Edgar Cokaliong Shipping Lines v. Ucpb General Insurance Company

Summary

This case involves the extent of a common carrier's liability for lost cargo when goods are undervalued in bills of lading but insured for higher amounts. M/V Tandag sank due to fire caused by a cracked fuel oil service tank, resulting in total cargo loss. The Supreme Court held that while the shipping company was liable for negligence (not force majeure), its liability was properly limited to the values declared in the bills of lading (P6,500 and P14,000 total) rather than the higher insured values (P150,000 total). The Court emphasized that liability limitation clauses in bills of lading are valid under Civil Code Articles 1749-1750, and shippers who deliberately undervalue goods to pay lower freight commit fraud. The decision balances carrier protection with shipper responsibility, establishing that insurers who collect proper premiums for actual values should bear losses exceeding declared bill of lading values.