Study Guide # 2 (Code of Commerce, Article 350 – 379)

I. Bill of Lading (350-354)

Form – Article 350, 351, 352 - No form necessary.

a. Definition (memorize)

 Unsworth Transport International (Phils.) Inc. v. CA (G,R. No. 166250, July 26,
2010)

a written acknowledgement of the receipt of the goods and an agreement to transport and
to deliver them at a specified place to a person named therein or to his order.

 Note liability of freight forwarder. When does it become a common carrier?

A freight forwarder's liability is limited to damages arising from its own

negligence, including negligence in choosing the carrier; however, where the
forwarder contracts to deliver goods to their destination instead of
merely arranging for their transportation, it becomes liable as a common
carrier for loss or damage to goods. A freight forwarder assumes the
responsibility of a carrier, which actually executes the transport, even though the
forwarder does not carry the merchandise itself.

 Is the Bill of Lading indispensable for the creation of a contract of carriage? -

Compañia Maritima v. Insurance Company of North America (G.R. No. L-18965,
October 30, 1964)

Bill of lading not indispensable to contract of carriage. — As to the issuance of a bill

of lading, although article 350 of the Code of Commerce provides that "the shipper as
well as the carrier of merchandise or goods may mutually demand that a bill of lading is
not indispensable. As regards the form of the contract of carriage it can be said that
provided that there is a meeting of the minds and from such meeting arise rights
and obligations, there should be no limitations as to form." The bill of lading is not
essential to the contract, although 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 bill of lading is juridically a documentary
proof of the stipulations and conditions agreed upon by both parties. (Del Viso, pp. 314-
315; Robles vs. Santos, 44 O.G. 2268). In other words, the Code does not demand, as
necessary requisite in the contract of transportation, the delivery of the bill of lading
to the shipper, but gives right to both the carrier and the shipper to mutually
demand of each other the delivery of said bill. (Sp. Sup. Ct. Decision, May 6, 1895).
(Martin, Philippine Commercial Laws, Vol. II, Revised Edition, pp. 12-13)

The liability of the carrier as common carrier begins with the actual delivery of the goods
for transportation, and not merely with the formal execution of a receipt or bill of lading;
the issuance of a bill of lading is not necessary to complete delivery and acceptance. Even
where it is provided by statute that liability commences with the issuance of the bill of
lading, actual delivery and acceptance are sufficient to bind the carrier. (13 C.J.S., p. 288)

b. Nature of Bill of Lading/Threefold character of a Bill of Lading –

i) receipt
ii) contract (Article 353),
iii) document of title

 Keng Hua Paper Products Co., Inc. v. CA (G.R. No. 116863, February 12, 1998
A bill of lading serves two functions. First, it is a receipt for the
goods shipped. Second, it is a contract by which three parties,
namely, the shipper, the carrier, and the consignee undertake specific
responsibilities and assume stipulated obligations. A bill of lading
delivered and accepted constitutes the contract of carriage
even though not signed, because the acceptance of a paper
containing the terms of a proposed contract generally
constitutes an acceptance of the contract and of all of its terms
and conditions of which the acceptor has actual or constructive
notice. In a nutshell, the acceptance of a bill of lading by the
shipper and the consignee, with full knowledge of its contents,
gives rise to the presumption that the same was a perfected
and binding contract.

c. Parties –
i) Shipper – The one who sends the goods
ii) Carrier – The one who transport the goods.
iii) Consignee – The one who receives the goods. Shipper and Consignee may be
one and the same.

 Everett Steamship Corporation v. CA (G.R. No 122494, October 8, 1998)

“x x x even if the consignee was not a signatory to the contract of carriage between the
shipper and the carrier, the consignee can still be bound by the contract.”

When private respondent formally claimed reimbursement for the

missing goods from petitioner and subsequently filed a case against
the latter based on the very same bill of lading, it (private respondent)
accepted the provisions of the contract and thereby made itself a party
thereto, or at least has come to court to enforce it. 9 Thus, private
respondent cannot now reject or disregard the carrier's limited liability
stipulation in the bill of lading. In other words, private respondent is
bound by the whole stipulations in the bill of lading and must respect
the same.
 How a consignee becomes a party to the contract of carriage – MOF Company, Inc. v.
Shin Yang Brokerage Corporation ( G.R. No. 172822, December 18, 2009)

The bill of lading is oftentimes drawn up by the shipper/consignor

and the carrier without the intervention of the consignee. However,
the latter can be bound by the stipulations of the bill of lading when a)
there is a relation of agency between the shipper or consignor
and the consignee or b) when the consignee demands
fulfillment of the stipulation of the bill of lading which was
drawn up in its favor.

d. Kinds/Classes of Bill of Lading – no need to memorize, just familiarize yourself

with the following terms:
(i) negotiable bill of lading;
(ii) non-negotiable bill of lading;
(iii) clean bill of lading;
(iv) foul bill of lading;
(v) spent bill of lading;
(vi) through bill of lading;
(vii) on board bill of lading;
(viii) received for shipment bill of lading;
(ix) custody bill of lading;
(x) port bill of lading.

II. Transportation of Goods

a. Responsibility/Rights of Carrier – Article 355, 356, 357

b. Delivery - Article 358 & 370

 Maersk Line v. CA (G.R. No. 94761, May 17, 1993)

While it is true that common carriers are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right to prompt delivery, unless such
common carriers previously assume the obligation to deliver at a given date or time
(Mendoza v. Philippine Air Lines, Inc., 90 Phil. 836 [1952]), delivery of shipment or cargo
should at least be made within a reasonable time.

c. Liability for losses and damages – Article 361 & 362 (Not incompatible with the
provisions of the New Civil Code)

 Mauro Ganzon v. CA (G.R. No. L-48757, May 30, 1988)

There is no incompatibility between the Civil Code provisions on common carriers and
Articles 361 and 362 of the Code of Commerce which were the basis for this Court's ruling in
Government of the Philippine Islands vs. Ynchausti & Co. and which the petitioner invokes in
tills petition. For Art. 1735 of the Civil Code, conversely stated, means that the shipper
will suffer the losses and deterioration arising from the causes enumerated in Art.
1734; and in these instances, the burden of proving that damages were caused by the
fault or negligence of the carrier rests upon him. However, the carrier must first establish
that the loss or deterioration was occasioned by one of the excepted causes or was due to
an unforeseen event or to force majeure. Be that as it may, insofar as Art. 362 appears to
require of the carrier only ordinary diligence, the same is .deemed to have been modified by
Art. 1733 of the Civil Code.

d. Return of bill of lading upon delivery – General Rule: Article 353, 2nd paragraph

“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.”

 Exception: Delivery without return of the bill of lading

 Macam v. CA (G.R. No. 125524, August 25, 1999);
He declared that it was his practice to ask the shipping lines to immediately release
shipment of perishable goods through telephone calls by himself or his "people." He
no longer required presentation of a bill of lading nor of a bank guarantee as a condition to
releasing the goods in case he was already fully paid. Thus, taking into account that subject
shipment consisted of perishable goods and SOLIDBANK pre-paid the full amount of the
value thereof, it is not hard to believe the claim of respondent WALLEM that petitioner
indeed requested the release of the goods to GPC without presentation of the bills of lading
and bank guarantee.

 National Trucking and Forwarding Corporation v. Lorenzo Shipping Corporation

(G.R. No. 153563, February 7, 2005);

Art. 353 x x x

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. (Emphasis supplied)

Conformably with the aforecited provision, the surrender of the original bill of lading is
not a condition precedent for a common carrier to be discharged of its contractual
obligation. If surrender of the original bill of lading is not possible, acknowledgment of
the delivery by signing the delivery receipt suffices. This is what respondent did.

 Designer Baskets, Inc. v. Air Sea Transport, Inc. (G.R. No. 184513, March 9, 2016)
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
canceled. 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.

Clearly, law and jurisprudence is settled that the surrender of the original bill of
lading is not absolute; that in case of loss or any other cause, a common carrier
may release the goods to the consignee even without it.

e. Right of Consignee to abandon the goods transported – Article 363, 365, 371

When consignee may abandon the goods:

1. Art. 336, when there is partial non-delivery and consignee proves that he
cannot make use of the goods which may be delivered, independently of those
not delivered.
2. Art. 365, where the goods are rendered useless for sale and consumption for
the purposes which they are properly destined.
3. Art. 371, where there is delay through fault of the carrier.

f. Filing of claim for loss or damage to cargo – Article 366 (Condition precedent to
the accrual of a right of action)
CLAIM NECESSARY TO RIGHT OF ACTION
Damage may either be:
1. ascertainable only by opening of the packages (claim made within 24 hourse
after receipt.); or
2. from the outside part of the packages (claim must be made upon receipt.)

In both cases, claim must be made before payment of transportation charges.

These are conditions precedent to the accruing of the rights of action against carriers for
damages caused to the merchandise. They are not limitations of action.

 Southern Lines, Inc. v. CA (G.R. No. L-16629, January 31, 1962)

Invoking the provisions of Article 366 of the Code of Commerce and those of the bill of
lading, petitioner further contends that respondent is precluded from filing an action for
damages on account of its failure to present a claim within 24 hours from receipt of the
shipment. It also cites the cases of Government v. Ynchausti & Co., 24 Phil. 315 and Triton
Insurance Co. v. Jose, 33 Phil. 194, ruling to the effect that the requirement that the claim for
damages must be made within 24 hours from delivery is a condition precedent to the accrual
of the right of action to recover damages. These two cases above-cited are not applicable to
the case at bar. In the first cited case, the plaintiff never presented any claim at all before
filing the action. In the second case, there was payment of the transportation charges which
precludes the presentation of any claim against the carrier.

 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. (G.R. No.
87434, August 5, 1992)
SAME AS CASE ABOVE

 Lorenzo Shipping Corp. v. Chubb and Sons, Inc. (G.R. No. 147724, June 8, 2004)
The twenty-four-hour period prescribed by Art. 366 of the Code of
Commerce within which claims must be presented does not begin to
run until the consignee has received such possession of the
merchandise that he may exercise over it the ordinary control
pertinent to ownership. In other words, there must be delivery of
the cargo by the carrier to the consignee at the place of destination.

 Aboitiz Shipping Corporation v. Insurance Company of North America (G.R. No.

168402, August 6, 2008)

Under the Code of Commerce, the notice of claim must be made within twenty four (24) hours
from receipt of the cargo if the damage is not apparent from the outside of the package. For
damages that are visible from the outside of the package, the claim must be made immediately.
The law provides:

Article 366. Within twenty four hours following the receipt of the merchandise, the claim
against the carrier for damages or average which may be found therein upon opening the
packages, may be made, provided that the indications of the damage or average which
give 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. (Emphasis supplied)

The periods above, as well as the manner of giving notice may be modified in the terms of
the bill of lading, which is the contract between the parties. Notably, neither of the parties in
this case presented the terms for giving notices of claim under the bill of lading issued by
petitioner for the goods.

 UCPB General Insurance Co., Inc. v. Aboitiz Shipping Corp. (G.R. No. 168433,
February 10, 2009)

The requirement to give notice of loss or damage to the goods is not an empty formalism.
The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just
liability, but reasonably to inform it that the shipment has been damaged and that it is
charged with liability therefor, and to give it an opportunity to examine the nature and extent
of the injury. This protects the carrier by affording it an opportunity to make an investigation
of a claim while the matter is still fresh and easily investigated so as to safeguard itself from
false and fraudulent claims.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of
a right of action against a carrier for loss of, or damage to, the goods. The shipper or
consignee must allege and prove the fulfillment of the condition. Otherwise, no right of action
against the carrier can accrue in favor of the former.

 Federal Express Corporation v. American Home Assurance Company (G.R. No.

150094, April 18, 2004)
From the initial proceedings in the trial court up to the present, petitioner has tirelessly
pointed out that respondents' claim and right of action are already barred. The latter, and
even the consignee, never filed with the carrier any written notice or complaint regarding its
claim for damage of or loss to the subject cargo within the period required by the Warsaw
Convention and/or in the airway bill. Indeed, this fact has never been denied by respondents
and is plainly evident from the records.

 Filing of Action - Loadstar Shipping Co., Inc. v. CA (G.R. No. 131621, September
28, 1999)
PRESCRIPTION: 1 year.

Inasmuch as 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. This one-year
prescriptive period also applies to the insurer of the goods. 22 In this case, the period for
filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the
one-year period is null and void;

III. Rights of Carrier – Article 372, 374, 375, 376

ARTICLE 372.
in cases if loss or misplacement shall be determined in accordance with that declared in
the bill of lading, the shipper not being allowed to present proof that among the goods
declared therein there were articles of greater value and money.

ARTICLE 374. The consignees to whom the shipment was made may not defer the
payment of the expenses and transportation charges of the goods they receive after the
lapse of twenty-four hours following their delivery; and in case of delay in this payment,
the carrier may demand the judicial sale of the goods transported in an amount necessary
to cover the cost of transportation and the expenses incurred.

ARTICLE 375. The goods transported shall be especially bound to answer for the cost of
transportation and for the expenses and fees incurred for them during their conveyance
and until the moment of their delivery.

This special right shall prescribe eight days after the delivery has been made, and once
prescribed, the carrier shall have no other action than that corresponding to him as an
ordinary creditor.

ARTICLE 376. The preference of the carrier to the payment of what is owed him for the
transportation and expenses of the goods delivered to the consignee shall not be cut off
by the bankruptcy of the latter, provided it is claimed within the eight days mentioned in
the preceding article.

Enforcement of payment of charges:

1. Article 374, judicial sale of the goods transported
2. Article 375, by creating a lien in favor of the carrier on the
goods transported.
Right to sue not excluded: The mere fact that the goods remain in the possession of the
carrier because they have not been removed by the consignee, and the right to demand
sale do not deprive the carrier to demand in a proper case the amounts owing to it by
reason of the contract of transportation.

Effect of Bankruptcy: Bankruptcy of the consignee shall not cut off the preference of
the carrier, provided that the claim is made within 30 days from the date of delivery.
Purpose of lien and time limit: lien in favor of the shipper.

IV. Rights and liabilities in combined services – Article 373

ARTICLE 373. The carrier who makes the delivery of the merchandise to the consignee
by virtue of combined agreements or services with other carriers shall assume the
obligations of those who preceded him in the conveyance, reserving his right to
proceed against the latter if he was not the party directly responsible for the fault
which gave rise to the claim of the shipper or consignee.

The carrier who makes the delivery shall likewise acquire all the actions and rights
of those who preceded him in the conveyance. The shipper and the consignee shall
have an immediate right of action against the carrier who executed the transportation
contract, or against the other carriers who may have received the goods transported
without reservation.