BILL OF LADING AN OTHER FORMALITIES CHAPTER 4

1. Concepts
-A bill of lading or a ticket is not necessary for the perfection of a contract of carriage. The
obligation of the carrier to exercise extraordinary diligence in transporting goods or passengers is
present even if there is no bill of lading or ticket.
-In the absence of BOL, disputes shall be determined on the NCC and suppletorily by the CoC
2. Definition
-A bill of lading is a written acknowledgement, signed by the master of a vessel or other authorized
agent of the carrier, that he has received the described goods from the shipper, to be transported on
the expressed terms, to the described place of destination, and to be delivered there to the designated
consignee or parties.
NATURE -Operates as RECEIPT, CONTRACT, and a DOCUMENT OF TITLE
--Receipt and documents of title are applicable only to Carriage of Goods.. (Contract to Passenger;ticket)

WHEN EFFECTIVE upon its delivery to and acceptance by the shipper.

-The acceptance of the bill without dissent raises the presumption that all the terms therein were
brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake,
he is estopped from thereafter denying that he assented to such terms.

KINDS OF BILL OF LADING CF.S.T. ObR. CP.

1.) Clean Bill of Lading Does not contain any notation indicating any defect in the goods.
2.) Foul Bill of Lading Contains notation indicating any defect in the goods
3.) Spent Bill of Lading Goods are already delivered but the bill of lading was not yet returned.
(the carrier was supposed to have retrieved the covering bill of lading he issued for the goods.)
4.) Through Bill of Lading Issued by the carrier obliged to use the facilities of other carriers for
transporting the goods from the city of the seller to the city of the buyer, which BOL is honored
by the other carriers.
5.) On Board Bill The goods are received and on-board the vessel which is to carry the
goods(required in a martitime contract; it is a guaranty of certainty of shipping as well as the
seaworthiness of the vessel)
6.) Received for Shipment Bill states that the goods have been received for shipment with or
without specifying the vessel by which the goods are to be shipped.
7.) Custody Bill of Lading The goods are already received by the carrier but the vessel indicated
therein has not yet arrived in the port.
8.) Port Bill of Lading The vessel indicated in the BOL is already in the port.
BILL of LADING as a CONTRACT
-Expresses the terms and conditions of the agreement between the parties, name of the parties(shipper
carrier, in some instance, consignees), and serves as the law between the parties bound by its terms and
conditions.

Contracts of ADHESION are contracts almost all the provisions of which have been drafted only by
one party, usually a corporation(or carrier). The only participation of the party is the signing of his
signature or his adhesion thereto. (e.g. Insurance contracts, bills of lading, contracts of make of lots of
installment plan)
-HENCE, Bills of lading are construed liberally in favor of the passenger or shipper who adhered to such
bill of lading or ticket. (they were thus made to adhere thereto on a take it or leave it basis; to afford
fair play and justice, guidelines in the determination of validity are construed in their favor)
-The shipper or passenger is bound the terms and conditions if there is no occasion of ambiguities(if
there is, intention of the parties shall prevail)
ART. 24 (NCC). In all contractual property or other relations, when one of the parties is at a
disadvanatge on account of his moral dependence, ignorance indigence, mental weakness, tender age
and other handicap, the court must be vigilant for his protection.
PAROLE EVIDENCE RULE:
-The terms of a contract are rendered conclusive upon the parties, and evidence aliunde(from another
source) is not admissible to vary or contradict a complete and enforceable agreement embodied in a
document, subject to well defined exceptions. When the parties reduced their agreement in writing, all
their previous agreement on the matter are merged therein.
-Evidence of a prior verbal agreement is generally not admissible to defeat the operation of a valid
instrument.
-Mistake contemplated as an exception is a mistake of fact mutual to the parties.
-Must be put in issue by the pleading, raised in the complaint or answer.
BILL OF LADING AS EVIDENCE:
-The BOL is the legal evidence of the contract and the entries thereof constitutes prima facie evidence of the contract.
- All the essential elements of a valid contract (cause, consent, object) are present when such bill are issued.

BILL OF LADING AS AN ACTIONABLE DOCUMENT:

In a contractual obligation, the bill of lading can be categorized as an actionable document under the
Rules of Court. Hence, the bill of lading must be properly pleaded either as causes of action or defenses ART 1507 (NCC). A document of title in which it is stated that the goods referred to therein will be
delivered to the bearer or to the order of any person named in such document is a negotiable
document of title.
- If the document of title contains the required words of negotiability to make the instrument
negotiable under Article 1507 of the NCC, the document remains to be negotiable even if the words
not negotiable or non negotiable are placed thereon
a. Bearer document- negotiated by delivery
b. Order document- negotiated by indorsement of the specified person so named
- Effects of negotiation. Negotiation of the document has the effect of manual delivery so as to
constitute the transferee the owner of the goods.

BASIC STIPULATIONS
Provided for in the Code of Commerce (pp.203-210) Art. 350, Overland; Art. 706, Maritime; RA 8792
Electronic Commerce Act of 2000 Sec.25, Electronic Documents.
1. Exempting the carrier from any and all liability for loss or damage occasioned by its own negligence INVALID as it is contrary to public policy.
2. Parties may stipulate that the diligence to be exercised by the carrier for the carriage of goods be less
than extraordinary diligence if it is:
a. in writing and signed by both parties
b. supported by a valuable consideration other than the service rendered by the common carrier
c. the stipulation is just, reasonable and not contrary to law.
DIFFERENT FROM:
Stipulation fixing the amount that may be recovered, which only requires that:
a.) It is reasonable and just under the circumstances
b.) It is fairly and freely agreed upon.
3. Providing an unqualified limitation of such liability to an agreed valuation - INVALID
4. Limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value
and pays a higher rate of freight- VALID and ENFORCEABLE.
Purpose of limiting stipulations in the bill of lading is to protect the common carrier. Such stipulation
obliges the shipper/consignee to notify the common carrier of the amount that the latter may be liable
for in case of loss of the goods
Remember:
1. The parties cannot stipulate so as to totally exempt the carrier from exercising any degree of diligence
whatsoever
2. The parties cannot stipulate that the common carrier shall exercise diligence less than the diligence of
a good father of a family
3. Reduction of Diligence not allowed for passenger.
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
- Applies suppletorily to the Civil Code if the goods are to be shipped form a foreign port to the
Philippines
- COGSA is applicable in international maritime commerce. It can be applied in domestic sea
transportation if agreed upon by the parties. (paramount clause)
- Under the Sec. 4 (5), the liability limit is set at $500 per package unless the nature and value of such
goods is declared by the shipper. This is deemed incorporated in the bill of lading even if not mentioned
in it (Eastern Shipping v. IAC, 150 SCRA 463).
- If by agreement, another maximum amount than that mentioned may be fixed provided that such
maximum shall not be less than $500 and in no event shall the carrier be liable for more than the
amount of damage actually sustained
Note that Art. 1749 of the NCC applies to inter-island trade.

Meaning of Package
- If the goods are shipped in cartons, each carton is considered a package even if they are stored in
container vans
- When what ordinarily be considered packages are shipped in a container supplied by the carrier and
the number of such units is disclosed in the shipping documents, each of those units and not the
container constitutes the package.
Prescriptive periods
- Suit for loss or damage to the cargo should be brought within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec. 3[6])
The one-year prescriptive period is suspended by:
1. express agreement of the parties (Universal Shipping Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed. (Stevens & Co. v. Nordeutscher Lloyd, 6
SCRA 180)
Things to Remember:
1. Article 1757 provides that the responsibility of a common carrier to exercise utmost diligence
for the safety of PASSENGERS CANNOT be dispensed with or lessened by stipulation or
statement on tickets or otherwise
2. Article 1750 of the Civil Code provides that 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
3. It is unfair to deny the shipper the right to declare the actual value of his cargos and to recover
such true value in case of loss or damage Note: it has been suggested that the signature of the
shipper in the bill of lading with regards to the limitation applies only to reduction of diligence
and not to the stipulated amount to be paid.
4. It is unjust and contrary to public policy if the common carriers liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is
dispensed with or diminished
5. The common carrier may EXEMPT itself from liability if he can prove that:
a. He observed extraordinary diligence
b. The proximate and only cause of the incident is a fortuitous event or force majeure
c. The proximate and only cause of the loss is the character of the goods or defects in the
packing or in the containers
d. The proximate and only cause of the loss is the order or act of competent public
authority

Note: to limit its liability or at least mitigate the same, the carrier can cite CONTRIBUTORY NEGLIGENCE
of the plaintiff and the DOCTIRNE OF AVOIDABLE CONSEQUENCES
Case: Sea-Land Service Inc. vs. IAC
- 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
- COGSA is applicable up to the final port of destination and that the fact that transshipment was made
on an interisland vessel did not remove the contract of carriage of goods from the operation of said Act.

Case: Citadel Lines Inc. vs. CA

- The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted
to the carrier to prove that it has exercised the extraordinary diligence required by law. And, its
extraordinary responsibility lasts from the times that goods are unconditionally placed in the possession
of, and received by the carrier for transportation until the same are delivered, actually or constructively,
by the carrier to the consignee or to the person who has the right to receive them
Case: Everett Steamship Corporation vs. CA
- Considering that the shipper did not declare a higher valuation it had itself to blame for not complying
with the situations
- The trial courts ratiocination that private respondent could not have fairly and freely agreed to the
limited liability clause in the bill of lading because the said conditions were printed in small letters does
not make the bill of lading invalid
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
- Applies to all international transportation of person, baggage or goods performed by aircraft for hire.
- International transportation means any transportation in which the place of departure and the place
of destination are situated either:
o within the territories of two High Contracting Parties regardless of whether or not there be a break in
the transportation or transshipment, or
o within the territory of a single High Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or authority of another power, even though that power is
not a party to the Convention.
Transportation to be performed by several successive air carriers shall be deemed to be one undivided
transportation, if it has been regarded by the parties as a single operation, whether it has been agreed
upon under the form of a single contract or of a series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts is to be performed entirely within a
territory subject to the sovereignty, suzerainty, mandate, or authority of the same High Contracting
Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in the Philippines since an
international law prevails over general law.
WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the carriers employees. The Convention does not
regulate, much less exempt, carrier from liability for damages for violating the rights of its
passengers under the contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is similarly
caused by any agent of the carrier acting within the scope of his employment
2. when it contradicts public policy;
3. if the requirements under the Convention are not complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the
course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage; (Art.
18) and
3. Delay in the transportation of passengers, luggage or goods. (Art. 19)

NOTE: The Hague Protocol amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself completely (Art. 20(1)).
(Alitalia v. IAC, 192 SCRA 9)
Remember: The said provisions merely declare the carrier liable for damages in the enumerated cases if
the conditions therein specified are present. Neither said provisions nor others in the aforementioned
Convention regulate or exclude liability for OTHER BREACHES of contract of carrier.
The Convention does not thus operate as an exclusive enumeration of the instances of an airlines
liability, or as an absolute limit of the extent of that liability.
LIMIT OF LIABILITY
passengers - limited to 250,000 francs;
o except: agreement to a higher limit
goods and checked-in baggage - 250 francs/kg
o except: consigner declared its value and paid a supplementary sum, carrier liable to not
more than the declared sum unless it proves the sum is greater than its actual value.
hand-carry baggage - limited to 5,000 francs/passenger
An agreement relieving the carrier from liability or fixing a lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its
part. (Art. 25)
Case: China Airlines vs. Daniel Chiok
- The ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts and the
omissions of any errant carrier to which it may have endorsed any sector of the entire, continuous trip.
Place of Destination- within the meaning of the Warsaw Convention, is determined by the terms of the
contract of carriage, or specifically the ticket between the passenger and the carrier. It is the destination
and not an agreed stopping place that controls for the purpose of ascertaining jurisdiction under the
Convention. (Case: Santos III vs. Northwest Orient Airlines and CA)
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
otherwise the action is barred except in case of fraud on the part of the carrier. (Art. 26)
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through which the contract has been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
5. Rule in case of various successive carriers,

In case of transportation of passengers the action is filed only against the carrier in which the accident
or delay occurred unless there is an agreement whereby the first carrier assumed liability for the whole
journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against the first carrier and the carrier in which the damage occurred
ii. the consignee can file an action against the last carrier and the carrier in which the damage occurred.
These carriers are jointly and severally liable. (Art. 30)
Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or international travel
Code of Commerce applies to inter-island or domestic travel.
Bill of Lading as Document of Title
Bill of lading is a document of title under the Civil Code. It can be a negotiable document of title.
A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order of any person named in such document.
(Art. 1507, Civil Code)
a) Effect of Stamp or Notation Non-Negotiable

the document remains to be negotiable even if the words not-negotiable or non-negotiable are
placed thereon. - Art. 1510 (Civil Code)
B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- can only be negotiated through the indorsement of the specified person so named.
- such indorsement may be in blank, to bearer or to a specified person.

Where a negotiable document of title is transferred for value by delivery, and the endorsement of
the transferor is essential for negotiation, the transferee acquires a right against the transferor to
compel him to endorse the document. xxx (Art. 1515, Civil Code)
C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the transferee the owner of the goods
- results in the transfer of ownership because transfer of document likewise transfers control over the
goods
- refer to Art. 1513