Arellano University School of Law

In Partial Fulfillment Of The Requirements For The Subject

Transportation Law and Public Utilities

Sunday 3 PM to 5 PM

A report on the

CARRIAGE OF GOODS BY SEA ACT

Submitted by:

Abcede, Aile Carissa

Canda, Mary Grace

De Leon, Nathan

Espera, Jielene Kelly

Isidro, Krimfer

Liban, Jonas Vincent

Macapagal, Kane Aldwin

Mateo, Naomi Rhea Pearl

Merza, Karen Ann

Parwani, Maria Abigail

Timpug, Lyndon

Submitted to:

Atty. Rhea Joy Morales-Gonzalez

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 or 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.

TERMS

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.

RESPONSIBILITIES AND LIABILITIES

(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. Such a bill of lading shall
be prima facie evidence of the receipt by the carrier of the goods.

(4) 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.

(5) 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.

(6) 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 provided in this section or lessening
such liability otherwise than as provided in this Act, shall be null and void and of no effect.

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. It applies only in cases 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, 1967)

2. It also applies 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: New Civil Code as to provisions for damages, torts, and contracts.

2. Common Carrier coming to the Philippines

First: New 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. 1753 of the
New 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 New 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 New 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 New 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 one (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 Supreme Court 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 one (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 ten
(10) years to file an action (for breach of contract) or four (4) years (for a quasi-delict).