Laws on Transportation

CODE OF COMMERCE OF THE PHILIPPINES

COMMERCIAL CONTRACTS FOR TRANSPORTATION

Article 349 – A contract of transportation by land or water ways of any kind shall be considered commercial:

When it has for its object merchandise or any Article of commerce.

When, whatever its object may be, the carrier is a merchant or is habitually engaged in transportation for the
public.

Article 350 – The shipper as well as the carrier of merchandise or goods may mutually demand that a bill of
lading be made, stating:

The name, surname and residence of the shipper.

The name, surname and residence of the carrier.
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.
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.
The cost of transportation.
The date on which shipment is made.
The place of delivery to the carrier.
The place and the time at which delivery to the consignee shall be made.
The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

Article 351 – In transportation made by railroads or other enterprises subject to regulation rate and time
schedules, it shall be sufficient for the bills of lading or the declaration of shipment furnished by the shipper to
refer, with respect to the cost, time and special conditions of the carriage, to the schedules and regulations the
application of which he requests; and if the shipper does not determine the schedule, the carrier must apply
the rate of those which appear to be the lowest, with the conditions inherent thereto, always including a
statement or reference to in the bill of lading which he delivers to the shipper.

Article 352 – The bills of lading, or tickets in cases of transportation of passengers, may be diverse, some for
persons and others for baggage; but all of them shall bear the name of the carrier, the date of shipment, the
points of departure and arrival, the cost, and, with respect to the baggage, the number and weight of the
packages, with such other manifestations which may be considered necessary for their easy identification.

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.

Article 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.

Article 355 – The responsibility of the carrier shall commence from the moment he receives the merchandise,
personally or through a person charged for the purpose, at the place indicated for receiving them.
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 purposes 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 359 – If there is an agreement between the shipper and the carrier as to the road over which the
conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and
should he do so without this cause, he shall be liable for all the losses which the goods he transports may
suffer from any other cause, beside paying the sum which may have been stipulated for such case.

When on account of said cause of force majeure, the carrier had to take another route which produced an
increase in transportation charges, he shall be reimbursed for such increase upon formal proof thereof.

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.
The expenses which this change of consignment occasions shall be for the account of the shipper.

Article 361 – [The merchandise shall be transported at the risk and venture of the shipper, if the contrary has
not been expressly stipulated.

As a consequence, all the losses and deteriorations which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the
account and risk of the shipper.

Proof of these accidents is incumbent upon the carrier.]

Article 362 – Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes
mentioned in the preceding Article if it is proved, as against him, that they arose through his negligence or by
reason of his having failed to take the precautions which usage has established among careful persons, unless
the shipper has committed fraud in the bill of lading, representing the goods to be of a kind or quality different
from what they really were.

If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost,
on account of their nature or by reason of unavoidable accident, there being no time for their owners to
dispose of them, the carrier may proceed to sell them, placing them for this purpose at the disposal of the
judicial authority or of the officials designated by special provisions.

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 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 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.

Article 367 – If doubts and disputes should arise between the consignee and the carrier with respect to the
condition of the goods transported at the time their delivery to the former is made, the goods shall be
examined by experts appointed by the parties, and, in case of disagreement, by a third one appointed by the
judicial authority, the results to be reduced to writing; and if the interested parties should not agree with the
expert opinion and they do not settle their differences, the merchandise shall be deposited in a safe
warehouse by order of the judicial authority, and they shall exercise their rights in the manner that may be
proper.

Article 368 – The carrier must deliver to the consignee, without any delay or obstruction, the goods which he
may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do
so, he shall be liable for the damages which may be caused thereby.

Article 369 – If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to
pay the transportation charges and expenses, 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.

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 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.

Article 377 – The carrier shall be liable for all the consequences which may arise from his failure to comply with
the formalities prescribed by the laws and regulations of the public administration, during the whole course of
the trip and upon arrival at the point of destination, except when his failure arises from having been led into
error by falsehood on the part of the shipper in the declaration of the merchandise. If the carrier has acted by
virtue of a formal order of the shipper or consignee of the merchandise, both shall become responsible.

Article 378 – Agents for transportation shall be obliged to keep a special registry, with the formalities required
by Article 36, in which all the goods the transportation of which is undertaken shall be entered in consecutive
order of number and dates, with a statement of the circumstances required in Article 350 and others following
for the respective bills of lading.
Article 379 – The provisions contained in Articles 349 and following shall be understood as equally applicable
to those who, although they do not personally effect the transportation of the merchandise, contract to do so
through others, either as contractors for a particular and definite operation, or as agents for transportations
and conveyances.

In either case they shall be subrogated in the place of the carriers themselves, with respect to the obligations
and responsibility of the latter, as well as with regard to their rights.

SECTION 4
Common Carriers

SUBSECTION 1. General Provisions

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their
services to the public.

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 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.

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 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

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.

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.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration on the question of whether or not a stipulation
limiting the common carrier’s liability is reasonable, just and in consonance with public policy.

Article 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over
the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction
or deterioration.

Article 1753. The law of the country to which the goods are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.

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 1757. The responsibility of a common carrier for the safety of passengers as required in articles 1733
and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise.

Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier’s liability for
negligence is valid, but not for willful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier’s liability.

Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
willful 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.

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 1760. The common carrier’s responsibility prescribed in the preceding article cannot be eliminated or
limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

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 willful 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.

SUBSECTION 4. Common Provisions

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this
Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of
contract by a common carrier.

Article 1765. The Public Service Commission may, on its own motion or on petition of any interested party,
after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly
fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.

Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special laws.