Commonwealth Act No.

65: Carriage of Goods by Sea

Act (COGSA)
INTRODUCTION

The COGSA is the applicable law for all contracts for carriage of goods by sea to and from Philippine
ports in foreign trade. On April 16, 1936, Public Act No. 521 aka COGSA was approved by the 74th US
Congress. Subsequently, this was made applicable to the Philippines upon the election and approval of
Commonwealth Act No. 55 by the National Assembly of the Commonwealth Government. COGSA
covered contracts of carriage of goods by sea from the US to Philippine ports from 1936-1950. On
August 30, 1950, the New Civil Code of 1949 (RA 386) came into effect which provided for more
provisions involving common carriers.

PURPOSE OF COGSA
The purpose of COGSA are as follows:
a. To govern the rights and responsibilities between shippers of cargo and ship-owners regarding ocean
shipments;
b. To define the terms used in shipping;
c. To prescribe the maximum amount for the limitation of the ship-owner’s liability and
d. To stipulate the period for prescription.

APPLICABILITY OF COGSA
1. In case of loss or damage, and not to misdelivery or conversion of goods. (Ang v. American
Steamship Agencies, Inc., G.R. No. L-22491, Jan. 27, 2967)

2. In case of deterioration of goods due to delay in their transportation constitutes "loss" or "damage"
within the meaning of Sec. 3(6) of COGSA. (Mitsui O.S.K. Lines Ltd. v. CA, G.R. No. 119571, Mar. 11,
1998)

REQUISITES FOR APPLICABILITY

1. There must be a contract of carriage between the ship-owner or its agent and the shipper;
2. The contract must be for the carriage of goods;
3. For transportation by sea; and
4. In foreign trade, UNLESS expressly agreed upon by the parties to apply in domestic shipping.

APPLICABILITY TO A TRANSSHIPMENT OF CARGO VIA INTER-ISLAND VESSEL

COGSA may still apply to a transshipment of cargo via inter-island vessel.
In the case of American Insurance Co. vs. Compania Maritima (21 SCRA 998), a contract for
carriage from New York, USA with final destination in Cebu City, Philippines was entered into.
From US to Manila, the shipment was on board M/S Toreador; and from Manila to Cebu, the
shipment was loaded on S/S SIQUIJOR. The transshipment of the cargo from Manila to Cebu
was not a separate transaction from that originally entered into by Macondray, as general agent
for the M/S Torreador. It was part of Macondray’s obligation under the contract of carriage and
the fact that the transshipment as made via an interisland vessel did not operate to remove the
transaction from the operation of the COGSA.

GOVERNING LAW
1. Private carrier coming to the Philippines
First: COGSA
Second: Code of Commerce
Third: Civil Code as to provisions for damages, torts, and contracts.

2. Common Carrier coming to the Philippines

First: Civil Code provisions on common carriers
Second: COGSA
Third: Code of Commerce

3. Private or Common Carrier going to a foreign country.

General Rule: Law of the country of destination as provided by Art. 17543 of the Civil Code
Exception: Expressly agreed upon by the parties.

IMPORTANT FEATURES
The following are important features of the Carriage of Goods by Sea Act:

1.) It acts as a supplement to the Civil Code and applies to all contracts of carriage of goods
coming to or from Philippine ports in foreign trade.
2.) When there is damage to the goods, notice must be given by the recipient to the carrier or
his agent upon receipt of the goods. But if the damage is apparent/externally visible, notice
must be given within 3 days from receipt of the goods.
3.) Failure of the recipient to notify the carrier will not prevent the filing of a suit for the
loss/damage of the goods.
4.) The maximum liability is US$600.00 per package/customary freight unit unless the shipper
or owner of the goods declares a higher value. It may be lowered by agreement put down in
the bill of lading.

The purpose of limiting the common carrier's liability is to protect it from fraud, such as by
allowing it to take insurance to protect itself. If, for example, the shipper or consignee/recipient
understated the value of the goods, it not only violates a valid contractual stipulation; it has
also committed fraud against the common carrier by trying to make it liable for an amount
greater that what was stipulated in the bill of lading (Cokaliong Shipping Lines vs. UCPB General
Insurance Co., GR 146018, June 25, 2003.)

LIMITATION OF LIABILITY
Art. 1749 of the Civil Code expressly permits a stipulation limiting the liability of a common
carrier to the value of the goods appearing on the bill of lading.
PRESCRIPTIVE PERIOD

COGSA [Sec. 4(5)] is suppletory to the Civil Code. It limits the liability to $600 per package in
the absence of a declaration of a higher value of the goods by the shipper in the Bill of Lading.
The provisions of the COGSA on limited liability are as much a part of the bill of lading as
though physically in it and as much a part thereof as though placed therein by agreement of
the parties. (Eastern Shipping Lines, Inc. v. IAC, 150 SCRA 463)

The prescriptive period is 1 year from date of delivery or the date when they should have been
delivered. Take note of the following:

1.) Delivery is to the arrastre operator not the recipient

2.) It won't apply if the goods were delivered to the wrong person
3.) An extra-judicial claim/demand from the recipient won't interrupt the prescriptive period

It will apply only to goods damaged/lost in transit, which is why prescription begins when the
goods are handed over to the arrastre operator. If the arrastre service was responsible for
damaging the goods, another law will apply.

The SC has been known to bend the rules on the prescriptive period, especially if certain
unfortunate things would take place. If, for instance, a case was dismissed for lack of
jurisdiction and the prescriptive period expired, it ruled that the recipient could file a new case
within 1 year from the dismissal of the previous case (Stevens & Co vs. Nordeutscher Lloyd, 6
SCRA 180.) If, however, the case was filed against the wrong party, the prescriptive period
won't be interrupted.

The prescriptive period is interrupted by the following instances:

1.) An action has been filed in court
2.) There is an express agreement that extra-judicial claims/demands for damages will suspend
the running of the prescriptive period.
If the goods were delivered to the wrong person, the recipient of the goods has 10 years to file
an action (for breach of contract) or 4 years (for a quasi-delict.)