CHAPTER 5

BILL OF LADING

1. CONCEPT

 A bill of Lading / ticket is not necessary for the perfection of a contract of carriage.

Even if no tickets were issued, a verbal contract to carry is already a binding consensual contract. Even if no
bill of lading were issued, Contract of carriage is perfected when the goods are unconditionally placed in the
possession and control of the carrier, and upon their receipt by the carrier for transportation.

Therefore, obligation of common carriers required under the Civil Code to exercise extraordinary diligence in
the performance of their obligation to carry goods and/or passengers. is present even if the carrier does not issue a
bill of lading or ticket.

 This is implicit from Art. 354 of the Code of Commerce which provides that:

ART. 354 In the absence of a bill of lading disputes shall be determined by the legal proofs which
the parties may present in support of their respective claims, according to the general provisions
established in this code for commercial contracts.

 RA 8792 Electronic Commerce Act – allows the issuance of ticket in the form of electronic documents

 Although a bill of lading is not essential to the contract, it may become obligatory by reason of the
regulations of railroad companies, or as a condition imposed in the contract by the agreement of the parties
themselves.

The conditions imposed by LTFRB for the issuance of a Certificate of Public Convenience for Public
Utility Vehicles (PUV) includes the requirement that PUV and taxi operators shall issue tickets/
receipts to passengers in accordance with the requirements of the BIR.

2. DEFINITION

A bill of lading is a written acknowledgment, 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.

 Technically, BOL contains all the necessary information highlighting the types, destination and
quantity of the goods.

 NOTE: BOL comprehends all forms of transportation. Land, ocean and air are the means used for
bills of lading and not merely those issued for the carriage of goods by the sea.

 BOL is sometimes called: s

o shipping receipts
o forwarder’s receipts
o receipts for transportation

3. KINDS

1. Negotiable or non-negotiable

Non-Negotiable Bill of Lading is a bill of lading that cannot be transferred by endorsement.

A negotiable bill of lading instructs the carrier to deliver goods to anyone in possession of the
original endorsed negotiable bill, which itself represents title to and control of the goods.

2. Clean or foul

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  Clean bill of lading is one that does not contain any notation indicating any
defect in the goods.
 Foul bill of lading (Unclean / Dirty) is one that contains such notation.

3. Spent
 If the goods were already delivered but the bill of lading was not returned, the bill of
lading is called a spent bill of lading

4. Through
 Issued by the carrier who is obliged to use the facilities of other carriers as well as his
own facilities in 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
o not issue their own lading

5. On board bill or received for shipment bill

 On board bill is one in which it is stated that the goods have been received on board
the vessel which is to carry the goods
 Received for shipment bill is one in which is stated that the goods have been received
for shipment with or without specifying the vessel by which the goods are to be
shipped.

6. Custody
 The goods are already received by the carrier but the vessel indicated therein has not
yet arrived in the port
7. Port
 The vessel indicated in the bill of lading that will transport the goods is already in the
port.

4. NATURE

Three-fold character of BOL

1. As a receipt
a. It recites the date and place of shipment
b. Describes the goods as to quantity, quality, conditions, dimensions, identification
marks weight and value.
2. As a contract
a. It names the contracting parties and it stipulates the rights and obligations.
b. It shall only be binding upon the parties who make them, their assigns and heirs.

3. As a document of title
a. It is a document of title that makes it a symbol of the goods.
b. it regulates the relations between a carrier and a holder of the same.

5. EFFECTIVITY

 Bill of lading becomes effective upon its delivery to and acceptance by the shipper.

 PRESUMPTION:

In the absence of fraud, concealment or improper conduct, it is presumed that the

stipulations of the bill are
o known to the shipper and
o he is generally bound by his acceptance whether he reads the
bill or not.

The acceptance of the bill without objection after an opportunity to inspect it 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 denying that he assented to such terms.

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 6. BILL of LADING as CONTRACT

Bill of Lading – a written acknowledgment 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.

The nature of a bill of lading as a contract applies to tickets issued to passengers. Meaning, issued for goods and not
to a passenger ticket.

As a contract, that it expresses the terms and conditions of the agreement between 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.

6.01. PARTIES

The parties in a bill of lading are the Shipper and the Carrier. The Consignee, although not a signatory to the
contract of carriage between the shipper and the carrier, becomes a party by reason of either:
a. The relationship of agency between the consignee and the shipper/consignor;
b. The unequivocal acceptance of the bill of lading delivered to the consignee, with full knowledge
of its contents; and
c. Availment of the stipulation pour autrui.

Thus, in the bill of lading, the parties with rights and/or obligations are the SHIPPER, CARRIER, and the
CONSIGNEE.

PROBLEM:
On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port
China, 8, 260 metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila and
delivered to its consignee, Heindrich Trading Corp. (HEINDRICH). The subject shipment was insured with
respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against all risks under
Marine Open Policy No. 062890275 for the amount of P18,048,421.00. P.T. Pakarti Tata (PAKARTI) owns the subject
vessel that it chartered to Shinwa Kaiun Kaisha Ltd. (SHINWA). Representing itself as owner of the vessel, SHINWA
entered into a charter party contract with Sky International, Inc. (SKY), an agent of Kee Yeh Maritime Co. (KEE YEH),
which further chartered it to Regency Express Lines S.A. (REGENCY). Thus, it was REGENCY that directly dealt with
consignee HEINDRICH, and accordingly, issued Clean Bill of Lading. On July 23, 1990, the vessel arrived at the Port of
Manila and the shipment was discharged. However, upon inspection of HEINDRICH and petitioner Ace Navigation
Co., Inc. (ACENAV), agent of CARDIA, it was found that out of the 165,200 bags of cement, 43,905 bags were in bad
order and condition. Unable to collect the sustained damages in the amount of P1,423,454.60 from the shipper,
CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of the cargo, each paid the consignee,
HEINDRICH, the amounts of P427,036.40 and P284,690.94, respectively, and consequently became subrogated to
all the rights and causes of action accruing to HEINDRICH. On August 8, 1991, respondents filed a complaint for
damages against the following defendants: “REGENCY EXPRESS LINES, S.A./UNKNOWN CHARTERER OF THE VESSEL
‘PAKARTI TIGA’/UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL ‘PAKARTI TIGA’, SKY
INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC.” Maintaining that it was not a party to the bill of
lading, ACENAV asserts that it cannot be held liable for the damages sought to be collected by the respondents. It
also alleged that since its principal, CARDIA, was not impleaded as a party-defendant/respondent in the instant suit,
no liability can therefore attach to it as a mere agent. Who are the parties in the bill of lading?

A: As a contract, the Bill of Lading names the contracting parties, which include the consignee, fixes the route,
destination and freight rates or charges, and stipulates the rights and obligations assumed by the parties. As such, it
shall only be binding upon the parties who make them, their assigns and heirs. In this case, the original parties to
the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI; and (c) the consignee HEINDRICH. However,
by virtue of their relationship with PAKARTI under separate charter arrangements, SHINWA, KEE YEH and its agent
SKY likewise became parties to the bill of lading. In the same vein, ACENAV, as admitted agent of CARDIA, also
became a party to the said contract of carriage. However, ACENAV, as a mere agent is not liable based on the
provisions of the New Civil Code. (Ace Navigation Co., Inc. v. FGU Insurance Corporation, et al., G.R. 171591, June
25, 2012)

6.02. CONTRACT of ADHESION

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 a.) Contract of Adhesion a contract that is drafted only by one party, usually the carrier, and is sought to be
accepted or adhered to by the other party, the passengers or shippers, the passenger/shippers cannot change the
contract and they are thus made to adhere thereto on the “take it or leave it” basis.

Hence, Bill of lading are construed liberally in favor of the passenger or shipper who adhered to such bill of
lading or ticket.

b.) The shipper or passenger is bound the terms and conditions if there is no occasion of ambiguities. Article
24, NCC expressly enjoins the protection of the disadvantaged.

Article 24, NCC. In all contractual property or other relations, when one of the parties is at a disadvantage
on account of his moral dependence, ignorance indigence, mental weakness, tender age and other handicap, the
courts must be vigilant for his protection.

Thus, were the law always to be applied strictly, there would be danger that injustice might arise. It is
obvious that to protect the rights of the other party, courts must construe obscurities and ambiguities in the contract
strictly AGAINST the corporation or the company.

c.) It is an ordinary contract, one who adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent.

d.) The shipper or passenger is bound by the terms and conditions if there is no occasion to speak of
ambiguities or obscurities whatsoever.

6.03. PAROL EVIDENCE RULE

Parole Evidence rule is based on the consideration that when the parties have reduced their agreement on
a particular matter into writing, all their previous and contemporaneous agreements on the matter are merged
therein.

6.04. BILL of LADING as EVIDENCE

a. Bill of lading is the legal evidence of the contract is recognized in the Code of Commerce provisions on
Overland transportation:

Article 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading,
by the contents of which the disputes which may arise regarding their execution and performance shall be decided,
no exceptions being admissible other than those of falsity and material error in the drafting.

After the contract has been complied with, the bill of lading which the carrier has issued shall be returned
to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions
shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to
writing, with the exception of that provided for in Article 366.

In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of
its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same
effects as the return of the bill of lading.

That such bill of lading shall be prima facie evidence, the tickets and the bills are the best evidence of
contract.

1. The consent of the contracting parties (the passenger boards the ship and the shipper accepts him in the
ship for transportation);
2. The cause or consideration (the fare paid by the passenger as stated in the ticket) and
3. The object (the transportation of the passenger from the place of departure to the place of destination).

b. Code of Commerce provisions on Maritime Commerce:

Article 709. A bill of lading drawn up in accordance with the provisions of this title shall be proof as between
all those interested in the cargo and between the latter and the insurers, proof to the contrary being reserved for
the latter.

6.05. BILL of LADING as ACTIONABLE DOCUMENT

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 The bill of lading must be properly pleaded either as causes of action or defenses. When the shipper
enforces a contractual obligation under the contract of carriage.

6.06. SHIPMENT TERMS

Shipment terms designed to regulate the rights of the parties whenever one ships goods to another.

a. Free On Board (F.O.B.) F.O.B. Point of Destination means that the seller still assumes the risk until the
goods reach the point of destination.

b. Free Alongside (F.A.S.) F.A.S. Vessel means that the seller relinquishes the risk the moment the goods are
delivered alongside the vessel.

c. Cost, Insurance, Freight (F.I.S.) indicates that the price quoted by the seller includes the invoice price plus
insurance and freight.

d. Cost and Freight (C & F) the buyer may decide to take his own insurance over the cargo.

e. Delivery to the carrier is delivery to the buyer. Article 1523, NCC, the ownership over the goods is
transferred to the buyer upon delivery to the carrier. Hence, the risk of loss generally falls on the buyer upon delivery
to the carrier in accordance with the principle res perit domino.

f. Article 1503, NCC, provides for that the ownership over the goods are not transferred to the buyer even
if the goods are already delivered to the carrier if the bill of lading provides that the goods are deliverable to the
seller or his agent or to the order of the seller or his agent.
g. International Commercial Terms or the Incoterms are embodied in the rules published by the
International Chamber of Commerce (or ICC) and over which the latter has intellectual property rights.

7. BASIC STIPULATIONS.

The Code of Commerce provides the basic contents of the bill of lading both for land transportation and maritime
commerce.

7.01. OVERLAND TRANSPORTATION

Formalities are provided for in Article 350, Code of Commerce provides that, The shipper as well as the
carrier of merchandise or goods may mutually demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to whose order the goods are to be sent
whether they are to be delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of their weight, and of the external marks
or signs of the packages in which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be made.
9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

7.02. MARITIME COMMERCE.

Article 706, Code of Commerce, provides the captain of the vessel and the shipper shall have the obligation
of drawing up the bill of lading in which shall be stated:
1. The name, registry and tonnage of the vessel.
2. The name of the captain and his domicile.
3. The port of loading and that of unloading.
4. the name of the shipper.
5. The name of the consignee, if the bill of lading is issued in the name of a specified person.
6. the quantity, quality, number of packages and marks of the merchandise.
7. The freightage and the primage stipulated.

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 The bill of lading may be issued to bearer, to order, or in the name of a specified person, and must be signed
within 24 hours after the cargo has been received on board, the shipper being entitled to demand the unloading at
the expense of the captain should the latter not sign it, and in every case, the losses and damages suffered thereby.

7.03. ELECTRONIC DOCUMENTS

Republic Act (R.A.) No. 8792, otherwise known as the Electronic Commerce Act of 2000 now allows the
issuance of tickets in the form of electronic documents.

8. PROHIBITED AND LIMITING STIPULATIONS

PROHIBITED STIPULATIONS:

Article 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper;

(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a
man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;

(6) That the common carrier’s 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;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

LIMITING STIPULATIONS:

Article 1746. 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.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common carrier’s liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carrier’s liability for delay on account of strikes or riots is valid.

Article 1749. 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.

Article 1750. 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.

Purpose of limiting stipulations

- 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
- common carriers may take appropriate measures such as getting insurances, to cover or protect itself

Presumption of negligence

-the presence of a limiting stipulation does not remove the duty to exercise extraordinary diligence in the
transportation of goods

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Stipulation reducing diligence

-parties cannot stipulate so as to totally exempt the carrier from exercising any degree of diligence
whatsoever; and the parties cannot stipulate that the common carrier shall exercise diligence less than the diligence
of a good father of a family. Parties may stipulate that the diligence to be exercised be less than the extraordinary
diligence provided that the following requisites are complied with:

1. that the stipulation be in writing signed by both parties;

2. that the stipulation be supported by a valuable consideration other than the service rendered by the
common carrier; and
3. that the stipulation be reasonable, just and not contrary to law
-reduction of diligence not allowed for passenger

Stipulations fixing the limit of recovery

Article 1750: a stipulation fixing the amount that may be recovered only requires that:

1. It is reasonable and just under the circumstances and

2. It is fairly and freely agreed upon

- RIOTS AND STRIKES.

Article 1748 provides that an agreement limiting the common carrier’s liability for delay on account
of strikes or riots is valid. The provision merely allows limitation and not escape from liability.

-CARRIAGE OF GOODS BY SEA ACT.

COGSA applies suppletorily to the Civil Code if the goods are to be shipped from a foreign port to
the Philippines. If the goods are shipped in cartons, each carton is considered a package even if they are
stored in container vans.

When the limiting stipulation cannot be invoked

1. When the agreement limiting the common carrier’s liability is annulled by the shipper or owner if the
common carrier refused to carry the goods unless the former agreed to such stipulation

2. if the carrier delays in the transportation of the goods

3. if the carrier changes the stipulated or usual route

9. BILL OF LADING AS RECEIPT

SALUDO V CA

“A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport and
deliver them at a specified place to a person named or on his order. Such instrument may be called a shipping receipt,
forwarder’s receipt and receipt for transportation. The designation is immaterial. It has been held that freight tickets
for bus companies as well as receipts for cargo transported by all forms of transportation, whether by sea or land,
fall within the definition.”

*A receipt is not essential to 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.

10. BILL OF LADING AS DOCUMENT OF TITLE

NEGOTIABILITY

-if the document title contains the required words of negotiability to make the instrument negotiable under
Article 1507, the document remains to be negotiable even if the words “not-negotiable” are placed thereon.

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 -mode of negotiation depends on type of document:
a. bearer document
b. order document
c. incomplete negotiation

EFFECTS OF NEGOTIATION:

- negotiability of a document merely indicates that the transfer of a document of title through negotiation
has the effect of transferring possession of the goods

Philippine Trust Co. v National Bank

“The execution of the notes, the physical possession of the negotiable quedan, or warehouse receipt, and the
recognition of ownership by the warehouseman, legally carries with it both the title to, and the possession of, the
property. In such a case, title is not founded on a public instrument which should be authenticated by a notary or by
a competent public official.”

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