TRANSPORTATION LAW

BILL OF LADING

DEFINITION

In an ordinary sense, a bill of lading is a legal document issued by a

carrier to a shipper that details the type, quantity, and destination of the
goods being carried. A bill of lading also serves as a shipment receipt when
the carrier delivers the goods at a predetermined destination. This
document must accompany the shipped products, no matter the form of
transportation, and must be signed by an authorized representative from
the carrier, shipper, and receiver (Definition, Investopedia).

Under Philippine jurisdiction, a bill of lading is defined as "an

instrument in writing, signed by a carrier or his agent, describing the freight
so as to identify it, stating the name of the consignor, the terms of the
contract for carriage, and agreeing or directing that the freight to be
delivered to the order or assigns of a specified person at a specified place"
(Ace Navigation Co., Inc. vs. FGU Insurance corporation and Pioneer
Insurance and Surety Corporation, G.R. No. 171591, 25 June 2012).’

CONTENTS OF THE BILL OF LADING

The shipper as well as the carrier of merchandise and goods may mutually
demand of each other the issue of a bill of lading in which there shall be
stated:

1. The name, surname, and domicile of the shipper.

2. The name, surname, and domicile of the carrier.

3. The name, surname and domicile of the person to whom or to whose

order the goods are addressed, or whether they are to be delivered to
the bearer of the said bill.

4. A description of the goods, stating their generic character, their

weight, and the external marks or signs of the packages containing
the same.

5. The cost of the transportation.

6. The date on which the shipment is made.

 7. The place of the delivery to the carrier.

8. The place and time at which the delivery is to be made to the

consignee.

9. The damages to be paid by the carrier in case of delay, if any

agreement is made on this point. ( Art. 350, Code of Commerce)

KINDS OF BILL OF LADING

1. ON BOARD - issued when the goods have been actually placed
aboard the ship with very reasonable expectation that the shipment is
as good as on its way.
2. RECEIVED - one in which it is stated that the goods have been
received for shipment with or without specifying the vessel by which
the goods are to be shipped.
3. NEGOTIABLE - one 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 therein.
4. NON-NEGOTIABLE - One in which it is stated that the goods
referred to therein will be delivered to a specified person.
5. CLEAN – One which does not indicate any defect in the goods.
6. FOUL – One which contains a notation thereon indicating that the
goods covered by it are in bad condition.
7. SPENT – One which covers goods that already have been delivered
by the carrier without a surrender of a signed copy of the bill.
8. THROUGH – One issued by the 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 bill of lading is honored by the second and other
interested carriers who do not issue their own bills.
9. CUSTODY – One wherein the goods are already received by the
carrier but the vessel indicated therein has not yet arrived in the port.
10. PORT – One which is issued by the carrier to whom the goods have
been delivered, and the vessel indicated in the bill of lading by which
the goods are to be shipped is already in the port where the goods
are held for shipment.
APPLICABILITY OF BILL OF LADING

“Bill of Lading are not those issued by masters of vessels alone; they
are now comprehend all forms of transportation, whether by sea or land,
and includes bus receipts for cargo” (Interprovincial Autobus Co., Inc. Vs.
Collector Of Internal Revenue, G.R. No. L-6741. January 31, 1956).

Are Freight Tickets a form of Bill of Lading? Yes. Freight tickets of

bus companies are "bills of lading or receipts" within the meaning of the
Documentary Stamp Tax Law (Interprovincial Autobus Co., Inc., Supra).

What is the nature of Bill of Lading? “It is a long standing

jurisprudential rule that a bill of lading operates both as a receipt and as a
contract. It is a receipt for the goods shipped and a contract to transport
and deliver the same as therein stipulated. As a contract, it names the
parties, which includes the consignee, fixes the route, destination, and
freight rates or charges, and stipulates the rights and obligations assumed
by the parties. Being a contract, it is the law between the parties who are
bound by its terms and conditions provided that these are not contrary to
law, morals, good customs, public order and public policy. A bill of lading
usually becomes effective upon its delivery to and acceptance by the
shipper. It is presumed that the stipulations of the bill were, in the absence
of fraud, concealment or improper conduct, known to the shipper, and he is
generally bound by his acceptance whether he reads the bill or not”
(Magellan Manufacturing Marketing Corporation vs. Court Of Appeals, G.R.
no. 95529).

The Bill of Lading is the law between the parties in the transport of
goods or passengers. The legal basis of the contract between the shipper
and the carrier shall be the bills of lading, by the contents of which all
disputes which may arise with regard to their execution and fulfillment shall
be decided without admission of other exceptions than forgery or material
errors in the drafting thereof. (Art. 353, Code of Commerce)

PURPOSE OF BILL OF LADING

Bill of lading is serving as the contract of the parties in a transport

transaction and also protection of a one party from abuses of the other, as
enunciated by the Supreme Court: “The courts cannot ignore that
nowadays monopolies, cartels and concentrations of capital, endowed with
overwhelming economic power, manage to impose upon parties dealing
with them cunningly prepared "agreements" that the weaker party may not
change one whit, his participation in the "agreement" being reduced to the
alternative to “take it or leave it" labelled since Raymond Baloilles
“contracts by adherence" in contrast to these entered into by parties
bargaining on an equal footing, such contracts (of which policies of
insurance and international bills of lading are prime examples) obviously
call for greater strictness and vigilance on the part of courts of justice with a
view to protecting the weaker party from abuses and imposition, and
prevent their becoming traps for the unwary” (Qua Chee Gan vs. Law
Union And Rock Insurance Co., GR. No. L-4611)

What would be the condition precedent before a cause of action

may arise when an obligation under Bill of Lading was not complied
with? “Stipulations in bills of lading or other contracts of shipment which
require notice of claim for loss of or damage to goods shipped in order to
impose liability on the carrier operate to prevent the enforcement of the
contract when not complied with, that is, notice is a condition precedent
and the carrier is not liable if notice is not given in accordance with the
stipulation, as the failure to comply with such a stipulation in a contract of
carriage with respect to notice of loss or claim for damage bars recovery for
the loss or damage suffered” (Philippine American General Insurance Co.,
Inc. And Tagum Plastics, Inc. Vs. Sweet Lines, Inc…, G.R. No. 87434)

Is shortening the period for filing a suit under a Bill of Lading

void? No. “The shortened period for filing suit is not unreasonable and has
in fact been generally recognized to be a valid business practice in the
shipping industry”.

However, when it comes to stipulation as to the venue of action,

the Supreme Court held that “the stipulated limitation on venue of action
provided in the subject bill of lading as a contract of adhesion and, under
the circumstances therein, void for being contrary to public policy is
evidently likewise unavailing in view of the discrete environmental facts
involved and the fact that the restriction therein was unreasonable”
(Philippine American General Insurance, supra.).
LIMITATION ON LIABILITIES

Is stipulation as to the limitation of liabilities of the common

carrier allowed? Yes. The Supreme Court has enunciated that “The
liability of a common carrier for the loss of goods may, by stipulation in the
bill of lading, be limited to the value declared by the shipper, as long as it is
not against public policy” (Edgar Cokaliong Shipping Lines, Inc. vs. UCPB
General Insurance Company, Inc., Gr. No. 146018). “A stipulation that the
common carrier’s liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is
binding. (Art. 1749, Civil Code) 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 freely and fairly agreed upon.’(Art. 1750, Civil Code)

However, the requirements provided in Article 1750 of the New Civil

Code must be complied with before a common carrier can claim a limitation
of its pecuniary liability in case of loss, destruction or deterioration of the
goods it has undertaken to transport (Parmanand Shewaram Vs. Philippine
Air Lines, Inc., Gr. No. L-20099).

TWO-FOLD CHARACTER OF BILL OF LADING

The two-fold character of a bill of lading is all too familiar; it is a

receipt as to the quantity and description of the goods shipped and a
contract to transport the goods to the consignee or other person therein
designated, on the terms specified in such instrument (Aniceto G. Saludo,
Et. Al vs. Court Of Appeals, G.R. No. 95536)

Does issuance of the bill of lading a pre-condition before the

obligation be complied? No. “Logically, since a bill of lading
acknowledges receipt of goods to be transported, delivery of the goods to
the carrier normally precedes the issuance of the bill; or, to some extent,
delivery of the goods and issuance of the bill are regarded in commercial
practice as simultaneous acts. However, except as may be prohibited by
law, there is nothing to prevent an inverse order of events, that is, the
execution of the bill of lading even prior to actual possession and control by
the carrier of the cargo to be transported. There is no law which requires
that the delivery of the goods for carriage and the issuance of the covering
bill of lading must coincide in point of time or, for that matter, that the
former should precede the latter. Ordinarily, a receipt is not essential to a
complete delivery of goods to the carrier for transportation but, when
issued, is competent and prima facie, but not conclusive, evidence of
delivery to the carrier. A bill of lading, when properly executed and
delivered to a shipper, is evidence that the carrier has received the goods
described therein for shipment. Except as modified by statute, it is a
general rule as to the parties to a contract of carriage of goods in
connection with which a bill of lading is issued reciting that goods have
been received for transportation, that the recital being in essence a receipt
alone, is not conclusive, but may be explained, varied or contradicted by
parol or other evidence” (Saludo et. al supra.).

In the absence of a bill of lading the respective claims of the parties

shall be decided by the legal proofs that each one may submit in support of
his claims, in accordance with the general provisions established in this
Code for commercial contracts. (Article 354, Code of Commerce)

PERIOD OF DELIVERY

As a general rule, period shall be form part of the content of the bill of
lading. When the period is stipulated the carrier is bound to fulfill the
contract and is liable for any delay; no matter from what cause it may have
arisen. However, if there is no period as to the delivery of the goods, the
law states that: “Should no period within which goods are to be delivered
be previously fixed, the carrier shall be under the obligation to forward them
in the first shipment of the same or similar merchandise which he may
make to the point of delivery; and should he not do so, the damages
occasioned by the delay shall be suffered by him.” (Article 358, Code of
Commerce) This implicates that the carrier shall deliver the goods within
reasonable time.

NOTICE OF DAMAGE

Within the twenty-four hours following the receipt of the merchandise a

claim may be brought against the carrier on account of damage or average
found therein on opening the packages, provided that the indications of the
damage or average giving rise to the claim cannot be ascertained from the
exterior of said packages, in which case said claim would only be admitted
on the receipt of the packages.

After the periods mentioned have elapsed, or after the transportation

charges have been paid, no claim whatsoever shall be admitted against the
carrier with regard to the condition in which the goods transported were
delivered. (Article 366, Code of Commerce)

The requisites for the applicability of the above are: 1) There must be
domestic / Inter-island / coastwise transportation, 2) Land/water/air
transportation, 3) Carriage of goods, and 4) Goods shipped are damaged.

Shipper should file a claim against the carrier within 24 hours from delivery
if there is a latent damage.

PRESCRIPTIVE PERIOD OF FILING A CLAIM UNDER BILL OF LADING

The Code of Commerce has not provided the rules on prescription. Thus,
the rules on prescription under Civil Code shall apply: If no bill of lading
was issued and after the notice was sent in the carrier and refuse to pay
the claim may be filed in court within 6 years (Article 1145, NCC), and 10
years if there is issued bill of lading (Article 1144, NCC).