CHAPTER 4

BILL OF LADING

stopped thereafter from denying that he assented to

such claims (whether he reads the bill or not)

I. CONCEPTS, DEFINITION AND KINDS

Bill of Lading (BOL)
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
be described the place of destination, and to be
delivered to the designated consignees of the
parties.
It operates as a (1) RECEIPT (2) as a CONTRACT (3)
as a DOCUMENT OF TITLE.
A BOL is not necessary for the perfection of a contract
of carriage. Thus, the obligation to exercise extraordinary
diligence by the carrier is still required even if there is no bill
of lading.
In the absence of the bill of lading, disputes shall be
determined on the basis of the provisions in the New Civil
Code and suppletorily by the Code of Commerce.
KINDS of BILL of LADING:
1. Clean Bill
of Lading
2. Foul Bill of
Lading
3. Spent Bill
of Lading

Does not contain any notation indicating

any defect in the goods.
One that contains the abovementioned
notation.
The goods are already delivered but the bill
of lading was not yet returned (upon
delivery, the carrier is supposed to retrieve
the covering bill of the goods)

4. Through
Bill of Lading

Issued by a carrier who is obliged to use the

facilities of other carriers as well as his own
facilities for the purpose of transporting the
goods from the city of the seller to the city
of the buyer, which BOL is honored by the
second and other interested carriers who
dont issue their own BOL.
-states that the goods have been received
on board the vessel which is to carry the
goods.
-apparently guarantees the certainty of
shipping as well as the seaworthiness of the
vessel to carry the goods.
-basically means that the goods are already
inside the vessel
-states that the goods have been received
for shipment with or without specifying the
vessel by which the goods are to be
shipped.
-issued when conditions are not normal and
there is insufficiency of shipping space.
The goods are already received by the
carrier but the vessel indicated therein has
not yet arrived in the port.
The vessel indicated in the BOL that will
transport the goods is already in the port.

5. On Board
Bill

6. Received
for
Shipment Bill

7.
Custody
Bill of Lading
8. Port Bill of
Lading

Note: A party to a maritime contract would require an on

board bill of lading because of its apparent guaranty of
certainty of shipping as well as the seaworthiness of the
vessel which is to carry the goods.
Effectivity of BOL
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

THE 3-FOLD NATURE OF THE BILL OF LADING

The three fold nature of a bill of lading is obviously
applicable only to carriage of goods
As receipt and document of title: issued for goods
As contract: applies to tickets issued to passengers
-

I. RECEIPT
As comprehending all methods
of transportation,
a BOL may be defined as a written acknowledgement
of the receipt of goods and an agreement to
transport and to deliver them at a specified place to
a person named or on his order.
Other terms, shipping receipts, forwarders
receipts, and receipts for transportation.
(SC) the designation however is not material, and
neither is the form of the instrument. If it contains
an acknowledgement by the carrier of the receipt of
goods for transportation it is, in legal effect a BOL.
The issuance of a bill of lading carries the
presumption that the goods were delivered to the
carrier issuing the bill, for immediate shipment, and
it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the
carrier
II. CONTRACT
It expresses the terms and conditions of the
agreement between the parties; names the parties;
includes consignees etc. It is the law between the
parties bound by its terms and conditions.
Contracts of Adhesion
It is to be construed liberally in favor of the shipper
who adhered to such bill as it is a contract of
adhesion. The only participation of the party is the
signing of his signature or his adhesion thereto.
The shipper or passenger is bound by the terms and
conditions if there is no occasion to speak of
ambiguities or obscurities
If the words appear to be contrary to the evident
intention of the parties, the latter shall prevail over
the former
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
BOL is covered by the parol evidence rule, that the
terms of the contract are conclusive upon the parties
and evidence aliunde is not admissible to vary or
contradict a complete enforceable agreement,
subject to well defined exceptions
The mistake contemplated as an exception to the
parol evidence rule is one which is a mistake of fact
mutual to the parties.
Note that if such is not raised inceptively in the
complaint or in the answer, a party cannot later on
be permitted to introduce parol evidence thereon
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.
III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE

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 places thereon
o
o

a. Bearer document- negotiated by delivery

b.
Order
documentnegotiated
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.

If the claim is filed, but the carrier refuses to pay: enforce

carriers liability in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
b. within 10 years, if a bill of lading has been issued.
2. Overseas where goods arrived in a damaged condition
from a foreign port to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim
should be filled immediately;
b. if damage is not apparent, claim should be filled within 3
days from delivery.
Filing of claim is not a condition precedent, but an action must
be filed against the carrier within a period of 1 year from
discharge; if there is no delivery, the one-year period starts to
run from the day the vessel left port (in case of undelivered or
lost cargo), or from delivery to the arrastre (in case of
damaged cargo).
Where there was delivery to the wrong person, the
prescriptive period is 10 years because there is a violation of
contract, and the carriage of goods by sea act does not apply
to misdelivery. (Ang v. American SS Agencies (19 SCRA
631)
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)

BASIC STIPULATIONS
Provided for in the Code of Commerce
(for overland transportation, maritime commerce and
electronic documents, please refer to the textbook
for the codal pp. 203-210)

PROHIBITED AND LIMITING STIPULATION

1.
2.

3.
4.

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.
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.
Providing an unqualified limitation of such liability to
an agreed valuation - INVALID
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.

Note: the purpose of limiting stipulations in the bill of lading is

to protect th 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
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE
OF GOODS:
1. Inter-island - if goods arrived in damaged condition (Art.
366):
a. If damage is apparent, the shipper must file a claim
immediately (it may be oral or written);
b. If damage is not apparent, he should file a claim within 24
hours from delivery.
The filing of claim under either (1) or (2) is a condition
precedent for recovery.

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.

3.

4.

5.

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
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.
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
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:

within the territories of two High Contracting

Parties regardless of whether or not there be
a
break
in
the
transportation
or
transshipment, or
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
1. passengers - limited to 250,000 francs;

except: agreement to a higher limit

2. goods and checked-in baggage - 250 francs/kg

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.
3. 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
F 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,
a. 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