What is a Bill of Lading?

The written acknowledgment of receipt of

goods and agreement to transport them
to a specific place to a person named or
to his order. (Unsworth Transport
International Phils. Inc. v. CA, GR
166250, July 26, 2010)
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 of
carriage, and agreeing or directing that
the freight be delivered to bearer, to order
or to a specified person at a specified
place. (Designer Baskets Inc. v. Air Sea
Transport)
A bill of lading is issued by a common
carrier as a contract, receipt and symbol
of the goods covered by it. If it has no
notation of any defect or damage in the
goods, it is considered as a clean bill of
lading. A clean bill of lading constitutes
prima facie evidence of the receipt by the
carrier of the goods as therein described.
(Eastern Shipping Lines v. BPI/MS
Insurance Corp)
Nature of Bill of Lading
Code of Commerce
Art. 350.
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 or 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.
Art. 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.
Art. 707.
Four true copies of the original bill of
lading shall be made, and all of them
shall be signed by the captain and the
shipper. Of these, the shipper shall keep
one and send another to the consignee;
the captain shall take two, one for himself
and another for the ship agent.
There may also be drawn up as many
copies of the bill of lading as may be
considered necessary by the person
interested; but when they are issued to
order or to bearer, they shall be stated in
all the copies, be they the first four or the
subsequent ones, the destination of each
one, stating whether it is for the agent, for
the captain, for the shipper, or for the
consignee. If the copy sent to the latter
should have a duplicate, this
circumstance and the fact that it is not
valid except in default of the first one
must be stated therein.
Art. 708.
Bills of lading issued to bearer and sent
to the consignee shall be transferable by
actual delivery of the instrument; and
those issued to order, by virtue of an
indorsement.
In either case, the person to whom the bill
of lading is transferred shall acquire all
the rights and actions of the transferor or
indorser with regard to the merchandise
mentioned in the same.
Art. 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.
Art. 710.
If the bills of lading do not agree, and no
change or erasure can be observed in
any of them, those possessed by the
shipper or consignee signed by the
captain shall be proof against the captain
or ship agent in favor of the consignee or
shipper; and those possessed by the
captain or ship agent signed by the
shipper shall be proof against the shipper
or consignee in favor of the captain or
ship agent.
Art. 711.
The legitimate holder of a bill of lading
who fails to present it to the captain of the
vessel before the unloading obliging the
latter thereby to unload it and place it in
deposit, shall be responsible for the
expenses of warehousing and other
expenses arising therefrom.
Art. 712.The captain may not by himself
change the destination of the
merchandise. In admitting this change at
the instance of the shipper, he must first
take up the bill of lading which he may
have issued, under pain of being liable
for the cargo to the legitimate holder of
the same.
Art. 713.If before the delivery of the cargo a
new bill of lading should be demanded of the
captain, on the allegation that the failure to
present the previous ones is due to their loss
or to any other just cause, he shall be
obliged to issue it, provided that security for
the value of the cargo is given to his
satisfaction, but without changing the
consignment, and stating therein the
circumstances prescribed in the last
paragraph of Article 707, under penalty,
should he not so state, of being held liable
for said cargo if improperly delivered
through his fault.
Art. 714.
If before the vessel puts to sea the
captain should die or should cease to
hold his position through any cause, the
shippers shall have the right to demand
of the new captain the ratification of the
first bills of lading, and the latter must do
so, provided that all the copies previously
issued be presented or returned to him,
and it should appear from all examination
of the cargo that they are correct.
The expenses arising from the
examination of the cargo shall be
defrayed by the ship agent, without
prejudice to the right of action of the latter
against the first captain if he ceased to be
such through his own fault. Should said
examination not be made, it shall be
understood that the new captain accepts
the cargo as it appears from the bills of
lading issued.
Art. 715.
Bills of lading will give rise to a most
summary action or to judicial, compulsion
("accion sumarisima o de apremios"),
according to the case, for the delivery of
the cargo and the payment of the
freightage and the expenses thereby
incurred.
Art. 716.
If several persons should present bills of
lading issued to bearer or to order,
indorsed in their favor, demanding the
same merchandise, the captain shall
prefer, in making delivery the person who
presents the copy first issued, except
when the latter one was issued on proof
of the loss of the first, and both are
presented by different persons.
In such case, as well as when only
second subsequent copies, issued
without this proof, are presented, the
captain shall apply to the judge or court,
so that he may order the deposit of the
merchandise and their delivery, through
him, to the proper person.
Art. 717.
The delivery of the bill of lading shall
effect the cancellation of all the
provisional receipts of prior date given by
the captain or his subordinates for partial
deliveries of the cargo which may have
been made.
Art. 718.
After the cargo has been delivered the bill
of lading which the captain signed, or at
least the copy by reason of which the
delivery is made, shall be returned to
him, with the receipt for the merchandise
mentioned therein.
The delay on the part of the consignee
shall make him liable for the damages
which such delay may cause the captain.
 Carriage of Goods by Sea Act
(COGSA)
[Responsibilities and Liabilities]
Sec. 3.
1) The carrier shall be bound, before and
at the beginning of the voyage, to
exercise due diligence to —
Make the ship seaworthy;
a)

Properly man, equip, and supply the

b)

ship;
Make the holds, refrigerating and
c)

cooling chambers, and all other parts

of the ship in which goods are
carried, fit and safe for their reception
carriage and preservation.
2) The carrier shall properly and carefully
load, handle, stow, carry, keep, care
for, and discharge the goods carried.
3) After receiving the goods into his
charge the carrier, or the master or
agent of the carrier, shall, on demand
of the shipper, issue to the shipper a
bill of lading showing among other
things —
a)The leading marks necessary for
identification of the goods as the
same are furnished in writing by the
shipper before the loading of such
goods starts, provided such marks
are stamped or otherwise shown
clearly upon the goods if uncovered,
or on the cases or coverings in which
such goods are contained, in such a
manner as should ordinarily remain
legible until the end of the voyage.
b)Either the number of packages or
pieces, or the quantity or weight, as
the case may be, as furnished in
writing by the shipper.
c)The apparent order and condition of
the goods: Provided, That no carrier,
master, or agent of the carrier, shall
be bound to state or show in the bill
 of lading any marks, number,
quantity, or weight which he has
reasonable ground for suspecting
not accurately to represent the goods
actually received, or which he has
had no reasonable means of
checking.
4) Such a bill of lading shall be prima
facie evidence of the receipt by the
carrier of the goods as therein
described in accordance with
paragraphs (3) (a), (b), and (c) of this
section: Provided, That nothing in this
Act shall be construed as repealing or
limiting the application of any part of
the Act, as amended, entitled "An Act
relating to bills of lading in interstate
and foreign commerce," approved
August 29, 1916 (U.S.C. title 49, secs.
81-124), commonly known as the
"Pomerene Bills of Lading Act."
5) The shipper shall be deemed to have
guaranteed to the carrier the accuracy
at the time of shipment of the marks,
number, quantity, and weight, as
furnished by him; and the shipper shall
indemnify the carrier against all loss
damages, and expenses arising or
resulting from inaccuracies in such
particulars. The right of the carrier to
such indemnity shall in no way limit his
responsibility and liability under the
contract of carriage or to any person
other than the shipper.
6) (Unless notice of loss or damage and
the general nature of such loss or
damage be given in writing to the
carrier or his agent at the port of
discharge before or at the time of the
removal of the goods into the custody
of the person entitled to delivery
thereof under the contract of carriage,
such removal shall be prima facie
evidence of the delivery by the carrier
of the goods as described in the bill of
lading. If the loss or damage is not
apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe
endorsed upon the receipt for the
goods given by the person taking
delivery thereof.
The notice in writing need not be given
if the state of the goods has at the time
of their receipt been the subject of joint
survey or inspection.
In any event the carrier and the ship
shall be discharged from all liability in
respect of loss or damage unless suit
is brought within one year after
delivery of the goods or the date when
the goods should have been
delivered: Provided, That if a notice of
loss or damage, either apparent or
 concealed, is not given as provided for
in this section, that fact shall not affect
or prejudice the right of the shipper to
bring suit within one year after the
delivery of the goods or the date when
the goods should have been
delivered.
In the case of any actual or
apprehended loss or damage the
carrier and the receiver shall give all
reasonable facilities to each other for
inspecting and tallying the goods.
7) After the goods are loaded the bill of
lading to be issued by the carrier,
master, or agent of the carrier to the
shipper shall, if the shipper so
demands, be a "shipped" bill of lading
Provided, That if the shipper shall
have previously taken up any
document of title to such goods, he
shall surrender the same as against
the issue of the "shipped" bill of lading,
 but at the option of the carrier such
document of title may be noted at the
port of shipment by the carrier, master,
or agent with name or name the
names of the ship or ships upon which
the goods have been shipped and the
date or dates of shipment, and when
so noted the same shall for the
purpose of this section be deemed to
constitute a "shipped" bill of lading.
8) Any clause, covenant, or agreement in
a contract of carriage relieving the
carrier or the ship from liability for loss
or damage to or in connection with the
goods, arising from negligence, fault,
or failure in the duties and obligations
provided in this section, or lessening
such liability otherwise than as
provided in this Act, shall be null and
void and of no effect. A benefit of
insurance in favor of the carrier, or
similar clause, shall be deemed to be
 a clause relieving the carrier from
liability.
[Rights and Immunities]
Sec. 4.
1) Neither the carrier nor the ship shall be
liable for loss or damage arising or
resulting from unseaworthiness unless
caused by want of due diligence on
the part of the carrier to make the ship
seaworthy, and to secure that the ship
is properly manned, equipped, and
supplied, and to make to the holds,
refrigerating and cool chambers, and
all other parts of the ship in which
goods are carried fit and safe for their
reception, carriage, and preservation
in accordance with the provisions of
paragraph (1) of section 3. Whenever
loss or damage has resulted from
unseaworthiness, the burden of
proving the exercise of due diligence
 shall be on the carrier or other persons
claiming exemption under the section.
2) Neither the carrier nor the ship shall be
responsible for loss or damage arising
or resulting from —
Act, neglect, or default of the master,
a)

mariner, pilot, or the servants of the

carrier in the navigation or in the
management of the ship;
Fire, unless caused by the actual
b)

fault or privity of the carrier;

Perils, dangers, and accidents of the
c)

sea or other navigable waters;

Act of God;
d)

Act of war,
e)

Act of public enemies;

f)

Arrest or restraint of princes, rulers,

g)

or people, or seizure under legal

process;
Quarantine restrictions;
h)
i) Act or omission of the shipper or
owner of the goods, his agent or
representative;
j) Strikes or lockouts or stoppage or
restraint of labor from whatever
cause, whether partial or general;
Provided, That nothing herein
contained shall be construed to
relieve a carrier from responsibility
for the carrier's own acts;
k) Riots and civil commotions
l) Saving or attempting to save life or
property at sea;
m) Wastage in bulk or weight or any
other loss or damage arising from
inherent defect, quality, or vice of the
goods;
n) Insufficiency of packing;
o) Insufficiency of inadequacy of marks;
p) Latent defects not discoverable by
due diligence; and
 q) Any other cause arising without the
actual fault and privity of the carrier
and without the fault or neglect of the
agents or servants of the carrier, but
the burden of proof shall be on the
person claiming the benefit of this
exception to show that neither the
actual fault or privity of the carrier nor
the fault or neglect of the agents or
servants of the carrier contributed to
the loss or damage.
3) The shipper shall not be responsible
for loss or damage sustained by the
carrier or the ship arising from any
cause without the act, fault, or neglect
of the shipper, his agents, or servants.
4) Any deviation in saving or attempting
to save life or property at sea, or any
reasonable deviation shall not be
deemed to be an infringement or
breach of this Act or of the contract of
carriage, and the carrier shall not be
 liable for any loss or damage resulting
therefrom: Provided, however, That if
the deviation is for the purpose of
loading cargo or unloading cargo or
passengers it shall, prima facie, be
regarded as unreasonable.
5) Neither the carrier nor the ship shall in
any event be or become liable for any
loss or damage to or in connection
with the transportation of goods in an
amount exceeding $600 per package
lawful money of the United States, or
in case of goods not shipped in
packages, per customary freight unit,
or the equivalent of that sum in other
currency, unless the nature and value
of such goods have been declared by
the shipper before shipment and
inserted in the bill of lading. This
declaration, if embodied in the bill of
lading, shall be prima facie evidence,
 but shall not be conclusive on the
carrier.
By agreement between the carrier,
master, or agent of the carrier, and the
shipper another maximum amount
than that mentioned in this paragraph
may be fixed: Provided, That such
maximum shall not be less than the
figure above named. In no event shall
the carrier be liable for more than the
amount of damage actually sustained.
Neither the carrier nor the ship shall be
responsible in any event for loss or
damage to or in connection with the
transportation of the goods if the
nature or value thereof has been
knowingly and fraudulently misstated
by the shipper in the bill of lading.
6) Goods of an inflammable, explosive,
or dangerous nature to the shipment
whereof the carrier, master or agent of
the carrier, has not consented with
knowledge of their nature and
character, may at any time before
discharge be landed at any place or
destroyed or rendered innocuous by
the carrier without compensation, and
the shipper of such goods shall be
liable for all damages and expenses
directly or indirectly arising out of or
resulting from such shipment. If any
such goods shipped with such
knowledge and consent shall become
a danger to the ship or cargo, they
may in like manner be landed at any
place, or destroyed or rendered
innocuous by the carrier without
liability on the part of the carrier except
to general average, if any.
 New Civil Code
Art. 1508.
A negotiable document of title may be
negotiated by delivery:
1) Where by the terms of the document
the carrier, warehouseman or other
bailee issuing the same undertakes to
deliver the goods to the bearer; or
2) Where by the terms of the document
the carrier, warehouseman or other
bailee issuing the same undertakes to
deliver the goods to the order of a
specified person, and such person or
a subsequent endorsee of the
document has indorsed it in blank or to
the bearer.
Where by the terms of a negotiable
document of title the goods are
deliverable to bearer or where a
negotiable document of title has been
indorsed in blank or to bearer, any
 holder may indorse the same to
himself or to any specified person, and
in such case the document shall
thereafter be negotiated only by the
endorsement of such endorsee.
Art. 1509.
A negotiable document of title may be
negotiated by the endorsement of the
person to whose order the goods are by
the terms of the document deliverable.
Such endorsement may be in blank, to
bearer or to a specified person. If
indorsed to a specified person, it may be
again negotiated by the endorsement of
such person in blank, to bearer or to
another specified person. Subsequent
negotiations may be made in like
manner.
Art. 1510.
If a document of title which contains an
undertaking by a carrier, warehouseman
or other bailee to deliver the goods to
bearer, to a specified person or order of
a specified person or which contains
words of like import, has placed upon it
the words "not negotiable," "non-
negotiable" or the like, such document
may nevertheless be negotiated by the
holder and is a negotiable document of
title within the meaning of this Title. But
nothing in this Title contained shall be
construed as limiting or defining the
effect upon the obligations of the carrier,
warehouseman, or other bailee issuing a
document of title or placing thereon the
words "not negotiable," "non-
negotiable," or the like.
Art. 1513.
A person to whom a negotiable
document of title has been duly
negotiated acquires thereby:
1) Such title to the goods as the person
negotiating the document to him had
or had ability to convey to a purchaser
in good faith for value and also such
title to the goods as the person to
whose order the goods were to be
delivered by the terms of the
document had or had ability to convey
to a purchaser in good faith for value;
and
2) The direct obligation of the bailee
issuing the document to hold
possession of the goods for him
according to the terms of the
document as fully as if such bailee had
contracted directly with him.
Art. 1515.
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
unless a contrary intention appears. The
negotiation shall take effect as of the time
when the endorsement is actually made.
Art. 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.
Three-fold Character of a Bill of
Lading
1) Receipt
2) Contract
3) Document of title that makes it a
symbol of the goods
Parties in the Bill of Lading
The parties in a bill of lading are the
shipper and the carrier. However, a
consignee, although not a signatory to
the contract of carriage between the
shipper and the carrier, becomes a party
to the Bill of Lading by reason of either:
1) The relationship of agency between
the consignee and the
shipper/consignor;
2) The unequivocal acceptance of the bill
of lading delivered to the consignee,
with full knowledge of its contents; or
 3) Availment of the stipulation pour
autrui.
Rule on the period of delivery of
goods
Code of Commerce
Art. 358.
If there is no period fixed for the delivery
of the goods the carrier shall be bound to
forward them in the first shipment of the
same or similar goods which he may
make point where he must deliver them;
and should not do so, the damages
caused by the delay should be for his
account.
Art. 370.
If a period has been fixed for the delivery
of the goods, it must be made within such
time, and, for failure to do so, the carrier
shall pay the indemnity stipulated in the
bill of lading, neither the shipper not the
consignee being entitled to anything else.
If no indemnity has been stipulated and
the delay exceeds the time fixed in the bill
of lading, the carrier shall be liable for the
damages which the delay may have
caused.
May a consignee refuse to take
delivery of goods?
Code of Commerce
Art. 363.
If those not delivered from part of the
goods transported, the consignee may
refuse to receive the latter, when he
proves that he cannot make use of them
independently of the others.
Art. 365.
If, in consequence of the damage, the
goods are rendered useless for sale and
consumption for the purposes for which
they are properly destined, the consignee
shall not be bound to receive them, and
he may have them in the hands of the
carrier, demanding of the latter their
value at the current price on that day.
Art. 369.
Xxx or if he refuses to receive the goods,
the municipal judge, where there is none
of the first instance, shall provide for their
deposit at the disposal of the shipper, this
deposit producing all the effects of
delivery without prejudice to third parties
with a better right.
Art. 371.
In case of delay through the fault of the
carrier, referred to in the preceding
articles, the consignee may leave the
goods transported in the hands of the
former, advising him thereof in writing
before their arrival at the point of
destination.
What is the period for filing of claims?
Code of Commerce
Art. 366.
Within the twenty-four hours following the
receipt of the merchandise, the claim
against the carrier for damage or average
be found therein upon opening the
packages, may be made, provided that
the indications of the damage or average
which gives rise to the claim cannot be
ascertained from the outside part of such
packages, in which case the claim shall
be admitted only at the time of receipt.
After the periods mentioned have
elapsed, or the transportation charges
have been paid, no claim shall be
admitted against the carrier with regard
to the condition in which the goods
transported were delivered.
Is the Bill of Lading indispensable for
the release of goods to the
consignee?
The general rule is that upon receipt of
the goods, the consignee surrenders the
bill of lading to the carrier and their
respective obligations are considered
cancelled. The law, however, provides
two exceptions where the goods may be
released without the surrender of the bill
of lading because the consignee can no
longer return it.
These exceptions are when the bill of
lading gets lost or for other cause. In
either case, the consignee must issue a
receipt to the carrier upon the release of
the goods. Such receipt shall produce the
same effect as the surrender of the bill of
lading. (Designer’s Baskets v. CA)
Prescriptive period for filing of claims
“that the carrier shall in any event be
discharged from all liability whatsoever in
respect of the goods, unless suit is
brought in the proper forum within 9
months after delivery of the goods or the
date when they should have been
delivered”
 Philippine American General Ins Co v.
Sweet Lines 287 Phil 22 (1992)
YES, the court recognized that
stipulated prescriptive periods shorter
than their statutory counterparts are
generally valid because they do not
affect the liability of the carrier but
merely affects the shipper’s remedy.
 Pioneer Insurance and Surety Corp v.
APL Co. PTE. Ltd., GR 226345, Aug.
2, 2017
NO, in the Bill of Lading, it was
categorically stated that the carrier
 shall in any event be discharged from
all liability whatsoever in respect of the
goods, unless suit is brought in the
proper forum within 9 months after
delivery of the goods or the date when
they should have been delivered.
Carriage of Goods by Sea Act
Application in the Philippines
The Carriage of Goods by Sea Act
(COGSA), Public Act No. 521 of the 74th
US Congress, was accepted to be made
applicable to all contracts for the carriage
of goods by sea to and from Philippine
ports in foreign trade by virtue of CA No.
65. (Insurance Company of North
America v. Asian Terminals Inc., GR
180784, February 15, 2012)
When is it applicable?
The term “carriage of goods” covers the
period from the time when the goods are
loaded to the time when they are
discharged from the ship. (Section 1,
Title I of CA No 65)
The period of time when the goods have
been discharged from the ship and given
to the custody of the arrastre operator is
not covered by the COGSA (Insurance
Company of North America v. Asian
Terminals Inc., GR 180784, February 15,
2012)
Is notice necessary in cases of
damage of the goods covered by
COGSA?
Yes, under Section 3 (6) of COGSA,
notice of loss or damages must be filed
within 3 days from delivery.
Unless notice of loss or damage and the
general nature of such loss or damage be
given in writing to the carrier or his agent
at the port of discharge before or at the
time of the removal of the goods into the
custody of the person entitled to delivery
thereof under the contract of carriage,
such removal shall be prima facie
evidence of the delivery by the carrier of
the goods as described in the bill of
lading. If the loss or damage is not
apparent, the notice must be given within
three days of the delivery.
When to give notice?
Before or at the time of the removal of the
goods into the custody of the person
entitled to delivery thereof under the
contract of carriage.
If the loss or damage is not apparent, the
notice must be given within 3 days of
delivery.
A failure to file a notice of claim within
three days will not bar recovery if it is
nonetheless filed within one year from
delivery of the goods or from the date
when the goods should have been
delivered. (Belgian Overseas Chartering
and Shipping NV, et. Al. v. Philippine
First Insurance Company, GR 143133,
June 5, 2002)
Will the absence of notice of claim bar
recovery?
NO, neither the Civil Code nor the Code
of Commerce states a specific
prescriptive period on the matter, the
Carriage of Goods by Sea Act (COGSA)
which provides for a one-year period of
limitation on claims for loss of, or damage
to, cargoes sustained during transit may
be applied suppletorily to the case at bar.
(Loadstar Shipping Company v. CA, GR
131621, September 28, 1999)
When is the prescriptive period for
filing an action under COGSA?
It has long been settled that in case of loss or
damage or cargoes, the one-year prescriptive
period under the COGSA applies. (Pioneer
Insurance and Surety Corp. v. APL Co., GR
226345, August 2, 2017)
What will happen if no action is made
within the prescriptive period?
In any event the carrier and the ship shall
be discharged from all liability in respect
of loss or damage unless suit is brought
within one year after delivery of the
goods or the date when the goods should
have been delivered (Section 3.6
COGSA)
Is a stipulation limiting liability of a
Common Carrier for loss of goods
allowed under COGSA?
YES, such stipulation in the bill of lading
limiting respondents liability for the loss
of the subject cargoes is allowed under
Art. 1749 of the Civil Code, and Sec. 4,
paragraph (5) of the COGSA. (Philippine
Charter Insurance Corp. v. Neptune
Orient Lines/Overseas Agency Services,
Inc., GR 145044, June 12, 2008)
What is this Package Limitation Rule
all about?
The Package Limitation Rule under
COGSA limits the carrier’s liability in the
absence of the shippers’ declaration of a
higher value in a Bill of Lading.
Neither the carrier nor the ship shall in
any event be or become liable for any
loss or damage to or in connection with
the transportation of goods in an amount
exceeding $500 per package of lawful
money of the United States, or in case of
goods not shipped in packages, per
sutomary freight unit, or the equivalent of
that sum in other currency. (Unsworth
Transport International Phils. Inc. v. CA,
et. Al., GR 166250, July 26, 2010)
What is the exception to the Package
Limitation Rule?
The nature and value of such goods have
been declared by the shipper before
shipment and inserted in the bill of lading.
This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
(Section 4.5 COGSA)
Doctrine of Inscrutable Fault
It holds that where two vessels collided
and there is no proof as to who caused
the accident or who between the two is at
fault, the court should rule that neither
party can maintain any action for
compensation (Section 4.5 COGSA)
 Warsaw Convention
Application in the Philippines
This Convention applies to all
international carriage of persons,
luggage or goods performed by aircraft
for reward. It applies equally to gratuitous
carriage by aircraft performed by an air
transport undertaking.
Objective of the convention and its
coverage
Objective
The Warsaw Convention was designed
to protect and promote the international
airline industry that was, at the time of the
drafting of the treaty, still in its infancy.
The cardinal purpose of the Warsaw
Convention is to provide uniformity of
rules governing claims arising from
international air travel; thus, it precludes
a passenger from maintaining an action
for personal injury damages under local
law when his or her claim does not satisfy
the conditions of liability under the
Convention.
Coverage
Warsaw Convention
Art. 17.
The carrier is liable for damage sustained
in the event of the death or wounding of
a passenger or any other bodily injury
suffered by a passenger, if the accident
which caused the damage so sustained
took place on board the aircraft or in the
course of any of the operations of
embarking or disembarking.
Art. 18.
1) The carrier is liable for damage
sustained in the event of the
destruction or loss of, or of damage to,
any registered luggage or any goods,
if the occurrence which caused the
 damage so sustained took place
during the carriage by air.
2) The carriage by air within the meaning
of the preceding paragraph comprises
the period during which the luggage or
goods are in charge of the carrier,
whether in an aerodrome or on board
an aircraft, or, in the case of a landing
outside an aerodrome, in any place
whatsoever.
3) The period of the carriage by air does
not extend to any carriage by land, by
sea or by river performed outside an
aerodrome. If, however, such a
carriage takes place in the
performance of a contract for carriage
by air, for the purpose of loading,
delivery or transshipment, any
damage is presumed, subject to proof
to the contrary, to have been the result
of an event which took place during
the carriage by air.
Art. 19.
The carrier is liable for damage
occasioned by delay in the carriage by air
of passengers, luggage or goods.
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 of embarking or
disembarking; (Art. 17)
2) Destruction, loss or damage to any
baggage or goods, if it took place
during the “transportation by air”; (Art.
18) and
3) Delay in the transportation of
passengers, baggage or goods. (Art.
19)
Transportation by air
The period during which the baggage or
goods are in the charge of the carrier,
whether in an airport or on board an
aircraft, or, in case of a landing outside
an airport, in any place whatsoever.
It includes any transportation by land or
water outside an airport if such takes
place in the performance of a contract for
transportation by air, for the purpose of
loading, delivery, or transshipment.

Limitation of Liability
Warsaw Convention
Art. 22.
1) In the carriage of passengers, the
liability of the carrier for each
passenger is limited to the sum of
125,000 francs. Where, in accordance
with the law of the Court seized of the
case, damages may be awarded in the
form of periodical payments, the
equivalent capital value of the said
payments shall not exceed 125,000
francs. Nevertheless, by special
 contract, the carrier and the
passenger may agree to a higher limit
of liability.
2) In the carriage of registered
luggage and of goods, the liability of
the carrier is limited to a sum of 250
francs per kilogram, unless the
consignor has made, at the time when
the package was handed over to the
carrier, a special declaration of the
value at delivery and has paid a
supplementary sum if the case so
requires. In that case the carrier will be
liable to pay a sum not exceeding the
declared sum, unless he proves that
that sum is greater than the actual
value to the consignor at delivery.
3) As regards objects of which the
passenger takes charge himself,
the liability of the carrier is limited to
5,000 francs per passenger.
4) The sums mentioned above shall be
deemed to refer to the French franc
consisting of 65 ½ milligrams gold of
millesimal fineness 900. These sums
may be converted into any national
currency in round figures.
Limitation of liability (Art. 22, as
amended by Guatemala Protocol,
1971; Alitalia vs. IAC)
1) Passengers
General rule: $100,000 per passenger
Exception: Agreement to a higher limit
2) Checked-in baggage
General rule: $20 per kilogram
Exception: In case of special
declaration of value and payment of a
supplementary sum by consignor,
carrier is liable to not more than the
declared sum unless it proves the sum
is greater than actual value.
3) Hand-carried baggage
$1,000/passenger
 4) Goods to be shipped
General rule: $20 per kilogram
Exception: In case of special
declaration of value and payment of a
supplementary sum by consignor,
carrier is liable to not more than the
declared sum unless it proves the sum
is greater than actual value.
Liability for willful misconduct
The Warsaw Convention however denies
to the carrier resort to “the provisions
which exclude or limit his liability, if the
damage is caused by his willful
misconduct or by such default on his part
as, in accordance with the law of the
court seized of the case, is considered to
be equivalent to willful misconduct,” of “if
the damage is (similarly) caused… by
any agent of the carrier acting within the
scope of his employment.”
The stated limits of liability are not
applicable “if it is proved that the damage
resulted from an act or omission of the
carrier, its servants or agents, done with
intent to cause damage or recklessly and
with knowledge that damage would
probably result.”
Warsaw Convention
Art. 25.
1) The carrier shall not be entitled to avail
himself of the provisions of this
Convention which exclude or limit his
liability, if the damage is caused by his
wilful misconduct or by such default on
his part as, in accordance with the law
of the Court seized of the case, is
considered to be equivalent to wilful
misconduct.
2) Similarly the carrier shall not be
entitled to avail himself of the said
provisions, if the damage is caused as
 aforesaid by any agent of the carrier
acting within the scope of his
employment.
Willful misconduct
The intentional performance of an act (or
failure to act) with knowledge that the act
will probably result in injury or damage,
or in some manner as to imply reckless
disregard not to discharge some duty
necessary to safety.
Essential elements of willful
misconduct
1) An intentional act or omission done
with conscious awareness that such
an act or omission was wrongful;
2) An awareness of the probable
consequences of an act or omission;
and
3) A causal relationship between the act
or omission and the injury sustained.
Note: There is no willful misconduct if the
airplane was lost without a trace. In such
case, no willful misconduct can be
proved because if the airplane is lost
without a trace, there is no proof of the
act or omission or the proximate cause of
the accident.
Notice requirement
Warsaw Convention
Art. 26.
1) Receipt by the person entitled to
delivery of luggage or goods without
complaint is prima facie evidence that
the same have been delivered in good
condition and in accordance with the
document of carriage.
2) In the case of damage, the person
entitled to delivery must complain to
the carrier forthwith after the discovery
of the damage, and, at the latest,
within three days from the date of
 receipt in the case of luggage and
seven days from the date of receipt in
the case of goods. In the case of delay
the complaint must be made at the
latest within fourteen days from the
date on which the luggage or goods
have been placed at his disposal.
3) Every complaint must be made in
writing upon the document of carriage
or by separate notice in writing
despatched within the times aforesaid.
4) Failing complaint within the times
aforesaid, no action shall lie against
the carrier, save in the case of fraud
on his part.
Notice of claim
A written complaint must be made within:
1) 3 days from receipt of baggage
2) 7 days from receipt of goods
3) In case of delay, 14 days from receipt
of baggage/goods
The complaint is a condition precedent.
Without the complaint, the action is
barred except in case of fraud on the part
of the carrier. (Art. 26)
Prescriptive period, exception
Warsaw Convention
Art. 29.
1) The right to damages shall be
extinguished if an action is not brought
within two years, reckoned from the
date of arrival at the destination, or
from the date on which the aircraft
ought to have arrived, or from the date
on which the carriage stopped.
2) The method of calculating the period
of limitation shall be determined by the
law of the Court seized of the case.
Prescriptive period
Action must be filed within 2 years from:
1) date of arrival at the destination
2) date of expected arrival
 3) date on which the transportation
stopped. (Art. 29)
Bumping-off of passengers
In Lufthansa German Airlines v. Court of
Appeals, Lufthansa issued a confirmed
ticket to Tirso Antiporda covering five-leg
trip aboard different airlines.
Unfortunately, Air Kenya, one of the
airlines which was to carry Antiporda to a
specific destination “bumped” him off. An
action for damages was filed against
Lufthansa which, however, denied any
liability, contending that its responsibility
towards its passenger is limited to the
occurrence of a mishap on its own line.
Consequently, when Antiporda
transferred to Air Kenya, its obligation as
a principal in the contract of carriage
ceased; from there on, it merely acted as
a ticketing agent for Air Kenya. The
Supreme Court ruled: “In the very nature
of their contract, Lufthansa is clearly the
principal in the contract of carriage with
Antiporda and remains to be so,
regardless of those instances when
actual carriage was to be performed by
various carriers. The issuance of
confirmed Lufthansa ticket in favor of
Antiporda covering his entire fve-leg trip
aboard successive carriers concretely
attest to this.”
Over-booking
Even where overbooking of passengers
is allowed as a commercial practice, the
airline company would still be guilty of
bad faith and still be liable for damages if
it did not properly inform passenger that
it could breach the contract of carriage
even if they were confirmed passengers
(Zalamea v. CA, 228 SCRA 23)