Cases:

1. HE Heacock Company vs. Macondray, G.R. No. L-16598, October 3, 1921;

Doctrine: “Three kinds of stipulations have often been made in a bill of lading. The
first is one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. The second is one providing for an unqualified
limitation of such liability to an agreed valuation. And the third is one limiting the
liability of the carrier to an agreed valuation unless the shipper declares a higher
value and pays a higher rate of freight. According to an almost uniform weight of
authority, the first and second kinds of stipulations are invalid as being contrary to
public policy, but the third is valid and enforceable.”
Facts: Plaintiff caused to be delivered on board of steamshipBolton Castle, four
cases of merchandise one of which contained twelve (12) 8-day Edmond clocks
properly boxed and marked for transportation to Manila, and paid freight on said
clocks from New York to Manila in advance. The said steampship arrived in the port
of Manila on or about the 10th day of September, 1919, consigned to defendant.
Neither the master of said vessel nor the defendant herein, as its agent, delivered
to the plaintiff the aforesaid twelve 8-day Edmond clocks, although demand was
made upon them for their delivery.
The invoice value of the said twelve 8-day Edmond clocks in the city of New York
was P22 and the market value of the same in the City of Manila at the time when
they should have been delivered to the plaintiff was P420. The bill of lading issued
and delivered to the plaintiff by the master of the said steamship Bolton Castle
contained, among others, the following clauses:
 It is mutually agreed that the value of the goods receipted for above does not
exceed $500 per freight ton, or, in proportion for any part of a ton, unless the
value be expressly stated herein and ad valorem freight paid thereon.
 9. Also, that in the event of claims for short delivery of, or damage to, cargo
being made, the carrier shall not be liable for more than the net invoice price
plus freight and insurance less all charges saved, and any loss or damage for
which the carrier may be liable shall be adjusted pro rata on the said basis.
The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic
feet, and the freight ton value thereof was $1,480, U. S. [Link] greater value
than $500, U. S. currency, per freight ton was declared by the plaintiff on the
aforesaid clocks, and no ad valorem freight was paid thereon. The lower court, in
accordance with clause 9 of the bill of lading above quoted, rendered judgment in
favor of the plaintiff against the defendant for the sum of P226.02.
The plaintiff-appellant insists that it is entitled to recover from the defendant the
market value of the clocks in question, to wit: the sum of P420. The defendant-
appellant, on the other hand, contends that, in accordance with clause 1 of the bill
of lading, the plaintiff is entitled to recover only the sum of P76.36, the
proportionate freight ton value of the said clocks. The claim of the plaintiff is based
upon the argument that the two clause in the bill of lading above quoted, limiting
the liability of the carrier, are contrary to public order and, therefore, null and void.
The defendant, on the other hand, contends that both of said clauses are valid, and
the clause 1 should have been applied by the lower court instead of clause 9.
Issue: Whether or not a common carrier, by stipulations inserted in the bill of
lading, limit its liability for the loss of or damage to the cargo to an agreed
valuation.
Ruling: Yes, a common carrier, by stipulations inserted in the bill of lading, limit its
liability for the loss of or damage to the cargo to an agreed valuation.
Three kinds of stipulations have often been made in a bill of lading. The first is one
exempting the carrier from any and all liability for loss or damage occasioned by its
own negligence. The second is one providing for an unqualified limitation of such
liability to an agreed valuation. And the third is one limiting the liability of the
carrier to an agreed valuation unless the shipper declares a higher value and pays a
higher rate of freight. According to an almost uniform weight of authority, the first
and second kinds of stipulations are invalid as being contrary to public policy, but
the third is valid and enforceable.
A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly
shows that the present case falls within the third stipulation, to wit: That a clause in
a bill of lading limiting the liability of the carrier to a certain amount unless the
shipper declares a higher value and pays a higher rate of freight, is valid and
enforceable.
It seems clear from the foregoing authorities that the clauses (1 and 9) of
the bill of lading here in question are not contrary to public order. Article
1255 of the Civil Code provides that "the contracting parties may establish
any agreements, terms and conditions they may deem advisable, provided
they are not contrary to law, morals or public order." Said clauses of the
bill of lading are, therefore, valid and binding upon the parties thereto.
Other issue related to the case (as to interpretation of BOL):
It will be noted, however, that whereas clause 1 contains only an implied
undertaking to settle in case of loss on the basis of not exceeding $500 per freight
ton, clause 9 contains an express undertaking to settle on the basis of the net
invoice price plus freight and insurance less all charges saved. "Any loss or damage
for which the carrier may be liable shall be adjusted pro rata on the said basis,"
clause 9 expressly provides. It seems to us that there is an irreconcilable conflict
between the two clauses with regard to the measure of defendant's liability. It is
difficult to reconcile them without doing violence to the language used and reading
exceptions and conditions into the undertaking contained in clause 9 that are not
there. This being the case, the bill of lading in question should be
interpreted against the defendant carrier, which drew said contract. "A
written contract should, in case of doubt, be interpreted against the party
who has drawn the contract." It is a well-known principle of construction that
ambiguity or uncertainty in an agreement must be construed most strongly against
the party causing it. (6 R. C. L., 855.) These rules as applicable to contracts
contained in bills of lading. "In construing a bill of lading given by the carrier
for the safe transportation and delivery of goods shipped by a consignor,
the contract will be construed most strongly against the carrier, and
favorably to the consignor, in case of doubt in any matter of construction."
2. Ong Yiu vs. CA, G.R. No. L-40597, June 29, 1979;
Doctrine:
"Bad faith means a breach of a known duty through some motive of interest or ill
will."
"Such provisions have been held to be a part of the contract of carriage, and valid
and binding upon the passenger regardless of the latter’s lack of knowledge or
assent to the regulation."
"The total liability of the Carrier for lost or damaged baggage of the passenger is
LIMITED TO P100.00 for each ticket unless a passenger declares a higher valuation
in excess of P100.00, but not in excess, however, of a total valuation of P1,000.00
and additional charges are paid pursuant to Carrier’s tariffs."
Facts: On August 26, 1967, petitioner Agustino B. Ong Yiu, a practicing lawyer and
businessman, boarded Philippine Air Lines (PAL) Flight No. 463-R from Mactan, Cebu
to Butuan City. He was scheduled to attend court hearings in Butuan from August 28
to 31, 1967. He checked in a blue "maleta" (suitcase) and was issued Claim Check
No. 2106-R.
Upon arrival at Bancasi Airport in Butuan, his luggage was missing. PAL personnel
later discovered that the luggage had been over-carried to Manila and arranged for
its return. The following day, August 27, the luggage arrived in Butuan. However,
upon delivery, the suitcase was found unlocked, and certain contents, including
important legal documents and personal items, were missing.
Ong Yiu filed a complaint against PAL for breach of contract of transportation,
seeking moral and exemplary damages. The trial court awarded him P80,000.00 in
moral damages, P30,000.00 in exemplary damages, and P5,000.00 in attorney's
fees. On appeal, the Court of Appeals reversed the decision, finding PAL guilty only
of simple negligence and limiting its liability to P100.00, as stipulated in the
conditions of carriage printed on the ticket.
Issue: Whether PAL acted in bad faith or with gross negligence in mishandling Ong
Yiu's luggage, thereby entitling him to moral and exemplary damages beyond the
stipulated P100.00 liability limit.
Ruling: No, PAL did not acted in bad faith or with gross negligence in mishandling
Ong Yiu's luggage, thereby entitling him to moral and exemplary damages beyond
the stipulated P100.00 liability limit.
The Supreme Court affirmed the Court of Appeals' decision, holding that:
"We agree with respondent Court that PAL had not acted in bad faith. Bad faith
means a breach of a known duty through some motive of interest or ill will. It was
the duty of PAL to look for petitioner's luggage which had been miscarried. PAL
exerted due diligence in complying with such duty."
Regarding the limitation of liability, the Court stated:
"The liability, however, of PAL for the loss, in accordance with the stipulation written
on the back of the ticket, Exhibit 12, is limited to P100.00 per baggage, plaintiff not
having declared a greater value, and not having called the attention of the
defendant on its true value and paid the tariff therefor."
Consequently, the petition was denied, and the judgment of the Court of Appeals
was affirmed in toto.
3. Sea-Land Service vs. IAC, G.R. No. 75118, Aug. 31, 1987;
Doctrine: A stipulation in the bill of lading limiting the common carrier’s liability to
the value of the goods appearing in the bill, unless the shipper or owner declares a
greater value, is a valid stipulation and binding upon the shipper, provided the latter
was given the option to pay a higher freight if he wanted to assume greater risk.
Facts: Sea-Land, a foreign shipping and forwarding company licensed to do
business in the Philippines, received from Sea-borne Trading Company in California,
a shipment consigned to Sen Hiap Hing, the business name used by Paulino Cue.
The shipper not having declared the value of the shipment, no value was indicated
in the bill of lading.
The shipment was discharged in Manila, and while awaiting transshipment to Cebu,
the cargo 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. 5 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 clause in 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. Said Court, after trial, 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.
Issue: Whether or not the consignee of seaborne freight is bound by stipulations in
the covering bill of lading limiting to a fixed amount the liability of the carrier for
loss or damage to the cargo where its value is not declared in the bill - YES
Ruling: There is no question of the right of a consignee in a bill of lading to recover
from the carrier or shipper for loss of, or damage to, goods being transported under
said bill, although that document may have been drawn up only by the consignor
and the carrier without the intervention of the consignee.
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 Sea-Land has Cue is governed primarily by the Civil Code, and as
ordained by the said Code, supplementary, in all matters not cluttered thereby, by
the Code of Commerce and special laws. One of these supplementary special laws is
the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the
carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding effect of the
liability limitation clause in the bill of lading here are fully substantial on the basis
alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation are
implicit in it giving the owner or shipper the option of avoiding accrual of liability
limitation by the simple expedient of declaring the value of the shipment in the bill
of lading.
The stipulation in the bill of lading limiting the liability of SeaLand for loss or
damages to the shipment covered by said rule to US$500 per package unless the
shipper declares the value of the shipment and pays additional charges is valid and
binding on Cue.
4. Citadel Lines vs. CA, G.R. No. 88092, April. 25, 1990;

5. Everett Steamship Corporation vs. CA, G.R. No. 122494, October 8, 1998;
6. Saludo, Jr. vs. CA, G.R. No. 95536, March 23, 1992.
7. Northwest Airlines vs. Cuenca, G.R. No. L 22425, August 31, 1965;
8. Alitalia vs. IAC, G.R. No. 71929, December 4, 1990;
9. Pan American World Airways vs. IAC, G.R. No. 70462, August 11, 1988;
10. China Airlines vs. Daniel Chiok, G.R. No. 152122, July 30, 2003;
11. Santos III vs. Northwest Airlines, G.R. No. 101538, June 23, 1992; and
12. United Airlines vs. Willie Uy, G.R. No. 127768, November 19, 1999.