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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:
1. When it has for its object merchandise or
any article of commerce.
2. When, whatever its object may be, the
carrier is a merchant or is habitually engaged
in transportation for the public.
Note: Air transportation is not mentioned in
ARTICLE 349 but it is considered as
commercial as well. The non-inclusion of air
transportation in the code its because air
transportation is not yet known at the time of
the promulgation of the Code of Commerce.
ARTICLE 350. The shipper as well as the
carrier of merchandise or goods may mutually
demand that a bill of lading be made, stating:
1. The name, surname and residence of the
shipper.
2. The name, surname and residence of the
carrier.
3. 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.
4. 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.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery
to the consignee shall be made.
9. 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.
Bill of lading is a written acknowledgement of
the receipt of goods and an agreement to
transport and to deliver them at a specified
place to a person named or on his or her order.
It operates both as a receipt and as a contract.
It is a receipt for the goods shipped and a
contract to transport and deliver the same as
therein stipulated. As a receipt, it recites the
date and place of shipment, describes the
goods as to quantity, weight, dimensions,
identification marks, condition, quality, and
value. As a contract, it names the contracting
parties, which include the consignee; fixes the
route, destination, and freight rate or charges;
and stipulates the rights and obligations
assumed by the parties.
The two-fold character of bill of lading:
1. It is a receipt which specifies the
quantity, condition and character of the
goods received, and it recites the date
and place of shipment and the fees paid
by the shipper;
2. It is a contract by which the three
parties, the shipper, the carrier and the
consignee undertakes specific
responsibilities and assume stipulated
obligations.
The bill of lading also fixes the route,
destination, free charges and stipulates the
rights and obligations assumed by the parties
under article 353.
*Is a bill of lading essential or indispensable
for the creation of a contract of carriage?
Bill of lading is not indispensable in
the creation of the contract of carriage. The
contract of carriage arises the moment the
goods delivered to the carrier and the carrier
assumes responsibility over the goods.
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Compania Maritima vs. Insurance Company of
North America, 12 SCRA 213
*Period of bringing a claim against the carrier,
Article 350-352.
If the damage is apparent?
If the consignee receives the package and the
damage is apparent from the exterior of the
package, the consignee must make a claim
against the carrier upon receipt. A verbal claim
is sufficient compliance under the law.
If the damage is not apparent, when must
the period must be brought?
It must be brought within 24hours upon
the receipt of the package if the damage cannot
be known from the exterior part.
Nature of Bill of Lading
A bill of lading aside from being a
contract and a receipt is also a symbol of the
goods covered by it. A bill of lading which has
no notation of any defect or damage in the
goods is called a clean bill of lading which
constitute prima facie evidence of the receipt
by the carrier of the goods as therein describe.
(LORENZO SHIPPING CORP., petitioner, vs.
CHUBB and SONS, Inc., GEARBULK, Ltd.
and PHILIPPINE TRANSMARINE
CARRIERS, INC., respondents.)
In the limitation of the value of goods that is
recoverable under the bill of lading is it
allowed?
That is allowed provided that the
contract is reasonable and just under the
circumstances and it has been fairly and freely
agreed by the parties. (Belgian Overseas vs
Philippine First Insurance)
Rationale: Is to bind the shippers to their
agreement to the value that is the maximum
valuation of their goods.
Belgian Overseas vs Philippine First Insurane
IRON BULK SHIPPING PHILIPPINES,
CO., LTD., petitioner, vs. REMINGTON
INDUSTRIAL SALES CORPORATION,
respondent.
Issue: Can the pro forma bill of lading can be
relied on to establish the condition of the cargo
upon landing?
What happen if the consignee receives the
merchandise and pays for the free charges
without protest?
All claims against the carrier are
extinguished.
When shall the period commence to
run? The moment the consignee actually
receives the goods. ( NOT upon notification )
The prescriptive period to file for the
recovery of undelivered cargo?
1. If with Bill of Lading – 10 years from
non delivery
2. If No Bill of Lading – 6 years from
non delivery
3. If it involves overseas trading – 1
year from non delivery
Held: When the hot rolled sheets arrived in
Manila they were found to be wet, with slight
traces of salt and rust. But the iron bulk said
that when the carrier accepted the cargo the
hot rolled sheets where actually wet and
covered with rust. However, it was stated in
the bill of lading that it was clean on board.
Iron Bulk wants to escape liability by showing
evidence contrary to what is stated in the bill
of lading. The hot rolled sheets were actually
wet and covered with rust. But the SC said that
the fact that the bill of lading is pro forma is of
no moment, if the bill of lading is not truly
reflective of the true condition of the cargo at
the time of loading to the effect that the cargo
was indeed in the damage state. The carrier
could have refused to accept or at the least
made a marginal note that the cargo is in a
damage state. But the Iron bulk did not do any
of those notations. Since the carrier failed to
annotate in the BL the alleged damage
condition of the cargo when it was loaded, the
carrier is bound by the description appearing
in the BL and estopped from denying liability
under the BL.
As to filing notice of claim?
(Provident Insurance Case January 15, 2004)
FACTS: The vessel MV Eduardo II received
on board a shipment of plastic woven bags of
fertilizer in good order and condition which
was consigned to Atlas Fertilizer Corp. (AFC)
and covered by a BL. In the process of
unloading at the port of destination certain
good were found to have fallen overboard and
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some considered unrecovered. Provident
(petitioner) indemnified the consignee Azucar
Shipping Corporation (ASC) for its damages
and seek for reimbursement from AFC for the
value of the loses or damages to the cargo.
AFC argued that the claim or demand by
petitioner had been waived, abandoned or
otherwise extinguished for failure of the
consignee to comply with the required claim
for damages set forth in the stipulation no. 7 of
the BL.
Issue: W/N failure to make prompt notice of
claim as required is fatal to the right to claim
for indemnification for damages.
 Note: BL is the best evidence, in the absence
Held: The SC said that there is no question
with the enforceability of stipulation no. 7 in
the BL. The 24hrs requirement under such
stipulation is by agreement of the contracting
parties a condition sine qua non for the accrual
of the right of action to recover damages
against the carrier. Considering the prompt
demand was necessary to foreclose the
possibility of fraud or mistake in ascertaining
the validity of claims, there was a need for the
consignee or its agents to observe the
conditions provided for in the stipulation no. 7.
But here, petitioner’s insistence or its agents
that the respondent carrier had knowledge of
the damage because one of the respondent’s
officer supervised the unloading operations
and signed the discharging receipt cannot be
construed as sufficient compliance with the
said proviso. Even if the representative of the
carrier supervised the unloading, in this case
the SC said that it cannot be considered as a
sufficient compliance under the law.
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.
the parties may present other evidence.
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 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
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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.
Note: The shipper has the right to change the
name of the consignee and the carrier has to
respect this.
ARTICLE 361. Has been repealed by
ARTICLE 1745 of the Civil Code.
Goods are transported at the risk of the
carrier and any stipulation to the contrary is
void. Except however, if the contract is purely
private wherein such arrangement is valid.
ARTICLE 362. Repealed by Article 1752
CC. Wherein the presumption now is there is
negligence in the event of damage to cargo.
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.
Note: Article 365 governs the case where the
goods are so damaged that they are rendered
useless for sale and consumption for purposes
that they are properly destined. The damage
may affect some or all of the goods.
a. If the damage affects all of the
goods – paragraph 1authorizes the
consignee to abandon all the goods
to the carrier who shall pay the
corresponding damages.
b. If the damage affects some of the
goods – paragraph 2 authorizes the
consignee to abandon only the
damage goods. But if the
consignee prove that it is
impossible to conveniently use the
undamaged goods in that form
without the damage goods. The
law authorizes the consignee to
abandon all of the goods.
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. (Very important)
Note: If the goods transported are damaged,
the damage may either be apparent from the
exterior of the package or cannot be
ascertained from the outside of the package.
 If the damage can be ascertained from the
outside of the package, the claim must be
made immediately.
 If the damage cannot be ascertained from
the outside of the package, the claim must
be made within 24hours. But Article 366,
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the claim must be made before the
payment of freight charges because the
moment the consignee pays for the
freightage, all the claims are considered
extinguished.
The 24hrs period is not a prescriptive period, it
is only intended to afford the carrier of a
reasonable opportunity to check the validity of
the claims of the consignee while the facts are
still fresh in the minds of the persons who took
part in the transaction and the documents are
still available. Otherwise if you bring the
claim more than 24hrs, it is more litigious.
Was there valid claim? (LORENZO
SHIPPING VS CHUBB)
The parties:
Carrier: Lorenzo Shipping
Consignee: Sumitomo Corporation of San
Francisco, California, USA
The Goods transported from Manila to
Davao City. The Ship arrived in Sasa wharf on
December 2, 1987 and it was received by
Transmarine Carriers. When the goods arrived
in Sasa wharf, it was found that the black steel
pipes where rusty and it was checked by R.J.
Del Pan Surveyors, wherein the surveyors
made a report that the black steel pipes where
no longer in good condition.
After the survey, respondent Gearbulk
loaded the shipment on board its vessel M/V
San Mateo Victory, for carriage to the United
States. It issued Bills of Lading stating that all
units are heavily rusted.
While the cargo was in transit from
Davao City to the U.S.A., consignee
Sumitomo sent a letter of intent dated
December 7, 1987, to petitioner Lorenzo
Shipping, which the latter received on
December 9, 1987. Sumitomo informed
petitioner Lorenzo Shipping that it will be
filing a claim based on the damaged cargo
once such damage had been ascertained.
On January 17, 1988, M/V San Mateo
Victory arrived at Oakland, California, U.S.A.,
where it unloaded 364 bundles of the subject
steel pipes. It then sailed to Vancouver,
Washington on January 23, 1988 where it
unloaded the remaining 217 bundles. Toplis
and Harding, Inc. of San Franciso, California,
surveyed the steel pipes, and also discovered
the latter heavily rusted. When the steel pipes
were tested with a silver nitrate solution,
Toplis and Harding found that they had come
in contact with salt water.
Due to its heavily rusted condition the
consignee Sumitomo rejected the damaged
steel pipes and declare them unfit for the
purpose they were intended.
On December 2, 1988, respondent
Chubb and Sons, Inc. filed a complaint for
collection of a sum of money, against
respondents Lorenzo Shipping, Gearbulk, and
Transmarine.
Issue: W/N Sumitomo filed the complaint
within the period prescribe by the Code of
Commerce.
Ruling: The cargo arrived December 2, it sent
a letter on December 7, 1987. How many
days? The SC ruled that Sumitomo has not yet
actually received the possession of the cargo
and has not physically inspected the same at
the time the shipment was discharge from MV
Lorcon of the Lorenzo shipping. Transmarine
carrier as agent of respondent Gearbulk which
carried the goods from Davao City to USA and
respondent Gearbulk itself are not authorized
agents of Sumitomo Corporation. What is
clear from the evidence is that the consignee
received and took possession of the entire
shipment only when the black steel pipes reach
USA shore. Only then was delivery is made
and completed, and only then the 24hrs
prescriptive period starts to run.
What law applies? Philippine law or law of
USA? Remember that the place of destination
applies. The place of destination is Davao
City, then Philippine law applies.
ABOITIZ CASE
Carrier: Aboitiz
Consignee: Science Teaching Improvement
Project(STIP)
The representative of STIP received the
cargo on Aug. 11, 1993, then the
representative made a phone call to the
representative of Aboitiz informing the status
of the cargo. But STIP made only a formal
claim on Sept. 21, 1993. (more than a month)
But the SC said there was a timely filing of the
notice of claim under Article 366. According
to the SC, this case is peculiar that lead to the
SC conclude that the notice requirement was
complied with taking into notice that the
consignee is a school institution that there are
rules and regulations that need to be followed
and there actions need to be approved by the
superiors unlike in a case of a corporation
wherein it has a different set up.
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Compare ABOITIZ vs STIP with
PHILIPPINE CHARTER INSURANCE
CORPORATION vs. CHEMOIL
LIGHTERAGE HITE GOLD
CORPORATION
Wherein the notice here upon receipt of the
damage cargo the representative of the
consignee made a phone call to the carrier that
the cargo was in damage condition. Then
eventually it made a claim but the SC said that
no timely filing of the notice of claim.
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.
Note: Art. 367 governs a situation wherein the
consignee and the carrier do not agree with
respect to the condition of the goods
transported at the time of delivery. The expert
opinion on the matter of the condition of the
goods is not conclusive. Art. 367 allows the
party to submit the valuation of damage to the
arbiters.
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.
Note: The duty of the carrier is not only to
carry the goods, but also to deliver the goods
to the consignee as indicated in the BL.
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.
Note: The consignation is allowed if the
consignee cannot be found, refuses to accept
the goods or refuses to pay the freightage.
What happens if the consignee is unknown to
the carrier? The carrier is still expected to
observe proper and reasonable diligence to
find the consignee. If after the exercise of
proper and reasonable diligence, the consignee
cannot be found. The goods may be stored in a
proper place and the carrier have perform its
duty will be discharge from liability as carrier.
Art. 370 - Art. 371 Covers the agreement
between the carrier and shipper for the
delivery of goods on certain date and
consequent right of abandonment.
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. Repealed by Article 1749 of the
CC. Subject matter is the validity of a carrier
to stipulate in a BL for a reduction of its
liability for damages.
Article 373 Refers to a case where several
carrier successively transport the goods or by
the use of a BL. The original carrier enters into
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an inter connecting contract of carriage shall
be liable for damages caused by its connecting
carrier.
Ex. A transports his goods from Davao City to
Cebu, and from Cebu to Manila pursuant to
combine agreement of services. Shipment was
through FedEx, then from Cebu to Manila
through DHL. FedEx being the first carrier
shall assume the responsibility of the DHL
under the combined services. Take note that
FedEx must have entered into contract of the
combined services with DHL.
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- 377 ( not so important)
Article 378 Wherein it requires the carrier to
keep a registry of cargo.
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.
PUBLIC ACT NO. 521
CARRIAGE OF GOODS BY SEA ACT
(COGSA)
Section 1. That the provisions of Public Act
No. 521 of the 7th Congress of the United
States, approved on April 16, 1936, be
accepted, as it is hereby accepted to be made
applicable to all contracts for the carriage of
goods by sea to and from Philippine ports in
foreign trade: Provided, that nothing in this
Act shall be construed as repealing any
existing provision of the Code of Commerce
which is now in force, or as limiting its
application. .
Note: The requisite of applicability of
COGSA:
1. The contract must be for contract of
carriage of goods;
2. Then it is by sea;
3. To and from the Philippine ports and in
foreign trade.
( If it is coastwise then COGSA does not apply
)
What is the effect of COGSA to our Maritime
laws? As expressly stated in section 1, it shall
not repeal any existing provisions of the Code
of Commerce which is now in force nor does it
limit its application.
Applicability of COGSA sample case:
A cargo was loaded in New York for
Davao City. Since most of the cargo was for
Manila, the carrier unloaded all the cargo
including that for Davao in Manila and did not
make a trip to Davao. Instead the goods is
transship with an inter island vessel. The cargo
arrived in a damage condition. The SC ruled
that the law of COGSA still applies since the
contract of carriage if from New York to
Davao City. The inter island vessel from
Manila to Davao is considered merely as a
connecting vessel and the shipment did not
constitute a separate contract of carriage.
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Sec. 2. This Act shall take effect upon its
approval. (Approved October 22, 1936
TITLE I
Sec. 1. When used in this Act —.
(a) The term "carrier" includes the owner or
the charterer who enters into a contract of
carriage with a shipper.
(b) The term "contract of carriage" applies
only to contracts of carriage by covered by a
bill of lading or any similar document of title,
insofar as such document relates to the
carriage of goods by sea, including any bill of
lading or any similar document as aforesaid
issued under or pursuant to a character party
from the moment at which such bill of lading
or similar document of title regulates the
relations between a carrier and a holder of the
same. .
(c) The term "goods" includes goods, wares,
merchandise, and articles of every kind
whatsoever, except live animals and cargo
which by the contract of carriage is stated as
being carried on deck and is so carried..
(d) The term "ship" means any vessel used for
the carriage of goods by sea..
(e) The term "carriage of goods" covers the
period from the time when the goods are
loaded to the time when they are discharged
from the ship.
RISKS
Sec. 2. Subject to the provisions of Section 6,
under every contract of carriage of goods by
sea, the carrier in relation to the loading,
handling, stowage, carriage, custody, care, and
discharge of such goods shall be subject to the
responsibilities and liabilities and entitled to
the rights and immunities hereinafter set forth
RESPONSIBILITIES AND LIABILITIES
Sec. 3. (1) The carrier shall be bound before
and at the beginning of the voyage to exercise
due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling
chambers, and all other parts of the ship in
which goods are carried, fit and safe for their
reception, carriage, and preservation.
(2) The carrier shall properly and carefully
load, handle, stow, carry, keep, care for,and
discharge the goods carried.
(3) After receiving the goods into his carrier,
or the master or agent of the carrier, shall, on
demand of the shipper, issue to the shipper a
bill of lading showing among other things
(a) The loading marks necessary for
identification of the goods as the same are
furnished in writing by the shipper before the
loading of such goods starts, provided such
marks are stamped or otherwise shown clearly
upon the goods if uncovered, in such a manner
as should ordinarily remain legible until the
end of the voyage
(b) Either the number of packages or pieces,
or the quantity or weight, as the case may be,
as furnished in writing by the shipper.
(c) The apparent order and conditions of the
goods: Provided, that no carrier, master, or
agent of the carrier, shall be bound to state or
show in the bill of lading any marks, number,
quantity, or weight which he has reasonable
ground for suspecting not accurately to
represent the good actually received or which
he has had no reasonable means of checking..
(4) Such a bill of lading shall be prima facie
evidence of the receipt by the carrier of the
goods as therein described in accordance with
paragraphs (3) (a), (b), and (c), of this section:
(The rest of the provision is not applicable to
the Philippines).
(5) The shipper shall be deemed to have
guaranteed to the carrier the accuracy at the
time of shipment of the marks, number,
quantity, and weight, as furnished by him; and
the shipper shall indemnify the carrier against
all loss, damages, and expenses arising or
resulting from inaccuracies in such particulars.
The right of the carrier to such indemnity shall
in no way limit his responsibility and liability
under the contract of carriage to any person
other than the shipper..
(6) Unless notice or loss or damage and the
general nature of such loss or damage by
given in writing to the carrier or his agent at
the port of discharge or at the time of the
removal of the goods into the custody of the
person entitled to delivery thereof under the
contract of carriage, such removal shall be
prima facie evidence of the delivery by the
carrier of the goods as described in the bill of
lading. If the loss or damage is not apparent,
the notice must be given within three days of
the delivery.
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Said notice of loss or damage may be endorsed
upon the receipt for the goods given by the
person taking delivery thereof.
The notice in writing need not be given if the
state of the goods has at the time of their
receipt been the subject of joint survey or
inspection.
In any event the carrier and the ship shall be
discharged from all liability in respect of loss
or damage unless suit is brought within one
year after delivery of the goods or the date
when the goods should have been delivered:
Provided, that, if a notice of loss or damage,
either apparent or concealed, is not given as
provided for in this section, that fact shall not
affect or prejudice the right of the shipper to
bring suit within one year after the delivery of
the goods or the date when the goods should
have been delivered.
In the case of any actual or apprehended loss
or damage, the carrier and the receiver shall
give all reasonable facilities to each other for
inspecting and tallying the goods.
Note: The periods under Art. 3(6), there is the
3 day giving of notice and the 1 year
prescriptive period. The requirement of 3 day
notice under this section does not apply if the
state of the goods at the time of their receipt
has been the subject of a joined survey or
inspection. Also, a failure to file a notice of
claim within 3days will not bar a recovery if it
is nonetheless filed within 1year. This 1 year
prescriptive period also applies to the shipper,
consignee and to the insurer of the goods or
any legal holder of the BL.
Under COGSA, if the goods arrived in a
damage condition from a foreign port to the
Philippine port of authority or port of entry,
upon discharge of goods if damage is apparent,
claim should be filed immediately. If the
damage is not apparent, claim should be filed
within 3 days from delivery. Unlike in Art.
366 of the Code of Commerce, under COGSA
such acclaim is not a condition precedent but
an action must be filed against the carrier
within 1year from discharge. Remember in
Art. 366 there must be a claim, in COGSA that
claim is not a condition precedent. If there is
no delivery the 1 year period starts to run from
the day the vessel left the port in case of
undelivered or lost cargo or from delivery to
arrastre in case of damaged cargo.
BELGIAN OVERSEAS CHARTERING
AND SHIPPING VS PHILIPPINE FIRST
INSURANCE COMPANY
Issue: Whether failure to file notice of claim
shall bar the respondent here from recovery.
(47 days)
Ruling: First, COGSA provides that the notice
of claim need not be given if the state of the
goods at the time of their receipt has been the
subject of a joint inspection or survey. In this
case, prior to the unloading of the cargo an
inspection report as to the condition of the
goods was prepared and signed by the
representative of both parties, so there is no
need of filing of notice of claim.
Second, failure to file a notice of claim within
3 days will not bar recovery if it is nonetheless
filed within 1year. The 1 year prescriptive
period also applies to the shipper, consignee,
the insurer of the good or any legal holder of
the BL. The cargo was discharge on July 31,
1990 and the complaint was filed on July 25m
1991 which is within the 1 year prescriptive
period.
*What if the consignee merely filed an extra
judicial demand? Does it toll the running of
the 1year prescriptive period? No. DOLE
Philippines vs Maritime company 148 SCRA
118.
*When there is miss delivery of cargo, does
COGSA apply? COGSA does not apply incase
of miss delivery of cargo. The prescriptive
now becomes 10 years because there is already
a violation of a contract and COGSA does not
apply to miss delivery.
(7) After the goods are loaded the bill of
lading to be issued by the carrier, master, or
agent of the carrier to the shipper shall if the
shipper so demands, be a "shipped" bill of
lading: Provided, that if the shipper shall have
previously taken up any document of title to
such goods, he shall surrender the same as
against the issue of the "shipped" bill of
lading, but at the option of the carrier such
document of title may be noted at the port of
shipment by the carrier, master, or agent with
the name or names of the ship or ships upon
which the goods have been shipped and the
date or dates of shipment, and when so noted
the same shall for the purpose of this section
be deemed to constitute a "shipped" bill of
lading.
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(8) Any clause, covenant, or agreement in a
contract of carriage relieving the carrier of the
ship from liability for loss or damage to or in
connection with the goods, arising from
negligence, fault, or failure in the duties and
obligations provide in this section or lessening
such liability otherwise than as provided in
this Act, shall be null and void and of no
effect. A benefit of insurance in favor of the
carrier, or similar clause, shall be deemed to be
a clause relieving the carrier from liability.
RIGHTS AND IMMUNITIES
Sec. 4. (1) Neither the carrier nor the ship
shall be liable for loss or damage arising or
resulting from unseaworthiness unless caused
by want of due diligence on the part of the
carrier to make the ship seaworthy and to
secure that the ship is properly manned,
equipped, and supplied, and to make the holds,
refrigerating and cooling chambers, and all
other parts of the ship in which goods are
carried fit and safe for their reception,
carriage, and preservation, in accordance with
the provisions of paragraph (1) of Section (3).
Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the
exercise of due diligence shall be on the carrier
or other person claiming exemption under this
section.
(2) Neither the carrier nor the ship shall be
responsible for loss or damage arising or
resulting from —
(a) Act, neglect, or default of the master,
mariner, pilot, or the servants of the carrier in
the navigation or in the management of the
ship;
(b) Fire, unless caused by the actual fault or
privity of the carrier;
(c) Perils, dangers, and accidents of the sea or
other navigable water;
(d) Act of God;
(e) Act of war;
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or
people, or seizure under legal process;
(h) Quarantine restrictions;.
(i) Act or omission of the shipper or owner of
the goods, his agent or representative;.
(j) Strikes or lockouts or stoppage or restraint
of labor from whatever cause, whether partial
or general: Provided, that nothing herein
contained shall be construed to relieve a
carrier from responsibility for the carrier's own
acts;.
(k) Riotsand civil commotions;.
(l) Saving or attempting to save life or
property at sea;.
(m) Wastage in bulk or weight or any other
loss or damage arising from inherent defect,
quality, or vice of the goods;
(n) Insufficiency or packing;
(o) Insufficiency or inadequacy of marks;
(p) Latent defects not discoverable by due
diligence; and
(q) Any other cause arising without the actual
fault and privity of the carrier and without the
fault or neglect of the agents or servants of the
carrier, but the burden of proof shall be on the
person claiming the benefit of this exception to
show that neither the actual fault or privity of
the carrier nor the fault or neglect of the agents
or servants of the carrier contributed to the loss
or damage.
(3) The shipper shall not be responsible for
loss or damage sustained by the carrier or the
ship arising or resulting from any cause
without the act, or neglect of the shipper, his
agents, or his servants.
(4) Any deviation in saving or attempting to
save life or property at sea, or any reasonable
deviation shall not be deemed to be an
infringement or breach or this Act or of the
contract of carriage, and carrier shall not be
liable for any loss or damage resulting
therefrom: Provided, however, that if the
deviation is for the purpose of loading or
unloading cargo or passengers it shall, prima
facie, be regarded as unreasonable.
(5) Neither the carrier nor the ship shall in
any event be or become liable for any loss or
damage to or in connection with the
transportation of goods in an amount
exceeding $500 per package of lawful money
of the United States, or in case of goods not
shipped in packages, per customary freight
unit, or the equivalent of that sum in other
currency, unless the nature and value of such
goods have been declared by the shipper
before shipment and inserted in the bill of
lading. This declaration, if embodied in the
bill of lading, shall be prima facie evidence,
but shall not be conclusive on the carrier.
By agreement between the carrier, master or
agent of the carrier, and the shipper another
maximum amount than that mentioned in this
paragraph may be fixed: Provided, that such
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maximum shall not be less than the figure
above named. In no event shall the carrier be
liable for more than the amount of damage
actually sustained.
Neither the carrier nor the ship shall be
responsible in any event for loss damage to or
in connection with the transportation of the
goods if the nature or value thereof has been
knowingly and fraudulently misstated by the
shipper in the bill of lading.
Note: COGSA provides for a valuation of
clauses on cargo, if value is stated, the
maximum liability is $500. If value is stated,
then apply the rule on qualified liability in the
Civil Code. If a higher value was declared then
you pay for the corresponding freightage and
that is the liability.
PHILIPPINE CHARTER INSURANCE VS
NEPTUNE 2008 CASE
The shipper in Hongkong did not declare
the actual value of the goods as insured before
shipment and the said value was inserted
before shipment in the BL for which no
additional charges were paid. What shall
apply? The stipulation from the BL that the
carrier’s liability shall not exceed $500 or
what is inserted in the BL? What shall apply,
the provision in COGSA on the maximum
liability or what is inserted in the BL but for
which no additional freightage was paid? The
Rule on COGSA applies, the maximum
liability shall not exceed $500.
(6) Goods of an inflammable, explosive, or
dangerous nature to the shipment whereof, the
carrier, master or agent of the carrier, has not
consented with knowledge of their nature and
character, may at any time before discharge be
landed at any place or destroyed or rendered
innocuous by the carrier without
compensation, and the shipper of such goods
shall be liable for all damages and expenses
directly or indirectly arising out of or resulting
from such shipment. If any such goods shipped
with such knowledge and consent shall
become a danger to the ship or cargo, they
may in like manner be landed at any place, or
destroyed or rendered innocuous by the carrier
without liability on the part of the carrier
except to general average if any.
SURRENDER OF RIGHTS AND
IMMUNITIES AND INCREASE OF
RESPONSIBILITIES AND LIABILITIES
Sec. 5. A carrier shall be at liberty to
surrender in whole or in part all or any of his
rights and immunities or to increase any of his
responsibilities and liabilities under this Act,
provided such surrender or increase shall be
embodied in the bill of lading issued to the
shipper.
The provisions of this Act shall not be
applicable to charter parties; but if bills of
lading are issued in the case of a ship under a
charter party, they shall comply with the terms
of this Act. Nothing in this Act shall be held to
prevent the insertion in a bill of lading of any
lawful provisions regarding general average.
SPECIAL CONDITIONS
Sec. 6. Notwithstanding the provisions of the
preceding section, a carrier, master or agent of
the carrier, and a shipper shall, in regard to any
particular goods be at liberty to enter into any
agreement in any terms as to the responsibility
and liability of the carrier for such goods, and
as to the rights and immunities of the carrier in
respect to such goods, or his obligation to
seaworthiness, (so far as the stipulation
regarding seaworthiness is contrary to public
policy), or the care or diligence of his servants
or agents in regard to the loading, handling,
stowage, carriage, custody, care and discharge
of the goods carried by sea; provided, that in
this case no bill of lading has been or shall be
issued and that the terms agreed shall be a
non-negotiable document and shall be marked
as such. .
Any agreement so entered into shall have full
legal effect: Provided, that this section shall
not apply to ordinary commercial shipments
made in the ordinary course of trade but only
to other shipments where the character or
condition of the property to be carried or the
circumstances, terms and conditions under
which the carriage is to be performed are such
as reasonably to justify a special agreement.
Sec. 7. Nothing contained in this Act shall
prevent a carrier or a shipper from entering
into any agreement, stipulation, condition,
reservation, or exemption as to the
responsibility and liability of the carrier or the
ship for the loss or damage to or in connection
with the custody and care and handling of
goods prior to the loading on and subsequent
to the discharge from the ship on which the
goods are carried by sea.
Sec. 8. The provisions of this Act shall not
affect the rights and obligations of the carrier
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under the provisions of the Shipping Act,
1916, or under the provisions of Sections 4281
to 4292, inclusive, of the Revised Statutes of
the United States, or of any amendments
thereto, or under the provisions of any other
enactment for the time being in force relating
to the limitation of the liability of the owners
of seagoing vessels.
TITLE II
Sec. 9. Nothing contained in this Act shall be
construed as permitting a common carrier by
water to discriminate between competing
shippers similarly placed in time and
circumstances, either (a) with respect to their
right to demand and receive bills of lading
subject to the provisions of this Act; or (b)
when issuing such bills of lading either in the
surrender of any of the carrier's rights and
immunities or in the increase of any of the
carrier's responsibilities and liabilities pursuant
to Section 5, Title I, of this Act; (c) in any
other way prohibited by the Shipping Act,
1916, as amended.
Sec. 10. (Not applicable to the Philippines.)
Sec. 11. When under the custom of any trade
the weight of any bulk cargo inserted in the
bill of lading is a weight ascertained or
accepted by a third party other than the carrier
or the shipper and the fact that the weight as
ascertained or accepted is stated in the bill of
lading, then notwithstanding anything in this
Act, the bill of lading shall not be deemed to
be prima facie evidence against the carrier of
the receipt of goods of the weight so inserted
in the bills of lading, and the accuracy thereof
at the time of shipment shall not be deemed to
have been guaranteed by the shipper.
Distinction of COGSA with Article 366 of
Code of Commerce
1. Art. 366, Notice of damage is a condition
precedent while under COGSA notice of
claim is not a condition precedent.
2. Art. 366, 24hr period for non-apparent
damage, so you make a claim within
24hours while in COGSA it is 3day period
for non-apparent damage.
3. Art. 366, there is no prescriptive period in
COGSA 1yr prescriptive period.
4. Art. 366 does not cover miss delivery or
delay and COGSA also does not cover
miss delivery or delay.
5. Art. 366, extra judicial demand tolls the
running of the prescriptive period or stops
the running of the prescriptive period,
under COGSA extra judicial demand does
not stop the running of the 1yr prescriptive
period.
6. Art. 366, the parties can stipulate for a
shorter period while in COGSA the parties
cannot stipulate to shorten the 1yr
prescriptive period.
Maritime Commerce
Article 573
Definition of Vessel PD 474 Section 3:
Vessel is any barge, lighter, bulk carrier,
passenger ship, freighter, tanker, container
ship, fishing boat, or other artificial
contrivance using any source of motive power.
Also that is designed, used or capable of being
used as a means of water transportation.
Operating either as common contract carrier,
fishing vessel are also considered as vessel
except those owned and operated by AFP and
by foreign governments for military purposes.
Also excluded bangkas, sail boat, and other
water board contrivance of less that 3 gross
tons capacity and not motorized. Small water
craft engaged in river and bay traffic.
How is ownership of merchant vessels
acquired under Article 573? By any of the
means recognized by law (Art. 712 CC), by
donation, by testate and intestate succession,
by consequence of other contracts, by
tradition.
Prescription is 3years, the possession must be
in good faith and with just title recorded. In the
absence of good faith and recording, it is
10years. Take note also that for prescription it
must appear in written instrument, otherwise it
will not produce any effect to 3rd person. In the
absence of these requisites, then continuous
possession for 10 years is required to acquire
ownership. Another mode of acquiring owner
ship of a vessel is by sale. If the sale is made
while the vessel is on voyage, the consequence
is the freightage it earns from the time it
receive its last cargo shall pertain entirely to
the purchaser and the payment of the crew and
other persons who make up its complement
shall be for the account of the purchaser. If the
sale is made after the vessel arrived at the port
of destination, the freightage shall be for the
account of the vendor and the payment of the
crew and other individuals who make up is
compliment shall be for the account of the
vendor unless is stipulated.
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Where can you register the vessel? The

MARINA issues the certificate of public
convenience for the operation of domestic and
overseas water carriers. Marina also issues the
certificate and licenses or documents
necessary or incident thereto.

What is the purpose of registering the vessel?

The purpose is to declare the nationality of the
vessel and for her to enable to assert her
nationality wherever the vessel may be found.