CODE OF COMMERCE OF THE PHILIPPINES

COMMERCIAL CONTRACTS FOR TRANSPORTATION

ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the
carriage is to be made by railway, and the shipment is insisted upon, the company shall transport
them, being exempt from all responsibility if its objections, is made to appear in the bill of lading.

ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents
of a package the carrier should decide to examine it, he shall proceed with his investigation in the
presence of witnesses, with the shipper or consignee in attendance.

If the shipper or consignee who has to be cited does not attend, the examination shall be made
before a notary, who shall prepare a memorandum of the result of the investigation, for such
purpose as may be proper.

If the declaration of the shipper should be true, the expense occasioned by the examination and that
of carefully repacking the packages shall be for the account of the carrier and in a contrary case for
the account of the shipper.

ARTICLE 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 he not do so, the damages caused by the delay should be for his
account.

ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may
change the consignment of the goods which he delivered to the carrier, provided that at the time of
ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be
returned to him, in exchange for another wherein the novation of the contract appears.

ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the carrier
shall be obliged to deliver the goods shipped in the same condition in which, according to the bill of
lading, they were found at the time they were received, without any damage or impairment, and
failing to do so, to pay the value which those not delivered may have at the point and at the time at
which their delivery should have been made.

If those not delivered form 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.

ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in the
value of the goods, the obligation of the carrier shall be reduced to the payment of the amount
which, in the judgment of experts, constitutes such difference in value.

ARTICLE 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.

If among the damaged goods there should be some pieces in good condition and without any defect,
the foregoing provision shall be applicable with respect to those damaged and the consignee shall
receive those which are sound, this segregation to be made by distinct and separate pieces and

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without dividing a single object, unless the consignee proves the impossibility of conveniently
making use of them in this form.

The same rule shall be applied to merchandise in bales or packages, separating those parcels which
appear sound.

ARTICLE 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 nor 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.

ARTICLE 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.

When this abandonment takes place, the carrier shall pay the full value of the goods as if they had
been lost or mislaid.

If the abandonment is not made, the indemnification for losses and damages by reason of the delay
cannot exceed the current price which the goods transported would have had on the day and at the
place in which they should have been delivered; this same rule is to be observed in all other cases in
which this indemnity may be due.

ARTICLE 372. The value of the goods which the carrier must pay 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.

Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation
shall be especially bound in favor of the shipper, although with respect to railroads said liability shall
be subordinated to the provisions of the laws of concession with respect to the property, and to
what this Code established as to the manner and form of effecting seizures and attachments against
said companies.

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.
However, the reservation made by the latter shall not relieve them from the responsibilities which
they may have incurred by their own acts.

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

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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.

CIVIL CODE OF THE PHILIPPINES

ARTICLE 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is
further set forth in articles 1755 and 1756.

SUBSECTION 2
Vigilance Over Goods

ARTICLE 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.

ARTICLE 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
required in article 1733.

ARTICLE 1736. The extraordinary responsibility of the common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the provisions of article 1738.

ARTICLE 1737. The common carrier’s duty to observe extraordinary diligence in the vigilance over
the goods remains in full force and effect even when they are temporarily unloaded or stored in
transit, unless the shipper or owner has made use of the right of stoppage in transitu.

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ARTICLE 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination, until
the consignee has been advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.

ARTICLE 1739. In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss. However, the common carrier
must exercise due diligence to prevent or minimize loss before, during and after the occurrence of
flood, storm or other natural disaster in order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the
common carrier in case of an act of the public enemy referred to in article 1734, No. 2.

ARTICLE 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural
disaster shall not free such carrier from responsibility.

ARTICLE 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of
the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall
be liable in damages, which however, shall be equitably reduced.

ARTICLE 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common carrier
must exercise due diligence to forestall or lessen the loss.

ARTICLE 1743. If through the order of public authority the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue the order.

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 1754. The provisions of articles 1733 to 1753 shall apply to the passenger’s baggage which is
not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998
and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

SUBSECTION 3
Safety of Passengers

ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

ARTICLE 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.

ARTICLE 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the former’s employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.

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This liability of the common carriers does not cease upon proof that they exercised all the diligence
of a good father of a family in the selection and supervision of their employees.

ARTICLE 1761. The passenger must observe the diligence of a good father of a family to avoid injury
to himself.

ARTICLE 1762. The contributory negligence of the passenger does not bar recovery of damages for
his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the
amount of damages shall be equitably reduced.

ARTICLE 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
wilful acts or negligence of other passengers or of strangers, if the common carrier’s employees
through the exercise of the diligence of a good father of a family could have prevented or stopped
the act or omission.

ARTICLE 1998. The deposit of effects made by travellers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that
notice was given to them, or to their employees, of the effects brought by the guests and that, on
the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects. (1783)

ARTICLE 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been
introduced or placed in the annexes of the hotel. (n)

ARTICLE 2000. The responsibility referred to in the two preceding articles shall include the loss of, or
injury to the personal property of the guests caused by the servants or employees of the keepers of
hotels or inns as well as by strangers; but not that which may proceed from any force majeure. The
fact that travellers are constrained to rely on the vigilance of the keeper of the hotel or inn shall be
considered in determining the degree of care required of him. (1784a)

ARTICLE 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure,
unless it is done with the use of arms or through an irresistible force. (n)

ARTICLE 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the
guest, his family, servants or visitors, or if the loss arises from the character of the things brought
into the hotel. (n)

ARTICLE 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-
keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void. (n)