inc. vs. Intermediate Appellate Court, we ruled:
and insurance premiums, if paid, and in no event shall the carrier
‘It seems clear that even if said section 4 (5) of the Carriage of be liable for any loss of possible profits or any consequential loss.
Goods by Sea Act did not exist, the validity and binding effect of the ‘The carrier shall not be liable for any loss of or any damage to or
liability limitation clause in the bill of lading here are nevertheless in any connection with, goods in an amount exceeding One Hundred
fully sustainable on the basis alone of the cited Civil Code Thousand Yen in Japanese Currency (¥100,000.00) or its equivalent
Provisions. That said stipulation is just and reasonable is arguable in any other currency per package or customary freight unit
from the fact that it echoes Art. 1750 itself in providing a limit to (whichever is least) unless the value of the goods higher than this
liability only if a greater value is not declared for the shipment in amount is declared in writing by the shipper before receipt of the
the bill of lading. To hold otherwise would amount to questioning goods by the carrier and inserted in the Bill of Lading and extra
the justness and fairness of the law itself, and this the private freight is paid as required.’
respondent does not pretend to do. But over and above that
consideration, the just and reasonable character of such stipulation
“The above stipulations are, to our mind, reasonable and
is implicit in it giving
just. In the bill of lading, the carrier made it clear that its
liability would only be up to One Hundred Thousand
(¥100,000.00) Yen. However, the shipper, Maruman Trading,
_______________
had the option to declare a higher valuation if the value of its
19 Exhibit 7-A-2; id., p. 233. cargo was higher than the limited liability of the carrier.
20 TSN, August 8, 1996, p. 4. Considering that the shipper did not declare a higher
21 Article 1749 of the Civil Code. See also St. Paul Fire & Marine valuation, it had itself to blame for not complying with the
Insurance Co. v. Macondray & Co., Inc., 70 SCRA 122, March 25, 1976. stipulations.” (Italics supplied)
22 358 SCRA 129, 135-136, October 8, 1998, per Martinez, J.
In the present case, the stipulation limiting petitioner’s
716 liability is not contrary to public policy. In fact, its just
and reasonable character is evident. The
shippers/consignees may recover the full value of the
716 SUPREME COURT REPORTS ANNOTATED
goods by the simple expedient of declaring the true
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General value of the shipment in the Bill of Lading. Other than
Insurance Company, Inc.
the payment of a higher freight, there was nothing to
stop them from placing the actual value of the goods
the shipper or owner the option of avoiding accrual of liability
therein. In fact, they committed fraud against the
limitation by the simple and surely far from onerous expedient of
common carrier by deliberately undervaluing the goods
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in their Bill of Lading, thus depriving the carrier of its In Aboitiz

23
Shipping Corporation v. Court of
proper and just transport fare. Appeals, the description of the nature and the value
Concededly, the purpose of the limiting stipulation of the goods shipped were declared and reflected in the
in the Bill of Lading is to protect the common carrier. bill of lading, like in the present case. The Court
Such stipulation obliges therein considered this declaration as the basis of the
carrier’s liability and ordered payment based on such
717
amount. Following this ruling, petitioner should not be
held liable for more than what was declared by the
VOL. 404, JUNE 25, 2003 717 shippers/consignees as the value of the goods in the
bills of lading.
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
We find no cogent reason to disturb the CA’s finding
General Insurance Company, Inc.
that Feliciana Legaspi was the owner of the goods
covered by Bills of Lading Nos. 58 and 59.
the shipper/consignee to notify the common carrier of Undoubtedly, the goods were merely consigned to
the amount that the latter may be liable for in case of Nestor Angelia and Zosimo Mercado, respectively;
loss of the goods. The common carrier can then take thus, Feliciana Legaspi or her subrogee (respondent)
appropriate measures—getting insurance, if needed, to was entitled to the goods or, in case of loss, to
cover or protect itself. This precaution on the part of compensation therefor. There is no evidence showing
the carrier is reasonable and prudent. Hence, a that petitioner paid her for the loss of those goods. It
shipper/consignee that undervalues the real worth of does not even claim to have paid her.
the goods it seeks to transport does not only violate a
valid contractual stipulation, but commits a fraudulent
_______________
act when it seeks to make the common carrier liable
for more than the amount it declared in the bill of 23 188 SCRA 387, August 6, 1990.
lading.
Indeed, Zosimo Mercado and Nestor Angelia misled 718
petitioner by undervaluing the goods in their
respective Bills of Lading. Hence, petitioner was 718 SUPREME COURT REPORTS ANNOTATED
exposed to a risk that was deliberately hidden from it,
and from which it could not protect itself. Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
It is well to point out that, for assuming a higher General Insurance Company, Inc.
risk (the alleged actual value of the goods) the
insurance company was paid the correct higher On the other hand, Legaspi Marketing filed with
premium by Feliciana Legaspi; while petitioner was petitioner a claim for the lost goods under Bill of
paid a fee lower than what it was entitled to for Lading No. 59, for which the latter subsequently paid
transporting the goods that had been deliberately P14,000. But nothing in the records convincingly
undervalued by the shippers in the Bill of Lading. shows that the former was the owner of the goods.
Between the two of them, the insurer should bear the Respondent was, however, able to prove that it was
loss in excess of the value declared in the Bills of Feliciana Legaspi who owned those goods, and who
Lading. This is the just and equitable solution. was thus entitled to payment for their loss. Hence, the
claim for the goods under Bill of Lading No. 59 cannot
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be deemed to have been extinguished, because

payment was made to a person who was not entitled
thereto.
With regard to the claim for the goods that were
covered by Bill of Lading No. 58 and valued at P6,500,
the parties have not convinced us to disturb the
findings of the CA that compensation could not validly
take place. Thus, we uphold the appellate court’s
ruling on this point.
WHEREFORE, the Petition is hereby PARTIALLY
GRANTED. The assailed Decision is MODIFIED in the
sense that petitioner is ORDERED to pay respondent
the sums of P14,000 and P6,500, which represent the
value of the goods stated in Bills of Lading Nos. 59 and
58, respectively.
No costs.
SO ORDERED.

     Puno (Chairman), Sandoval-Gutierrez, Corona

and Carpio-Morales, JJ., concur.

Petition partially granted, assailed judgment

modified.

Note.—A stipulation reducing the one year period

for filing the action for recovery is null and void and
must be struck down. (Loadstar Shipping Co., Inc. vs.
Court of Appeals, 315 SCRA 339 [1999])

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719

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