Short answer. Yes, but only within limits. Article 1750 of the Civil Code allows a contract fixing the sum recoverable for lost or damaged goods, provided the cap is reasonable and just under the circumstances and was fairly and freely agreed upon. A one-sided or hidden cap does not qualify.
What the law says
A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.
Civil Code, Article 1750 — Agreed Recovery Amount. Read the full provision →
A cap is allowed, but it is not automatic
A carrier is not forbidden from limiting its exposure. The law expressly permits a contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods. What the law refuses to do is enforce such a clause simply because it is printed on the bill of lading. Three conditions must all be met: the amount must be reasonable and just under the circumstances, and the limitation must have been fairly and freely agreed upon. Each of these is a separate hurdle, and the carrier that drafted the document is the party that has to show all three were satisfied.
What 'fairly and freely agreed upon' means
A limitation buried in fine print that the shipper never had a real chance to see, question, or negotiate is not something freely agreed upon. The idea behind the rule is genuine consent, not a signature obtained by handing over a pre-printed form at the counter. Whether the shipper was told of the cap, whether a higher valuation could have been declared for a higher freight rate, and whether the shipper actually had that choice all matter. A cap the shipper could not have avoided, and was never invited to reconsider, sits on weak ground even if the figure itself looks modest.
The cap must also be reasonable in amount
Even a clause the shipper consented to can fail the second test. A limit that bears no sensible relation to the value of what was shipped, or that would leave the shipper with a token recovery for a total loss, is not reasonable and just under the circumstances. Reasonableness is judged against the actual shipment and the freight paid, not in the abstract. This is why declaring the true value of high-value cargo, and paying the corresponding rate, protects a shipper: it removes the argument that the low cap was the bargain both sides struck.
Where this leaves a shipper with a claim
If your goods were lost and the carrier now points to a cap, the clause is a defence, not the end of the matter. You can question whether the amount is reasonable and whether you ever truly agreed to it. Keep the bill of lading, any declared-value documents, proof of what the goods were worth, and the freight receipt. The rule does not guarantee full recovery, and a valid, freely negotiated cap will bind you. But it does mean a carrier cannot unilaterally shrink its liability to a figure you never meaningfully accepted.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Everett Steamship Corporation vs. Court of Appeals, et al, G.R. No. 122494, October 8, 1998 — read the decision on LawPhil →
- Philippines Charter Insurance Corp. vs. Neptune Orient Lines/Overseas Agencies Services, Inc, G.R. No. 145044, June 12, 2008 — read the decision on LawPhil →
- Edgar Cokaliong Shipping Lines, Inc., vs. UCPB General Insurance Company, Inc, G.R. No. 146018, June 25, 2003 — read the decision on LawPhil →