Short answer. Only when all three conditions in Article 1744 are met: the limit is in writing and signed by the shipper, it is supported by consideration separate from the carriage itself, and it is reasonable, just and not contrary to public policy. Miss any one and the clause fails.
What the law says
(1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.
Civil Code, Article 1744 — Valid Limitation of Liability. Read the full provision →
What the law says
An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.
Civil Code, Article 1746 — Coerced Limitation Annullable. Read the full provision →
Three requirements, all of them necessary
A carrier may agree to be held to less than extraordinary diligence, but only on the terms Article 1744 sets. The clause must be in writing, signed by the shipper or owner, must be supported by a valuable consideration other than the service rendered by the common carrier, and must be reasonable, just and not contrary to public policy. They are cumulative. The second is the one most clauses die on, because a carrier that simply prints a limit on its standard form and carries the goods for its ordinary rate has given nothing extra in exchange for the concession.
Printed conditions are not a signed agreement
The signature requirement is doing consumer-protection work, not paperwork for its own sake. Fine print on the reverse of a waybill, a notice at the counter, or a term buried in a tariff schedule is not a stipulation the shipper signed. Nor is a clause the shipper had no realistic chance to refuse. Article 1746 lets a shipper annul the agreement if the common carrier refused to carry the goods unless the former agreed to such stipulation, which removes the take-it-or-leave-it version of the bargain from the carrier's reach.
What makes a limit reasonable
The third condition is a standard, not a formula, and the Code gives one guide to applying it. Article 1751 directs that the absence of any competitor along the route be taken into account in deciding whether a limitation is reasonable and just. The narrower the shipper's practical choice, the harder the clause is to defend. A limit that is a fair reflection of an undeclared value is a different thing from one that reduces the carrier's exposure to a token sum whatever the cargo was worth.
Even a valid clause does less than carriers hope
Two limits on the limit are worth knowing. A valid limitation does not shift the burden of proof: the carrier is still disputably presumed negligent when goods are lost or damaged, and must still account for what happened. And a carrier that, without just cause, delays the shipment or departs from the stipulated or usual route cannot invoke the clause at all. So before conceding a cap, ask what the carrier gave for it, whether you signed it, and whether it kept to the route and the schedule.
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.
- Valenzuela Hardwood and Industrial Supply, Inc. vs. Court of Appeals, et al, G.R. No. 102316, June 30, 1997 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1744 — Valid Limitation of Liability
- Civil Code, Article 1746 — Coerced Limitation Annullable
- Civil Code, Article 1751 — No Competition Considered