LECTURE 4 – CARRIAGE OF GOODS BY SEA ACT

 Applicable to all contracts for carriage of goods by sea act to and from
Philippine ports in foreign trade

EXAMPLE: Goods are transported from California to Manila. The goods never
reached the shipper because they were lost. Definitely, the shipper will file an
action for loss against the carrier.

QUESTION: Within what time may the shipper file a claim against the carrier for
the loss of his cargo?

MEANING LOSS under COGSA

- Contemplates merely a situation where no delivery at all was made by the
shipper of the goods because the goods have perished, have gone out of
commerce, or disappeared in such a way that their existence is unknown or
they cannot be recovered.

- Does not include a situation where there was indeed delivery; but the delivery
was made to the wrong person or there was misdelivery.
 Distinguished from Non-delivery – there was no delivery at all, be it to
the shipper or to the wrong person. In misdelivery, there was delivery but
it was not delivered to the shipper or to the consignee but was delivered
to the wrong person.

 ACTION FOR LOSS under COGSA

- Should be brought within ONE YEAR after delivery of the goods or the date
when the goods should have been delivered; otherwise, the carrier and the ship
shall be discharged from all liability for such loss or damage
- Same rule applies if the cargo was not lost but it was damaged.
- If the loss is under the definition of COGSA, then the claim for loss should be
made within ONE YEAR after delivery of the goods;
- ON THE OTHER HAND, if NO DELIVERY IS MADE, then period should be
computed from the date when the goods should have been delivered
 WHAT HAPPENS IF THE LOSS IS THRU MISDELIVERY OR CONVERSION
(the goods were delivered but to the wrong person), will the period of ONE YEAR
to file a claim apply?
o NO, the rule to be applied is that one under the Civil Code

ONE YEAR PRECRIPTIVE PERIOD

 INSTANCES THAT CAN AFFECT THE ONE-YEAR PRESCRIPTIVE
PERIOD:
1. When there is negotiation to amicably settle the claim of loss or
damage by the shipper

QUESTION: Will the negotiation interrupt or toll the running of the one-year
PP? NO.

EXAMPLE: A cargo from USA was unloaded and delivered at the port of
Manila on Feb. 26, 1947. On the same day, the consignee gave a written
notice that there was a shortage in the delivery. The action against the
carrier was only filed on May 7, 1948. That was already more than one year.
This is for the reason that there is a pending negotiation for amicable
settlement. Unfortunately, it failed so the action against the carrier was filed
on May 7, 1948 after the lapse of one year.

ANSWER: It has prescribed because it was commenced only after the lapse
of one year, 2mos and 9 days from the delivery of the goods in violation of
the provision of PAR. 6, SECTION 3 of COGSA which provides that “an
action for recovery of loss or damage in connection with certain cargo can
only be brought against the carrier within ONE YEAR after the delivery of
the cargo or the date when the goods should have been delivered.”

2. Making an Extra-Judicial Demand to the carrier to pay for the loss or

the damage –
o this will not toll the running of the one-year PP
o The general provisions of the NCC cannot be made to apply because the
application has the effect of extending the one-year period of PP fixed in
the law. It is desirable that matters affecting transporting of goods by sea
be decided in a short a time as possible.
o The application of the provisions of ART 1155 OF THE NCC would
unnecessarily extend the period and permit delays in the settlement of
questions affecting transportation contrary to the clear intent and
purpose of the law.
3. Dismissal of a case – is the filing of an action against the carrier interrupt
the one-year PP?

EXAMPLE 1: A shipment arrived in Manila and delivery was made on May

21, 1959. There were missing items. So, an action was commenced by the
shipper against the carrier in the Municipal Court of Manila on April 27,
1960. The case was dismissed on June 13, 1960 or 20 days after the
expiration of the period of one year due to lack of jurisdiction. Within one
year from the date of the dismissal of the case, the shipper refilled with the
proper court. But beyond one year from the date the goods were delivered.
Has the action prescribed?

ANSWER: NO. Under section 49 of Act No. 190, the period within which
plaintiff could initiate the present case was renewed for another year,
beginning from June 14, 1960. Since the case was commenced on June 24,
1960, then it was within the period last mentioned. Take note that the
period is interrupted if it has already been filed in court.

EXAMPLE 2: The cargo was delivered on Feb. 25, 1964. The action against
Barber Steamship Lines, Inc. was filed on Feb. 22, 1965. So within one year.
Upon motion, the complaint was dismissed on the ground that the
defendant was not the proper party-in-interest and should have been filed
against Barber Lines Fareast Service and not Barber Steamship Lines, Inc.
the complaint was re-filed on April 7, 1965 against Barber Lines Fareast
Service. Has the action against Barber Lines Fareast Service prescribed?

ANSWER: YES. The one-year statutory PP had already expired when the
action was filed on April 7, 1965. The one-year period commenced Feb. 22,
1964 when damaged cargo was delivered. In this case, the first action was
filed against the wrong party. And hence, it did not interrupt the PP of the
action against property party.

4. If the goods were delivered to the arrastre operator – when will the one-
year PP commence?

o If the goods were delivered by the carrier to the arrastre operator who in
turn delivers the goods to the consignee, the one-year PP should be
computed from the date of delivery of the goods to the arrastre operator
and NOT the date when the arrastre operator delivered it to the
consignee. (rule applies when the defendant is the carrier)
EXAMPLE: The consignee sued the arrastre operator for its failure to deliver the
merchandise shipped from abroad which the latter received from the carrier for
delivery to the consignee. The action was brought after the lapse of one year but
within the period of 4 years from the date of delivery. Case was dismissed on
the ground that it was filed after one year from the time the cause of action
accrued. Was the dismissal of the action correct?

ANSWER: No. take note here that the defendant is an arrastre so the law on the
one-year PP does not apply. Considering that the defendant here was neither a
charter nor a ship owner. Consequently, the COGSA does not apply to it. The
ordinary period of 4 years fixed by law will apply. The action in this case was
brought within that time. The one-year PP does not apply because the
defendant was not the common carrier. ONE YEAR PP applies only when the
defendant is the common carrier.

o Damages by reason of unreasonable delay in the transportation: The

damages of goods are covered by the one-year PP under COGSA because
it is the obligation of the carrier to carry the goods includes the duty not
to delay the transportation. So that if the goods are lost or damaged by
reason of unjustified delay, the carrier is liable thereof. The action is one
for damage to the goods and must be filed within the period of one year
from delivery of the goods or the date when the goods should have been
delivered as provided by the COGSA

5. If the insurer files a claim against the common carrier – ONE YEAR PP
applies.
o But if the claim was filed against the insurer, then the one year PP under
COGSA does not apply. The Insurance Contract/law of insurance
applies.

EXAMPLE 1: August – Oct. 1983, Kevin shipped goods from Manila to

Hongkong. The shipment was covered by insurance. When the goods
reached Hongkong, it was discovered that a substantial portion was
damaged. So, the insurer paid only part of the loss. So, Kevin demanded
payment of the balance from the insurer. Defendant here is the insurer, not
the common carrier. Kevin filed the action against the insurer on April 7,
1984, more than 2 years from the time the goods were unloaded from the
vessel. The insurer claimed prescription under COGSA because more than
one year had elapsed since the cargo was unloaded. Has the action
prescribed?

ANSWER: NO. COGSA does not apply to the insurer if the insurer is the
defendant. Basis of insurer’s liability is Insurance Contract.
 EXAMPLE 2: But if it is the insurer who filed an action against the carrier,
then he must be bound by the one year PP.

NOTICE OF LOSS OR DAMAGE

 If the damage is visible or apparent, then the consignee must notify the carrier
upon receipt of the goods. But if the damage is not visible, then the consignee is
given THREE DAYS from receipt to notify the carrier.
 Failure to notify or give notice to the carrier does not bar the filing of the suit if
made within the one year PP.