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CODE OF COMMERCE BOOK ONE MERCHANTS AND COMMERCE IN GENERAL TITLE ONE MERCHANTS AND ACTS OF COMMERCE ARTICLE

1. For purposes of this Code, merchants are: 1. Those who, having legal capacity to engage in commerce, habitually devote themselves to it; cdasia 2. The commercial or industrial companies which may be created in accordance with [this Code] existing legislation. ARTICLE 2. Acts of commerce, whether those who execute them be merchants or not, and whether specified in this Code or not, should be governed by the provisions contained in it, in their absence, by the usages of commerce generally observed in each place; and in the absence of both rules, by those of the civil law. Those acts contained in this Code and all others of analogous character shall be deemed acts of commerce. ARTICLE 3. The legal presumption of habitually engaging in commerce shall exist from the moment the person who intends to engage therein announces through circulars, newspapers, handbills, posters exhibited to the public, or in any other manner whatsoever, an establishment which has for its object some commercial operation. ARTICLE 4. Persons who possess the following qualifications shall have legal capacity to habitually engage in commerce: 1. Having completed the age of twenty-one years. 2. Not being subject to the authority of the father or of the mother nor to marital authority. 3. Having the free disposition of their property. ARTICLE 5. Those under twenty-one years of age and those incapacitated may continue, through their guardians, the business engaged in by their parents or their predecessors. If the guardians do not have legal capacity to trade or are under some disqualifications, they shall be obliged to appoint one or more factors having the legal qualifications who shall substitute them in conduct of the business. ARTICLE 6. (Repealed) 1 ARTICLE 7. (Repealed) 2 ARTICLE 8. The husband may freely revoke the authorization impliedly or expressly granted to his wife to trade, stating the revocation in a public instrument which shall also be recorded in the commercial registry, published in the official periodical of the town, if there be one, or otherwise in that of the town, if there be one, or otherwise in that of the province, and announced to her correspondents by means of circulars. The publication may also be made, if the husband so demands, by proclamations and common criers. This revocation may, in no case, prejudice rights acquired before its publication in the official periodical. aisadc ARTICLE 9. (Repealed) 3 ARTICLE 10. (Repealed) 4 ARTICLE 11. (Repealed) 5 ARTICLE 12. (Repealed) 6 ARTICLE 13. The following may not engage in commerce nor hold office or have any direct administrative or financial intervention in commercial or industrial companies: 1. Those sentenced to the penalty of civil interdiction, while they have not served their sentence or have not been amnestied or pardoned. 2. Those declared bankrupt, while they have not obtained their discharge [or have not been authorized, by virtue of an agreement accepted at a general meeting of creditors and approved by

judicial authority, to continue at the head of the establishment, the authority being understood in such case as limited to that expressed in the agreement.] 3. Those who on account of special laws or provisions can not trade. ARTICLE 14. The following cannot engage in the mercantile profession, in person or through another, nor hold office or have any direct administrative or financial intervention in commercial or industrial associations, within the limits of the districts, provinces or towns in which they discharge their duties: 1. Justices, judges and officials of the fiscals' office in active service. This provision shall not be applicable to the municipal mayors, judges and prosecuting attorneys, nor to those who may temporarily discharge judicial or prosecution duties. 2. Administrative, economic or military heads of districts, provinces, or posts. 3. Those employed in the collection and administration of funds of the State, appointed by the Government. Those who administer and collect under contract and their representative are excepted. 4. Stock and commercial brokers of whatever class they may be. 5. Those who, under special laws and provisions, cannot trade in specified territory. ARTICLE 15. Foreigners and companies created abroad may engage in commerce in the Philippines, subject to the laws of their country with respect to their capacity to contract, and to the provisions of this Code as regard the creation of their establishments in Philippine territory, their mercantile operations, and the jurisdiction of the courts of the nation. The provisions of the article shall be understood to be without prejudice to what, in particular cases, may be established by treaties or agreements with other powers. cdtai TITLE TWO COMMERCIAL REGISTRIES ARTICLE 16. In all the capitals of provinces shall be opened a mercantile registry composed of two independent books in which shall be inscribed: 1. Individual merchants. 2. Associations. In the coastal provinces and in the interior ones where it is considered convenient because of the presence of navigation, the registry shall include a third book for the registration of vessels. ARTICLE 17. Registration in the mercantile registry shall be optional for individual merchants and compulsory for associations which are created in accordance with this Code or with special laws, and for vessels. ARTICLE 18. The unregistered merchant cannot request the inscription of any document in the mercantile registry, nor take advantage of its legal effects. ARTICLE 19. The register shall keep the books necessary for registration, stamped, folioed and with a memorandum on the first page of the number of pages which each book contains, signed by the justice of the peace. Where there are several justices of the peace, any one of them may sign the memorandum. ARTICLE 20. The registrar shall enter in chronological order in the registry and general index all the merchants and companies which are registered, giving each sheet the correlative number which corresponds to it. ARTICLE 21. On the record sheet of each merchant or company shall be entered: 1. The name, firm name, or title. cd 2. The class of commerce or transactions in which engaged. 3. The date on which the transactions shall commence or have commenced. 4. The domicile, with a specification of the branches which may have been established, without prejudice to the registration of the branches in the registry of the province in which they may be domiciled. 5. Instruments for the creation of commercial associations, whatever their object or denomination

may be, as well as those for the modification, rescission or dissolution of such associations. 6. (Repealed) 7 7. (Repealed) 8 8. (Repealed) 9 9. [Dotal instruments], marriage settlement and the title which prove the ownership of the paraphernal property of the wives of merchants. 10. The issue of shares, certificates, and bonds of railroads and of all classes of associations, be they associations for public works, credit companies, or others, stating the series and number of the certificates of each issue, their participation, interest, payment and premium, should they have one or the other, the total amount of the issue, and the property, works, rights or mortgages, should there be any, by which their payment is secured. The issues which may be made by individuals shall also be recorded in accordance with the provisions of the preceding paragraph. 11. (Superseded) 10 12. (Superseded) 11 Foreign associations which desire to establish themselves or create branches in the Philippines shall present and record in the registry, besides their by-laws and the documents required of Filipinos, a certificate issued by the Philippine consul that they are constituted and authorized in accordance with the laws of their respective countries. ARTICLE 22. (Superseded) 12 ARTICLE 23. As a general rule, the registration shall be made by virtue of notarial copies of the documents which the interested party may present. cdt The registration of notes, bonds, or order and bearer instruments which do not carry mortgages of immovable property shall be made upon presentation of the certified minutes where in appears the resolution of the person or persons who made the issue, and the conditions, requisites and guaranties thereof. When these guaranties consist of mortgage of immovables, the corresponding instrument shall be presented for annotation in the mercantile registry. ARTICLE 24. Unregistered articles of association shall produce effect among the members who execute them, but they shall not prejudice third person who, however, may make use thereof in so far as favorable. ARTICLE 25. All the resolutions or acts which effect an increase or reduction in the capital of commercial associations, whatever their denomination may be, and those which modify or alter the conditions of recorded instruments, shall also be recorded in the mercantile registry. The omission of this requisite shall produce the effects mentioned in the preceding article. ARTICLE 26. Registered documents shall produce legal effect to the prejudice of third persons only from the date of their registration, and cannot be invalidated by prior or subsequent unregistered documents. ARTICLE 27. [Dotal] instruments [and those] referring to paraphernal property of the merchant's wife, not registered in the mercantile registry, shall have no right of preference over other credits. Immovable property and real rights over them, acquired by the wife prior to the creation of the concurrent credits, shall be excepted. ARTICLE 28. If a merchant should fail to make in the registry the inscription of the [dotal or] paraphernal property of his wife, the latter herself may request it or it may be done for her by her parents, by others or uncles by consanguinity, as well as by those who discharge or may have discharged the duties of guardians or curators of the wife, [or who constitute or may have constituted the dowry.] ARTICLE 29. (Repealed) 13 ARTICLE 30. The mercantile registry shall be public. The registrar shall furnish those who may

request it any data referring to what may appear on the registration sheet of each merchant, association or vessel. Likewise, he shall issue true copies of the whole or part of said sheet to anyone who may ask for it in a signed request. ARTICLES 31 and 32. (Repealed) 14 TITLE THREE BOOKS AND BOOKKEEPING OF COMMERCE ARTICLE 33. Merchants shall necessarily keep: 1. A book of inventories and balances. 2. A journal. 3. A ledger. 4. A book or books for copies of letters and telegrams. 5. Other books which may be required by special laws. Associations and companies shall also keep a book or books of minutes, in which shall be entered all resolutions referring to the progress and operations of the entities, approved at general meetings or at those of managing boards. cdtai ARTICLE 34. They may also keep other books which they may deem convenient, according to the system of bookkeeping they may adopt. These books shall not be subject to the provisions of Article 36; but they may legalize those which they may consider proper. ARTICLE 35. Merchants may keep their books personally or through persons whom they authorize for the purpose. If a merchant does not keep his books personally, authorization shall be presumed granted to him who keeps them unless there is proof to the contrary. ARTICLE 36. Merchants shall present the books referred to in Article 33, bound, ruled, and folioed, to the justice of the peace of the municipality in which they have their commercial establishments in order that he may put on the first page of each one a signed memorandum of the number of pages which the book contains. The seal of the justice of the peace legalizing it shall, furthermore, be stamped on all the pages of each book. ARTICLE 37. The book of inventories and balance shall begin with the inventory which the merchant must prepare at the time he starts his operations, and shall contain: 1. An exact statement of the money, securities, credits, notes receivable, movable and immovable property, merchandise and goods of all kinds, appraised at their true value, and which constitute his assets. 2. An exact statement of the debts and all kinds of pending obligations, should there be any, and which form his liabilities. 3. He shall determine, in proper cases, the exact difference between the assets and the liabilities, which shall be the capital with which he begins his operations. The merchant shall, furthermore, prepare annually and enter in the same book the general balance of his business, with the details mentioned in this article, and in accordance with the entries in the journal, without any reservations or omissions, under his signature and responsibility. ARTICLE 38. In the journal shall be entered as the first item the result of the inventory mentioned in the preceding article, divided into one or various consecutive accounts, according to the system of bookkeeping adopted. Thereafter, all his operations shall follow day by day, each entry stating the credit and debit of the respective accounts. aisadc When the operations are numerous, whatever their importance may be, or when they have taken place outside the domicile, those referring to each account and which have taken place in each day may be included in a single entry, but observing in their statement, if itemized, the same order in which they

took place. Likewise, the amounts which the merchant uses for his household expenses shall be entered on the date on which they are withdrawn from the funds, and they shall be carried into a special account to be opened for that purpose in the ledger. ARTICLE 39. The accounts referring to each object or person in particular shall, furthermore, be opened with Debit and Credit in the ledger, and to each of these accounts shall be transferred, in strict order of dates, the entries in the journal referring to them. ARTICLE 40. In the book of minutes which each association shall carry shall be entered verbatim the resolutions agreed upon at its meetings or at those of its managers, stating the date of each one, those present in them, the votes cast, and other matters conducive to an exact knowledge of what as agreed upon, authenticated with the signatures of the managers, directors or administrators charged with the management of the association or designated by the by-laws or regulations by which it is governed. ARTICLE 41. All the letters which a merchant may write regarding his business and the telegraphic dispatches which he may send shall be transferred, either by hand or by any mechanical means, to the book for copies., fully and successively by order of dates, including the subscribing clause and the signatures. ARTICLE 42. Merchants shall carefully keep, in bundles and in proper order, the letters and telegraphic dispatches which they may receive relative to their transactions. ARTICLE 43. Besides complying with and fulfilling the conditions and formalities prescribed in this title, merchants must keep their books with clearness, in the order of dates, without blanks, interpolations, erasures or blots, and without showing signs of having been altered by substituting or tearing out folios, or in any other manner whatsoever. ARTICLE 44. Merchants shall correct the errors or omissions which they may make in entering in their books, immediately upon noticing them, explaining clearly in what they consisted, and writing the entry as it should have been written. If some time should have elapsed since the error was committed or since the omission was incurred, they shall make the proper entry of correction, adding on the margin of the erroneous entry a memorandum indicating the correction. ARTICLE 45. No judge or court or authority may, on his own initiative, make an inquiry to ascertain if merchants keep their books in accordance with the provisions of this Code, nor make a general investigation or examination of the bookkeeping in the offices or counting-houses of merchants. ARTICLE 46. Neither may the communication, delivery or general examination of the books, correspondence and other documents of merchants, be decreed at the instance of a party, except in the cases of liquidation, universal succession or bankruptcy. ARTICLE 47. Outside of the cases mentioned in the preceding article, the exhibition of the books and documents of merchants may be decreed at the instance of a party or at the initiative of the court, only when the person to whom they belong has an interest or responsibility in the case in which the exhibition is made. [The examination shall be made in the counting-house of the merchant, in his presence or in that of the person whom he commissions, and shall be limited to the points related to the question at issue; these being the only ones that may be verified.] ARTICLE 48. In order to measure the probative force of the books of merchants, the following rules shall be observed: 1. The books of merchants shall be evidence against themselves, no proof to the contrary being admissible; but the adverse party cannot accept the entries which may be favorable to him and reject those which may prejudice him, but having accepted this means of proof, he shall be bound by the result which it may show in its entirety, taking into equal consideration all the entries relative to the question in litigation. 2. If there should be a conflict in the entries of the books kept by two merchant, and those of one

should have been kept with all the formalities mentioned in this title, and those of the other should suffer from any defect or should lack the requisites prescribed by this Code, the entries of the books properly kept shall be admitted against those of the defective one. unless the contrary is shown by means of other evidence admissible in law. cdt 3. If one of the merchants should not present his books or should manifest that he does not have them, those of his adversary, kept with all the legal formalities, shall be admitted against him, unless it is shown that the absence of such books is due to force majeure, and always saving proof by other means admissible in suits against the entries exhibited. 4. If the books of the merchants should have all the legal requisites and should be contradictory, the court shall decide by the other proofs, weighing them according to the general rules of law. ARTICLE 49. Merchants and their heirs or successors shall keep the books, telegrams, and correspondence of their business in general, during all the time that this may last and for five years after the liquidation of all their business and commercial affairs. Documents which specially concern specific acts or transactions may be rendered useless or destroyed upon the laps of the prescriptive period of the actions which may arise therefrom, unless some questions referring directly or indirectly to them should be pending, in which case, they must be kept until the conclusion thereof. TITLE FOUR GENERAL PROVISIONS RELATING TO COMMERCIAL CONTRACTS ARTICLE 50. Commercial contracts, in everything relative to their requisites, modifications, exceptions, interpretations and extinction and to the capacity of the contracting parties, shall be governed in all matters not expressly provided for in this Code or in special laws, by the general rules of the civil law. ARTICLE 51. Commercial contracts shall be valid and shall give rise to obligations and causes of action in suits, whatever the form and language in which they may be executed, the class to which they may belong, and the amount they may involve, provided their existence is shown by any means established by the civil law. However, the testimony of witness alone shall not be sufficient to prove the existence of a contract which involves an amount exceeding 1,500 pesetas unless supported by some other evidence. ARTICLE 52. From the provisions of the preceding article shall he excepted: 1. Contracts which, in accordance with this Code or with special laws, must be reduced to writing or require forms or formalities necessary for their efficacy. cdtai 2. Contracts executed in a foreign country in which the law requires certain instruments, forms or formalities for their validity, although Philippine law does not require them. In either case, contracts which do not satisfy the circumstances respectively required shall not give rise to obligations or causes of action. ARTICLE 53. Meaning of illicit agreements. Illicit agreements do not give rise to obligations or causes of action even should they refer to commercial transaction. ARTICLE 54. Contracts entered into by correspondence shall be perfected from the moment an answer is made accepting the offer or the conditions by which the latter may be modified. ARTICLE 55. Contracts in which an agent or broker intervenes shall be perfected when the contracting parties shall have accepted his offer. ARTICLE 56. In a commercial contract in which a penalty for indemnification against the party failing to comply therewith is fixed, the injured party may demand through legal means the fulfillment of the contract or the penalty stipulated; but the recourse to one of these actions shall extinguish the other unless the contrary is stipulated. ARTICLE 57. Commercial contracts shall be executed and complied with in good faith, according to the terms in which they were made and drawn up, without evading through arbitrary interpretations the plain, proper and usual meaning of the spoken or written words, or limiting the effects which are

naturally derived from the manner in which the contracting parties may have expressed their will and contracted their obligations. ARTICLE 58. If a discrepancy should appear between the copies of a contract which the contracting parties present, and, in its execution, an agent or broker should have intervened, that which appears in the books of the latter shall prevail provided they are kept in accordance with law. ARTICLE 59. If doubts which cannot be decided in accordance with what is provided in Article 2 of this Code should arise, the question shall be decided in favor of the debtor. ARTICLE 60. In all computations of days, months and years, it shall be understood that a day has twenty four hours, the months as designated in the Gregorian calendar, and the year has three hundred sixty-five days. Bills of exchange, promissory notes, and loans, with respect to which that specially provided for them by this Code shall govern, are excepted. ARTICLE 61. Days of grace, courtesy or others which under any name whatsoever defer the fulfillment of commercial obligations, shall not be recognized, except those which the parties may have previously fixed in the contract or which are based on a definite provision of law. ARTICLE 62. Obligations which do not have a period previously fixed by the parties or by the provisions of this Code, shall be demandable ten days after having been contracted if they give rise only to an ordinary action, and on the next day if they involve immediate execution. cd ARTICLE 63. The effect of default in the performance of commercial obligations shall commence: 1. In contracts with a day for performance fixed by the will of the parties or by the law, on the day following their maturity. 2. In those which do not have such day fixed, from the day on which the creditor makes a judicial demand on the debtor or notifies him of the protest for loss and damages made against him before a judge, notary or other public official authorized to admit the same. TITLE FIVE PLACES AND BUILDINGS FOR COMMERCIAL TRANSACTIONS ARTICLES 64 to 87. (These articles have been repealed. by the Securities Act.) TITLE SIX COMMERCIAL AGENTS AND THEIR RESPECTIVE OBLIGATIONS ARTICLES 88 to 115. (These articles of the Code of Commerce have been repealed by the Securities Act.) BOOK TWO SPECIAL COMMERCIAL CONTRACTS TITLE ONE COMMERCIAL ASSOCIATIONS ARTICLES 116 to 150, 151 to 159, 160 to 174. (Articles 116 to 150 and 160 to 174 have been repealed by Article 2270 [2] and superseded by Title IX on Partnership of Book Four of the New Civil Code. Article 151 to 159, on sociedades anonimas, have been expressly repealed by Section 191 of the Corporation Law.) ARTICLES 175 to 183. (These articles have been impliedly repealed by the Corporation Law and superseded by the General Banking Act.) ARTICLES 184 to 192. (These articles have been repealed and superseded by the Corporation Law and by the New Corporation Code. ARTICLES 193 to 198. (These articles have been repealed and superseded by the Warehouse Receipts Law.) ARTICLES 199 to 211. (These articles have been impliedly repealed by the Corporation Law and superseded by the General Banking Act.) ARTICLES 212 to 217. (These articles have been previously superseded by Act of Congress of March 4, 1907 and Act No. 1865. See also Act No. 2612, as amended by Act No. 7247. Now, the

matters therein treated are governed by the General Banking Act.) ARTICLES 218 to 238. (Articles 218 to 237 have been expressly repealed by Articles 2270 [2] and superseded by Title IX on Partnerships of Book Four of the New Civil Code. Article 238, being a provision on sociedades anonimas has been expressly repealed by the Corporation Law.) cdasia TITLE TWO JOINT ACCOUNTS ARTICLE 239. Merchants may interest themselves in the transaction of other merchants, contributing thereto the amount of capital they may agree upon, and participating in the favorable or unfavorable results thereof in the proportion they may determine. ARTICLE 240. With regard to their formation, joint accounts shall not be subjected to any formality, and may be privately contracted orally or in writing, and their existence may be proved by any of the means accepted by law, in accordance with the provisions of Article 51. ARTICLE 241. In the transactions treated of in the foregoing articles, no commercial name common to all the participants can be adopted, nor can any further direct credit be made use of except that of the merchant who transacts and manages the business in his own name and under his individual liability. ARTICLE 242. Persons transacting business with the merchant carrying on the joint business shall only have a right of action against the latter and not against the other persons interested, and the latter, on the other hand, shall have no right of action against the third person who made the transaction with the manager unless said manager formally cedes his rights to them. ARTICLE 243. The liquidation shall be effected by the manager, and after the transactions have been concluded, he shall render a proper account of its results. TITLE THREE COMMERCIAL AGENCY ARTICLES 244 to 302. (These articles have been expressly repealed by Article 2270 [2] of the New Civil Code and superseded by Title X, on Agency, of Book Four of the same Code.) TITLE FOUR COMMERCIAL DEPOSITS ARTICLES 303 to 310. (These articles have been expressly repealed by Article 2270 [2] of the New Civil Code and superseded by Title XI, on Deposits, of Book Four of the same Code.) TITLE FIVE COMMERCIAL LOANS ARTICLES 311 to 324. (These articles have been expressly repealed by Article 2270 [2] of the New Civil Code and superseded by Title XI, on Loans, of Book Four of the same Code.) TITLE SIX COMMERCIAL PURCHASE AND SALE AND BARTER AND TRANSFERS OF NONNEGOTIABLE CREDITS SECTION ONE PURCHASE AND SALE ARTICLES 325 to 345. (These articles have been expressly repealed by Article 2270 [2] of the New Civil Code and superseded by Title VI, on Sales, of Book Four of the same Code.) SECTION TWO BARTER ARTICLE 346. Commercial barter shall be governed by the same rules prescribed in this title for purchase and sale in so far as they are applicable to the circumstances and conditions of the former. SECTION THREE TRANSFERS OF NON-NEGOTIABLE CREDITS ARTICLE 347. Commercial credits which are neither negotiable nor payable to bearer may be transferred by the creditor without requiring the consent of the debtor, it being sufficient that he be

inform of the transfer. The debtor shall be bound to the new creditor by virtue of the notification, and, from the time it is made, no payment shall be considered valid except that made to the latter. ARTICLE 348. The assignor shall answer for the legality of the credit and the capacity in which he made the transfer; but he shall not answer for the solvency of the debtor unless there is an express agreement to the effect. cdtai TITLE SEVEN COMMERCIAL CONTRACTS FOR TRANSPORTATION OVERLAND 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. 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. 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. cd 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. cdtai 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. cdt 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. aisadc 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 he 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. cd 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. TITLE EIGHT INSURANCE CONTRACTS ARTICLES 380 to 438. (These articles have been expressly repealed by Section 204 of the Insurance Act and are superseded by said Act.) TITLE NINE COMMERCIAL GUARANTIES ARTICLES 439 to 442. (These articles have been expressly repealed by Article 2270 [2] of the New Civil Code and are superseded by Articles 2047 to 2048 of the same Code.) TITLE TEN CONTRACTS FOR BILLS OF EXCHANGE SECTION ONE BILL EXCHANGE ARTICLE 443. A bill of exchange shall be considered a commercial instrument, [and all the rights and actions arising therefrom, without distinction of persons, shall be governed by the provisions of this Code.] ARTICLE 444. (This is repealed. See Secs. 1 and 126, Negotiable Instruments Law.) ARTICLE 445. The clauses of "value on account" and "value understood" shall make the purchaser of the draft liable for the amount of the same in favor of the drawer, in order to demand it or compensate him in the manner and at the time which both may have agreed on in making the exchange contract. ARTICLES 446 to 447. (These are repealed. See Secs. 19-21, Negotiable Instruments Law.) ARTICLE 448. The drawers cannot refuse to issue to holders of the bills of exchange second and third bills, and as many as they may require on the same bill, provided the request is made before the bills fall due, excepting the provision of Article 500, there being stated in all of them that they shall not be considered valid except in case payment was not made on the first bill of exchange issued, or other prior ones. ARTICLE 449. In the absence of duplicate copies of the draft issued by the drawer, any holder may give the purchaser a copy, stating that he issues it in the absence of the original, which it is desired to substitute. In this copy, there must be inserted literally all the indorsements which the original contains. ARTICLE 450. (This is repealed. See Secs. 17[e] and 130, Negotiable Instruments Law.) ARTICLE 451. (This is repealed. See Secs. 4 and 7, Negotiable Instruments Law.) ARTICLES 452 to 453. (These are repealed. See Secs. 85, 86 and 194, Negotiable Instruments Law.) cdasia ARTICLE 454. The months for the periods of drafts shall be computed from date to date. If in the months the drafts falls due, there is no equivalent to that of the date on which the bill was drawn, it shall be understood that if falls due the last day of the month. ARTICLE 455. (Repealed).

SECTION THREE OBLIGATIONS OF DRAWERS ARTICLES 456 to 457. (These are repealed. See Sec. 127, Negotiable Instruments Law). ARTICLE 458. The expenses arising from the non-acceptance or non-payment of the draft shall be paid by drawer or by the third person for whose account it was made, [unless he proves that he supplied the funds at the proper time, or that he was a creditor in accordance with the foregoing article, or that he was specially authorized to draw for the amount in question. In any of the three cases, the drawer may require of the person obligated to accept and to pay the indemnity nor the expenses which he may have paid the holder of the draft.] ARTICLES 459 to 460. (These are repealed. See Secs. 61, 89, 124, 151, 102, 104, and 152, Negotiable Instruments Law.) SECTION FOUR INDORSEMENTS OF BILLS OF EXCHANGE ARTICLES 461 to 464. (These are repealed. See Secs. 30, 31-46, 31 and 45 and 12, Negotiable Instruments Law.) ARTICLE 465. Indorsements signed in blank and those in which the value is not stated shall transfer the ownership of the draft and shall produce the same effect as if "value received" were written therein. ARTICLES 466 to 468. (These are repealed. See Secs. 40 and 67; 63, 64, 66 and 69, Negotiable Instruments Law.) SECTION FIVE PRESENTATION OF DRAFTS AND THEIR ACCEPTANCE ARTICLE 469. Drafts which are not presented for acceptance or payment within the period fixed shall be affected thereby, as well as when they are not protested at the proper time. ARTICLES 470 to 477. (These are repealed. See Secs. 143 and 144 132, 13 and 17[c], Negotiable Instruments Law.) ARTICLE 478. [The acceptance of the draft must take place or be refused on the same day on which the holder presents it for this purpose, and the person of whom acceptance is demanded cannot retain the draft in his possession under any pretext whatsoever.] If the draft presented for acceptance is to be paid in a place other than that of the residence of the person accepting the same, the domicile in which payment is to be made must be stated in the draft. The person who receives a draft for acceptance, if it is drawn on him, or to have it accepted if it is drawn on a third person, and should retain possession thereof expecting another copy, and shall advise its acceptance by means of a letter, telegram, or other means of writing, shall be liable to the drawer and indorsers thereof in the same manner as if the acceptance had been placed on the draft in question, even though such acceptance has not taken place, or even when he refuses the delivery of the copy accepted to the person legally requesting it.] ARTICLES 479 to 484. (These articles are repealed. See Secs. 139-142, 162; 150, 151, 152 and 158; 70, 152, 81 and 82; and 131, Negotiable Instruments Law.) ARTICLE 485. Persons who forward drafts from one place to another too late to be presented or protested at the proper time shall be liable for the consequences which may arise by reason thereof. SECTION SIX GUARANTIES AND THEIR EFFECTS ARTICLE 486. The payment of a draft may be secured by a written obligation, independent of that contracted by the acceptor and indorser, known by the name of guarantee (aval). ARTICLE 487. If the guarantee (aval) is drawn up in general terms and without restriction, the person giving it shall be liable for the payment of the draft in the same cases and manner as the person for whom he appears as guarantor; but if the guarantee (aval) is limited as to a determined time, case, amount, or person, it shall not produce further liability than that arising from the terms of the guarantee

(aval). SECTION SEVEN PAYMENTS ARTICLE 488. (This is repealed. See Secs. 70 and 71, Negotiable Instruments Law.) aisadc ARTICLE 489. Bills of Exchange must be paid in the money designated therein, and if that could not be procured, in its equivalent according to the use and customs at the place of payment. ARTICLE 490. The person paying a bill of exchange before it is due shall not be exempted from paying the amount of the same if the first payment was not made to a legitimate person. ARTICLE 491. The payment of a bill of exchange payable to bearer which is due, shall be considered valid unless a garnishment of the amount thereof by reason of a judicial judgment was previously issued. ARTICLE 492. The holder of a draft who requests its payment, is obliged to satisfy the person paying it as to his identity, by means of instruments or though residents who are acquainted with him or who will guarantee his identity. The absence of this proof shall not prevent the deposit of the amount of the draft on the day of its presentation in an establishment or with a person accepted by the holder and payor, in which case, the establishment or person shall retain the sum deposited in his or its possession until the legitimate payment is made. The expenses and risks arising from this deposit shall be for the account of the holder of the draft. ARTICLE 493. The holder of a draft shall not be obliged to collect its amount before it falls due; but should he accept said payment, it shall be valid, [except in case of the bankruptcy of the payor in the fifteen days following, in accordance with the provisions of Article 879.)] ARTICLE 494. Neither shall the holder be obliged, even after the draft has fallen due, to receive part and not the whole amount of the same, and only with his consent may a portion of its value be paid and the balance be left standing. In such case, the draft may be protested for the amount which has been paid, and the holder shall retain possession thereof, making a memorandum on the same of the amount collected and giving a separate receipt for said amount. ARTICLE 495. Drafts accepted must necessarily be paid on the copy which contains the acceptance. If the payment is made on any of the other ones, the person who made the payment shall be liable for the value of the draft to the third person who is the legitimate holder of the acceptance. ARTICLE 496. The acceptor cannot be forced to pay even though the holder of the copy not containing the acceptance binds himself to give security to the satisfaction of the former; but in the latter case, the bearer may demand the deposit and formulate the protest in the terms mentioned in Article 498. If the acceptor voluntarily admits the security and makes the payment, the former shall be legally cancelled as soon as the acceptance has prescribed which give rise to the execution of the security. ARTICLES 497 to 499. (These are repealed.) ARTICLE 500. The request for a copy to take the place of the draft lost must be made by the last holder from the person who transferred it to him, and thus successively from one to another indorser until the drawer is reached. No person can refuse to lend his name and interposition to the steps taken to procure a new copy, the owner of the draft defraying the expenses which may arise until it is obtained. ARTICLE 501. The payments made on account of the value of a draft by the person on whom it is drawn shall reduce the liability of the drawer and indorsers in like proportion. SECTION EIGHT PROTESTS ARTICLE 502. (This is repealed. See Sec. 152, Negotiable Instruments Law.)

ARTICLE 503. All protests on account of non-acceptance or non-payment place the person who gave rise thereto under the obligation to defray the expenses, losses, and damages. ARTICLE 504 to 508. (These are repealed.) ARTICLE 509. No act or instrument can supply the omission and absence of the protest for the preservation of the action which may be instituted by the holder against the persons liable for the legal effect of the draft. ARTICLE 510. (This is repealed. See Sec. 158, Negotiable Instruments Law.) cdtai SECTION NINE INTERVENTION IN ACCEPTANCE AND PAYMENT ARTICLE 511. (This is repealed. See Secs. 161-163, Negotiable Instruments Law.) ARTICLE 512. [The person who intervenes in the protest of a bill of exchange, if he accepts it, shall be liable for its payment in the same manner as if it were drawn on him, being obliged to give notice of its acceptance by the first mail to the person for whom he intervened]; and should he pay it, he shall be subrogated to the rights of the holder, complying with the obligations prescribed for the latter, with the following limitations: 1. If he pays said draft for the account of the drawer, the latter only shall be liable for the amount disbursed, the indorsers being free. 2. If he pays it for the account of one of the latter, he shall be entitled to bring an action against the drawer, against the indorser for whose account he intervened, and against the others who precede said indorser in the order of their indorsements, but not against those who may be subsequent. ARTICLE 513. The intervention in the acceptance shall not deprive the holder of the draft protested of the right to demand of the drawer or of the indorsers the security for the results. ARTICLE 514. If the person who did not accept a draft, giving rise to a protest thereby, should appear to pay it when it falls due, his payment shall be accepted in preference to that of the person who intervened or wished to intervene for the acceptance or payment; but the expenses caused by the nonacceptance of the draft at the proper time shall be for his account. ARTICLE 515. (This is repealed. See Sec. 177, Negotiable Instruments Law.) SECTION TEN ACTIONS WHICH MAY BE INSTITUTED BY HOLDERS OF BILL OF EXCHANGE ARTICLE 516. In default of the payment of a bill of exchange presented and protested at the proper time and in the proper manner, the holder shall have a right to demand of the acceptor, of the drawer, or of any of the indorsers, the reimbursement for the costs of protest and re-exchange; [but after an action has been instituted against one of them, it cannot be brought against the rest except in the case of the insolvency of the defendant.] ARTICLE 517. (This is repealed). ARTICLE 518. If an execution has been had against the property of the debtor for the payment or reimbursement of a draft and the holder should have been able to realize only a part of his credit, he may bring an action against the rest for the balance of his account until he is fully reimbursed, in the manner established in Article 516. cdtai The same shall be done in case the person proceeded against is declared in bankruptcy, and if all the persons liable for the draft are in similar circumstances, the claimant shall be entitled to recover from each set of assets the corresponding dividend until his credit is totally cancelled. ARTICLE 519. [The indorser who pays a protested draft shall subrogate himself to the rights of the holder thereof, viz.: 1. If the protest were for non-acceptance, against the drawer and the other indorsers who precede him in order, for the security of the value of the draft, or the deposit in the absence of security. 2. If it were for non-payment, against the said drawer, acceptor, and prior indorsers for the recovery of the amount of the draft and of all the costs he may have paid.] If the drawer and the indorser both should appear to make the payment, the drawer shall be preferred;

and if the indorsers only should appear, the one of a prior date. ARTICLE 520. The drawer as well as any of the indorsers of a protested bill of exchange may demand, as soon as they receive notice of the protest, that the holder receive the amount with the legitimate expenses, and deliver to them the draft with the protest and the account of the redraft. ARTICLES 521 to 523. (These are repealed.) ARTICLE 524. The amount which a creditor remits or releases to a debtor against whom an action has been brought from the payment or reimbursement of a bill of exchange, shall be understood as extended also to the rest who may be liable for the effects of the collection. ARTICLE 525. The prescription of a protested draft shall not have any effect by reason of nonpresentation, protest, or its notification at the times which have been stated, with regard to the drawer or indorser who, after said periods have elapsed, has balanced the amount of the draft in his accounts with the debtor or reimbursed him with bonds or securities belonging to him. ARTICLE 526. Bills of exchange protested by reason of payment shall earn interest in favor of the holders thereof. SECTION ELEVEN RE-EXCHANGE AND REDRAFT ARTICLE 527. The holder of a protested bill of exchange may recover the amount thereof and the costs of protests and re-exchange by drawing a new bill against the drawer or one of its indorsers and attaching to this draft the original one, as well as the certified copy of the protest and the account of the redraft, which shall only contain the following clauses: 1. The amount of the bill of exchange protested. 2. Protest costs. [3. Stamp tax for the redraft. 4. Exchange according to the customs of the place. 5. Brokerage of the transaction.] 6. Expense of the correspondence. 7. Loss by reason of the re-exchange. In this account, there shall be stated the name of the person on whom the redraft is made. ARTICLE 528. All the items of the redraft shall conform to the usages of the place, [and the reexchange to the current rate of the day of the draft. This will be proven by the official quotation on exchange, or by means of a certificate of an official agent or broker, should there be one, and, in their absence, by that of two recorded merchants.] ARTICLE 529. Only one account or redraft can be made for each bill of exchange, which account shall be paid by the indorsers of one or the other until it is extinguished by means of the reimbursement of the drawer. [More than one re-exchange shall not be charged, and the amount thereof shall be graduated by increasing or reducing the amount due from each person, according as to whether the paper on the place to which the redraft is addressed is negotiated in that of its domicile with a premium or with discount which circumstance shall be proven by means of certificate or an agent, broker, or merchant.] cdasia ARTICLE 530. The holder of a redraft cannot demand legal interest thereon until after the day he demands payment of the person who is to pay it, in the manner prescribed in Article 63 of this Code. TITLE ELEVEN DRAFTS, BILLS, AND PROMISSORY NOTES PAYABLE TO ORDER AND CHECKS ARTICLES 531 to 566. These are mainly superseded by the Negotiable Instruments Law (Act 2031). TITLE TWELVE INSTRUMENTS PAYABLE TO BEARER, AND FORGERY, ROBBERY, THEFT, OR LOSS OF THE SAME

ARTICLES 531 to 535. (These are repealed). ARTICLE 536. It may be drawn in the same place it is to be paid or in a different place; but the maker shall be obliged to previously have the funds on deposit with the person on whom it is drawn. ARTICLES 537 to 538. (These are repealed). ARTICLE 539. Payment of a check shall be demanded of the depository on presentation. [The person to whom payment is made shall state in his receipt his name and the date of payment.] ARTICLE 540. (This is repealed.) ARTICLE 541. The maker or any legal holder of a check shall be entitled to indicate therein that it be paid to a certain banker or institution, which he shall do by writing across the face the name of said banker or institution, or only the words "and company." The payment made to a person other than banker or institution shall not exempt the person on whom it is drawn, if the payment was not correctly made. ARTICLES 542 to 545. (These are repealed). ARTICLE 546. The holder of an instrument payable to bearer shall have a right to compare it with the original whenever he consider it advisable. ARTICLE 547. The following shall be instruments of credit payable to bearer for the effects of this section, according to the following cases: 1. Instruments of credit against the State, provinces or municipalities, legally issued. 2. Those issued by foreign countries the quotation of which has been authorized by the Government, on the recommendation of the board of directors of the associations of agents. 3. Instruments of credit payable to bearer, of foreign enterprises, established in accordance with the law of the State to which they belong. 4. Instruments of credit payable to bearer issued in accordance with the laws of their association by national establishments, associations, or enterprises. 5. Those issued by private parties, provided they are mortgaged or are sufficiently secured. cdt ARTICLE 548. The dispossessed owner, no matter for what cause it may be, may apply to the judge or court of competent jurisdiction, asking that the principal, interest or dividends due or about to become due, be not paid a third person, as well as in order to prevent the ownership of the instrument from being transferred to another person, or he may request that a duplicate he issued him. The judge or court exercising jurisdiction in the district in which the debtor establishment or person is situated shall be of competent jurisdiction. ARTICLE 549. In the complaint made to the judge or court by the dispossessed owner, he must state the name, character, nominal value, number if it should have one, and the series of the instrument; and furthermore, if it were possible, the time and place he acquired ownership and the manner of acquisition thereof, the time and place where he received the last interest or dividends, and the circumstances attending the dispossession. The person dispossessed, in making the complaint, shall indicate within the district in which the judge or court of competent jurisdiction exercises the domicile where he is to be served with all notifications. ARTICLE 550. If the complaint relates only to the payment of the principal or interest or dividends which are due or about to become due, the judge or court, when the legality of the acquisition of the instrument has been proved, must admit said complaint immediately ordering: [1. That the complaint be immediately published in the Gacetas of Madrid and Manila, in the Boletin oficial of the province, and in the Diario oficial de Avisos of the place, should there be one fixing a short period within which the holder of the instrument may appear.] 2. That it be communicated to the managing office of the institution which issued the instrument, or to the association or private person from whom it originates, in order that the payment of the principal or interest may be suspended. ARTICLE 551. (This is repealed.) ARTICLE 552. After one year has elapsed since the complaint without anybody contradicting it,

and, if in the interval, two dividends have been distributed, the complainant may request the judge or court for authority not only to recover the interest of dividends due or about to become due, in the proportion and means of their collectibility, but also the principal of the instruments, if it is demandable. ARTICLE 553. After authorization has been granted by the judge or court, the person dispossessed must, before receiving the interest or dividends, or the principal, give sufficient security to cover the amount of the annuities recoverable, and, furthermore, twice the amount of the last annuity due. After two years have elapsed from the date of the authorization without the complainant being contradicted, the guaranty shall be cancelled. If the complainant does not wish to or cannot give the security, the debtor association or private person may request the deposit of the interest or dividends past due or of the principal recoverable, and to receive after the two years the amount deposited if there be no objection. ARTICLE 554. If the principal should be recoverable after the authorization, it may be demanded under security or the deposit may be required. After five years have elapsed, without opposition, from the date of the authorization, or ten years from the date it was demandable, the person dispossessed may receive the securities deposited. ARTICLE 555. The solvency of the guaranty shall be passed upon by the judges and courts. The complainant may give security in bonds of the State, recovering them at the termination of the period fixed for the guaranty. ARTICLE 556. If the complaint relates to coupons payable to bearer separated from the instrument, and the claim should not be overruled, the claimant may recover the amount of the coupons after three years have elapsed, counted from the date of the judicial declaration admitting the complaint. ARTICLE 557. The payments made to the person dispossessed in accordance with the rules above established exempt the debtor from all the liability; and a third person who considers himself injured shall only retain the right of personal action against the claimant who acted without just cause. ARTICLE 558. If, before the exemption of the debtor, a third holder should appear with the instruments the subject of the complaint, the former must retain possession thereof and inform the judge or court and the first claimant, at the same time stating the name, residence, or manner in which the third holder may be found. cdasia The appearance of a third person shall suspend the effects of the claim until it is decided by the judge or court. ARTICLES 559 to 565. (These are repealed). ARTICLE 566. The foregoing provisions shall not be applicable to the bank notes of the Spanish Philippine Bank (Banco Espaol-Filipino), nor to notes of the same kind issued by institutions subject to the same rule, nor to the instruments payable to bearer issued by the State, which are governed by special laws, decrees, or regulations. TITLE THIRTEEN LETTERS OF CREDIT ARTICLE 567. Letters of credit are those issued by one merchant to another or for the purpose of attending to a commercial transaction. ARTICLE 568. The essential conditions of letters of credit shall be: 1. To be issued in favor of a definite person and not to order. 2. To be limited to a fixed and specified amount, or to one or more undetermined amounts, but within a maximum the limits of which has to be stated exactly. Those which do not have any of these last circumstances shall be considered as mere letters of recommendation. ARTICLE 569. The drawer of a letter of credit shall be liable to the person on whom it was

issued, for the amount paid by virtue thereof, within the maximum fixed therein. Letters of credit may not be protested even should they not be paid, nor shall the bearer thereof acquire any right of action by reason of such non-payment against the person who issued it. The person paying shall have the right to demand the proof of the identity of the person in whose favor the letter of credit was issued. ARTICLE 570. The drawer of a letter of credit may annul it, informing the bearer and the person to whom it is addressed of such revocation. ARTICLE 571. The bearer of a letter of credit shall pay the amount received to the drawer without delay. Should he not do so, an action involving execution may be brought to recover it, with legal interest and the current exchange in the place where payment was made on the place where it is repaid. ARTICLE 572. If the bearer of a letter of credit does not make use thereof within the period agreed upon with the drawer, or, in default of a period fixed, within six months, counted from its date in any point in the Philippines, and with in twelve months anywhere outside thereof, it shall be void in fact and in law. MARITIME COMMERCE TITLE ONE VESSELS ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The acquisition of a vessel must appear in a written instrument, which shall not produce any effect with respect to third persons if not inscribed in the registry of vessels. cd The ownership of a vessel shall likewise be acquired by possession in good faith, continued for three years, with a just title duly recorded. In the absence of any of these requisites, continuous possession for ten years shall be necessary in order to acquire ownership. A captain may not acquire by prescription the vessel of which he is in command. ARTICLE 574. Builders of vessels may employ the materials and follow, with respect to their construction and rigging, the systems most suitable to their interests. Ship owners and seamen shall be subject to what the laws and regulations of the public administration on navigation, customs, health, safety of vessels, and other similar matters. ARTICLE 575. Co-owners of vessels shall have the right of repurchase and redemption in sales made to strangers, but they may exercise the same only within the nine days following the inscription of the sale in the registry, and by depositing the price at the same time. ARTICLE 576. In the sale of a vessel it shall always be understood as included the rigging, masts, stores and engine of a streamer appurtenant thereto, which at the time belongs to the vendor. The arms, munitions of war, provisions and fuel shall not be considered as included in the sale. The vendor shall be under the obligation to deliver to the purchaser a certified copy of the record sheet of the vessel in the registry up to the date of the sale. ARTICLE 577. If the alienation of the vessel should be made while it is on a voyage, the freightage which it earns from the time it receives its last cargo shall pertain entirely to the purchaser, and the payment of the crew and other persons who make up its complement for the same voyage shall be for his account. If the sale is made after the vessel has arrived at the port of its destination, the freightage shall pertain to the vendor, and the payment of the crew and other individuals who make up its complement shall be for his account, unless the contrary is stipulated in either case. ARTICLE 578. If the vessel being on a voyage or in a foreign port, its owner or owners should voluntarily alienate it, either to Filipinos or to foreigners domiciled in the capital or in a port of another country, the bill of sale shall be executed before the consul of the Republic of the Philippines at the port

where it terminates its voyage and said instrument shall produce no effect with respect to third persons if it is not inscribed in the registry of the consulate. The consul shall immediately forward a true copy of the instrument of purchase and sale of the vessel to the registry of vessels of the port where said vessel is inscribed and registered. In every case the alienation of the vessel must be made to appear with a statement of whether the vendor receives its price in whole or in part, or whether he preserves in whole or in part any claim on said vessel. In case the sale is made to a Filipino, this fact shall be stated in the certificate of navigation. aisadc When a vessel, being on a voyage, shall be rendered useless for navigation, the captain shall apply to the competent judge on court of the port of arrival, should it be in the Philippines; and should it be in a foreign country, to the consul of the Republic of the Philippines, should there be one, or, where there is none, to the judge or court or to the local authority; and the consul, or the judge or court, shall order an examination of the vessel to be made. If the consignee or the insurer should reside at said port, or should have representatives there, they must be cited in order that they may take part in the proceedings on behalf of whoever may be concerned. ARTICLE 579. After the damage to the vessel and the impossibility of her being repaired, in order to continue the voyage had been shown, its sale at public auction shall be ordered, subject to the following rules: 1. The hull of the vessel, its rigging, engines, stores, and other articles shall be appraised, after making an inventory, said proceedings to be brought to the notice of the persons who may wish to take part in the auction. 2. The order or decree ordering the auction to be held shall be posted in the usual places, an announcement thereof to be inserted in the Official Gazette and in two of the newspapers of the largest circulation of the port where the auction is to be held, should there be any. The period which may be fixed for the auction shall not be less than twenty days. 3. These announcements shall be repeated every ten days, and their publication shall be made to appear in the records. 4. The auction shall be held on the day fixed, with the formalities prescribed in the common law for judicial sales. 5. If the sale should take place while the vessel is in a foreign country, the special provisions governing such cases shall be observed. ARTICLE 580. In all judicial sales of any vessel for the payment of creditors, the following shall have preference in the order stated 2 1. The credit in favor of the public treasury proven by means of an official certificate of competent authority. 2. The judicial costs of the proceedings, according to an appraisement approved by the judge or court. 3. The pilotage charges, tonnage dues, and the other sea or port charges, proven by means of proper certificates of the officers intrusted with the collection thereof. 4. The salaries of the depositaries and keepers of the vessel and any other expenses for its preservation from the time of arrival at the port until the sale, which appear to have been paid or be due by virtue of an account verified and approved by the judge or court. cdtai 5. The rent of the warehouse where the rigging and stores of the vessel have been taken care of, according to contract. 6. The salaries due the captain and crew during its last voyage, which shall be verified by means of the liquidation to be made in view of the lists and of the books of account of the vessel, approved by the chief of the Bureau of Merchant Marine, where there is one, and in his absence by the consul or judge or court. 7. The reimbursement for the goods of the freight which the captain may have sold in order to

repair the vessel, provided that the sale has been ordered through a judicial proceedings held with the formalities required in such cases, and recorded in the certificate of registry of the vessel. 8. The part of the price which has not been paid to the said vendor, the unpaid credits for materials and labor in the construction of the vessel, when it has not navigated, and those arising from the repair and equipment of the vessels and from its provisioning with victuals and fuel during the last voyage. In order that the credits provided for in this subdivision may enjoy this preference, they must appear by contracts recorded in the registry of vessels, or if they were contracted for the vessel while on a voyage and said vessel has not returned to the port where it is registered, they must be made with the authorization required for such cases and annotated in the certificate of registration of the vessel. cdtai 9. The amount borrowed on bottomry on the hull, keel, tackle, and stores of the vessel before its departure, proven by means of the contract executed according to law and recorded in the registry of vessels; those borrowed during the voyage with the authorization mentioned in the preceding subdivision, satisfying the same requisites; and the insurance premium, proven by the insurance policy or a certificate taken from the books of the broker. 10. The indemnity due the shipper for the value of the goods shipped which were not delivered to the consignees, or for averages suffered for which the vessel is liable, provided that either appear in a judicial or arbitration decision. ARTICLE 581. If the proceeds of the sale should not be sufficient to pay all the creditors included in one number or grade, the residue shall be divided among them pro rata. ARTICLE 582. After the bill of the judicial sale at public auction has been executed and inscribed in the registry of vessels, all the other liabilities of the vessel in favor of the creditors shall be considered extinguished. But if the sale should have been voluntary and should have been made while the vessel was on a voyage, the creditors shall preserve their rights against the vessel until it returns to the port of her registry, and three months after the inscription of the sale in the registry of vessel or the arrival. ARTICLE 583. If while on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in subdivisions 8 and 9 of Article 580, he shall apply to the judge or court if he is in Philippine territory, and otherwise to the consul of the Republic of the Philippines, should there be one, and, in his absence, to the judge or court or proper local authority, presenting the certificate of the registration sheet treated of in Article 612 and the instruments proving the obligation contracted. The judge or court, the consul, or the local authority, as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum of their result in the certificate, in order that it may be recorded in the registry when the vessel returns to the port of its registry, or so that it can be admitted as a legal and preferred obligation in case of sale before its return, by reason of the sale of the vessel on account of a declaration of unseaworthiness. The omission of this formality shall make the captain personally liable for the credits prejudiced on his account. ARTICLE 584. The vessels subject to liability for the credits mentioned in Article 580 may be attached and judicially sold in the manner prescribed in Article 579, in the port in which they may be found, at the instance of any of the creditors; but if they should be loaded and ready to sail, the attachment may not be effected except for debts contracted to prepare and provision the vessel for the same voyage, and even then the attachment shall be dissolved if any person interested in its sailing should give a bond for the return of the vessel within the period fixed in the certificate of navigation binding himself to pay the indebtedness insofar as it may be legal, should it fail to do so, even if this failure be due to fortuitous event. For debts of any other kind whatsoever not comprised within the said Article 580, the vessel may be attached only in the port of her registry. ARTICLE 585. For all purposes of law not modified or restricted by the provisions of this Code,

vessels shall continue to be considered as personal property. TITLE TWO PERSONS WHO TAKE PART IN MARITIME COMMERCE SECTION ONE SHIPOWNERS AND SHIP AGENTS ARTICLE 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested for the benefit of the same. By ship agent is understood the person entrusted with provisioning or representing the vessel in the port in which it may be found. ARTICLE 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight it may have earned during the voyage. ARTICLE 588. Neither the shipowner nor the ship agent shall be liable for the obligations contracted by the captain, if the latter exceeds the powers and privileges pertaining to him by reason of his position or conferred upon him by the former. Nevertheless, if the amounts claimed were invested for the benefit of the vessel, the responsibility therefor shall devolve upon its owner or agent. ARTICLE 589. If two or more persons should be part owners of a merchant vessel, a partnership shall be presumed as established by the co-owners. This partnership shall be governed by the resolutions of the majority of the members. If the part owners should not be more than two, the disagreement of views, if any, shall be decided by the vote of the member having the largest interest. If the interests are equal, it should be decided by lot. The person having the smallest share in the ownership shall have one vote; and proportionately the other part owners as many votes as they have parts equal to the smallest one. aisadc A vessel may not be detained, attached or levied upon in execution in its entirety, for the private debts of a part owner, but the proceedings shall be limited to the interest which the debtor may have in the vessel, without interfering with the navigation. ARTICLE 590. The co-owners of a vessel shall be civilly liable in the proportion of their interests in the common fund, for the results of the acts of the captain, referred to in Article 587. Each co-owner may exempt himself from this liability by the abandonment, before a notary, of the part of the vessel belonging to him. ARTICLE 591. All the part owners shall be liable, in proportion to their respective ownership, for the expenses for repairing the vessel, and for other expenses which are incurred by virtue of a resolution of the majority. They shall likewise be liable in the same proportion for the expenses for the maintenance, equipment, and provisioning of the vessel, necessary for navigation. ARTICLE 592. The resolution of the majority with regard to the repair, equipment, and provisioning of the vessel in the port of departure shall bind the minority, unless the minority members renounce their interests, which must be acquired by the other co-owners, after a judicial appraisement of the value of the portion or portions assigned. The resolutions of the majority relating to the dissolution of the partnership and sale of the vessel shall also be binding on the minority. The sale of the vessel must be made at public auction, subject to the provisions of the law of civil procedure, unless the co-owners unanimously agree otherwise, saying always the right of repurchase and redemption provided for in Article 575. ARTICLE 593. The owners of a vessel shall have preference in her charter over other persons, under the same conditions and price. If two or more of them should claim this right, the one having the

greater interest shall be preferred; and should they have equal interests, the matter shall be decided by lot. ARTICLE 594. The co-owners shall elect the manager who is to represent them in the capacity of ship agent. The appointment of director or ship agent shall be revocable at the will of the members. ARTICLE 595. The ship agent, whether he is at the same time the owner of the vessel, or a manager for an owner or for an association of co-owners, must have the capacity to trade and must be recorded in the merchant's registry of the province. The ship agent shall represent the ownership of the vessel, and may, in his own name and in such capacity, take judicial and extrajudicial steps in matters relating to commerce. ARTICLE 596. The ship agent may discharge the duties of captain of the vessel, subject in every case to the provision of Article 609. If two or more co-owners apply for the position of captain, the disagreement shall be decided by a vote of the members; and if the vote should result in a tie, it shall be decided in favor of the co-owner having the larger interest in the vessel. If the interests of the applicants should be equal, and there should be a tie, the matter shall be decided by lot. ARTICLE 597. The ship agent shall designate and come to terms with the captain, and shall contract in the name of the owners, who shall be bound in all that refer to repairs, details of equipment, armament, provisions of food and fuel, and freight of the vessel, and, in general, in all that relate to the requirements of navigation. ARTICLE 598. The ship agent may not order a new voyage, or make contracts for a new charter, or insure the vessel, without the authorization of its owner or resolution of the majority of the coowners, unless these powers were granted him in the certificate of his appointment. cdasia If he insures the vessel without authorization therefore, he shall be subsidiarily liable for the solvency of the insurer. ARTICLE 599. The ship agent managing for an association shall render to his associates an account of the results of each voyage of the vessel, without prejudice to always having the books and correspondence relating to the vessel and to its voyages at their disposal. ARTICLE 600. After the account of the managing agent has been approved by a relative majority, the co-owners shall pay the expenses in proportion to their interest, without prejudice to the civil or criminal actions which the minority may deem fit to institute afterwards. In order to enforce the payment, the managing agent shall be entitled to an executory action ("accion ejecutiva"), which shall be instituted by virtue of a resolution of the majority, and without further proceedings than the acknowledgment of the signatures of the persons who voted for the resolution. ARTICLE 601. Should there be any profits, the co-owners may demand of the managing agent the amount corresponding to their interests by means of an executory action ("accion ejecutiva"), without any other requisite than the acknowledgment of the signatures on the instrument approving the account. ARTICLE 602. The ship agent shall indemnify the captain for all the expenses he may have incurred with funds of his own or of others, for the benefit of the vessel. ARTICLE 603. Before the vessel sets out to sea the ship agent may at his discretion discharge the captain and members of the crew whose contracts are not for a definite period or voyage, paying them the salaries earned according to their contracts, and without any indemnity whatsoever, unless there is an express and specific agreement in respect thereto. ARTICLE 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until they return to the port where the contract was made, unless there should be just cause for the discharge, all in accordance with Article 636 and following of this Code.

ARTICLE 605. If the contracts of the captain and members of the crew with the ship agent should be for a definite period or voyage, they may not be discharged until after the fulfillment of their contracts, except by reason of insubordination in serious matters, robbery, theft, habitual drunkenness, or damage caused to the vessel or to its cargo through malice or manifest or proven negligence. ARTICLE 606. If the captain should be a co-owner of the vessel, he may not be discharged unless the ship agent returns to him the amount of his interest therein, which, in the absence of agreement between the parties, shall be appraised by experts appointed in the manner established in the law of civil procedure. ARTICLE 607. If the captain who is a co-owner should have obtained the command of the vessel by virtue of a special agreement contained in the articles of association, he may not be deprived of his office except for the causes mentioned in Article 605. ARTICLE 608. In case of the voluntary sale of the vessel, all contracts between the ship agent and the captain shall terminate, reserving to the latter his right to the indemnity which may pertain to him, according to the agreements made with the ship agent. They vessel sold shall remain subject to the security of the payment of said indemnity if, after the action against the vendor has been instituted, the latter is found to be insolvent. SECTION TWO CAPTAINS AND MASTERS OF VESSELS ARTICLE 609. Captains, masters or patrons of vessels must be Filipinos, have legal capacity to contract in accordance with this code, and prove the skill, capacity, and qualifications necessary to command and direct the vessel, as established by marine or navigation laws, ordinances, or regulations, and must not be disqualified according to the same for the discharge of the duties of the position. cdt If the owner of a vessel desires to be the captain thereof, without having the legal qualifications therefor, he shall limit himself to the financial administration of the vessel, and shall intrust the navigation to a person possessing the qualifications required by said ordinances and regulations. ARTICLE 610. The following powers shall be inherent in the position of captain, master or patron of a vessel: 1. To appoint or make contracts with the crew in the absence of the ship agent, and to propose said crew, should said agent be present; but the ship agent may not employ any member against the captain's express refusal. 2. To command the crew and direct the vessel to the port of its destination, in accordance with the instructions he may have received from the ship agent. 3. To impose, in accordance with the contracts and with the laws and regulations of the merchant marine, and when on board the vessel, correctional punishment upon those who fail to comply with his orders or are wanting in discipline, holding a preliminary hearing on the crimes committed on board the vessel on the seas, which crimes shall be turned over to the authorities having jurisdiction over the same at the first port touched. 4. To make contracts for the charter of the vessel in the absence of the ship agent or of its consignee, acting in accordance with the instructions received and protecting the interests of the owner with utmost care. 5. To adopt all proper measures to keep the vessel well supplied and equipped, purchasing all that may be necessary for the purpose, provided there is no time to request instruction from the ship agent. 6. To order, in similar urgent cases while on a voyage, the repairs on the hull and engines of the vessel and in its rigging and equipment, which are absolutely necessary to enable it to continue and finish its voyage; but if he should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the latter. ARTICLE 611. In order to comply with the obligations mentioned in the preceding article, the captain, when he has no funds and does not expect to receive any from the ship agent, shall obtain the same in the successive order stated below:

1. By requesting said funds from the consignee of the vessel or correspondents of the ship agent. 2. By applying to the consignees of the cargo or to those interested therein. 3. By drawing on the ship agent. 4. By borrowing the amount required by means of a loan on bottomry. 5. By selling a sufficient amount of the cargo to cover the sum absolutely indispensable for the repair of the vessel and to enable it to continue its voyage. cd In these two last cases he must apply to the judicial authority of the port, if in the Philippines, and to the consul of the Republic of the Philippines if in a foreign country, and where there is none, to the local authority, proceeding in accordance with the provisions of Article 583, and with the provisions of the law of civil procedure. ARTICLE 612. The following obligations shall be inherent in the office of captain: 1. To have on board before starting on a voyage a detailed inventory of the hull, engines, rigging, spare-masts, tackle, and other equipment of the vessel; the royal or the navigation certificate; the roll of the persons who make up the crew of the vessel, and the contracts entered into with them; the lists of passengers; the bill of health; the certificate of the registry proving the ownership of the vessel and all the obligations which encumber the same up to that date; the charter parties or authenticated copies thereof; the invoices or manifests of the cargo, and the memorandum of the visit or inspection by experts, should it have been made at the port of departure. 2. To have a copy of this code on board. 3. To have three folioed and stamped books, placing at the beginning of each one a memorandum of the number of folios it contains, signed by the maritime authority, and in his absence by the competent authority. In the first book, which shall be called "log book," he shall enter day by day the condition of the atmosphere, the prevailing winds, the courses taken, the rigging carried, the power of the engines used in navigation, the distances covered, the maneuvers executed, and other incidents of navigation; he shall also enter the damage suffered by the vessel in her hull, engines, rigging, and tackle, no matter what its cause may be, as well as the impairment and damage suffered by cargo, and the effect and importance of the jettison, should there be any; and in cases of serious decisions which require the advice or a meeting of the officers of the vessel, or even of the crew and passengers, he shall record the decisions adopted. For the information indicated he shall make use of the binnacle book and of the steam of engine book kept by the engineer. In the second book called the "accounting book," he shall record all the amounts collected and paid for the account of the vessel, entering specifically article by article, the source of the collection and the amounts spent for provisions, repairs, acquisitions of equipment or goods, fuel, food, outfits, wages, and other expenses of whatever nature they may be. He shall furthermore enter therein a list of all the members of the crew, stating their domiciles, their wages and salaries, and the amounts they may have received on account, directly or by delivery to their families. In the third book, called "freight book," he shall record the loading and discharge of all the goods, stating their marks and packages, names of the shippers and of the consignees, ports of loading and unloading, and the freightage they give. In this same book he shall record the names and places of sailing of the passengers, the number of packages in their baggage, and the price of passage. 4. Before receiving cargo, to make with the officers of the crew and two experts, if required by the shippers and passengers, an examination of the vessel, in order to ascertain whether it is water-tight, with the rigging and engines in good condition, and with the equipment required for good navigation, preserving under his responsibility a certificate of the memorandum of his inspection, signed by all those who may have taken part therein. The experts shall be appointed, one by the captain of the vessel and another by those who request its examination, and in case of disagreement a third shall be appointed by the marine authority of the port or by the authority, exercising his functions.

5. To remain constantly on board the vessel with the crew while the cargo is being taken on board and to carefully watch the stowage thereof; not to consent to the loading of any merchandise or matter of a dangerous character, such as inflammable or explosive substances, without the precautions which are recommended for their packing, handling and isolation; not to permit the carriage on deck of any cargo which by reason of its arrangement, volume, or weight makes the work of the sailors difficult, and which might endanger the safety of the vessel; and if, on account of the nature of the merchandise, the special character of the shipment, and principally the favorable season in which it is undertaken, merchandise may be carried on deck, he must hear the opinion of the officers of the vessel and have the consent of the shippers and of the ship agent. 6. To demand a pilot at the expense of the vessel whenever required by the navigation, and principally when he has to enter a port, canal, or river, or has to take a roadstead or anchoring place with which neither he nor the officers and crew are acquainted. 7. To be on deck on reaching land and to take command on entering and leaving ports, canals, roadsteads, and rivers, unless there is a pilot on board discharging his duties. He shall not spend the night away from the vessel except for serious causes or by reason of official business. cdtai 8. To present himself, when making a port in distress, to the maritime authority if in the Philippines and to the consul of the Republic of the Philippines if in a foreign country, before twentyfour hours have elapsed, and to make a statement of the name registry, and port of departure of the vessel, of its cargo, and the cause of arrival which declaration shall be visaed by the authority or the consul, if after examining the same it is found to be acceptable, giving the captain the proper certificate proving his arrival in distress and the reasons therefor. In the absence of the maritime authority or of the consul, the declaration must be made before the local authority. 9. To take the necessary steps before the competent authority in order to record in the certificate of the vessel in the registry of vessels the obligations which he may contract in accordance with Article 583. 10. To place under good care and custody all the papers and belongings of any members of the crew who might die on the vessel, drawing up a detailed inventory, in the presence of passengers, or, in their absence, of members of the crew as witnesses. 11. To conduct himself according to the rules and precepts contained in the instructions of the ship agent, being liable for all that which he may do in violation thereof. 12. To inform the ship agent from the port at which the vessel arrives, of the reason of his arrival, taking advantage of the semaphore, telegraph, mail, etc., as the case may be; to notify him of the cargo he may have received, stating the names and domiciles of the shippers, freightage earned, and amounts borrowed on bottomry loan; to advise him of his departure, and of any operation and date which may be of interest to him. 13. To observe the rules with respect to situation, lights and maneuvers in order to avoid collisions. 14. To remain on board, in case the vessel is in danger, until all hope to save it is lost, and before abandoning it, to hear the officers of the crew, abiding by the decision of the majority; and if the boats are to be taken to, he shall take with him, before anything else, the books and papers, and then the articles of most value, being obliged to prove, in case of the loss of the books and papers, that he did all he could to save them. 15. In case of wreck, to make the proper protest in due form at the first port of arrival, before the competent authority or the Philippine consul, within twenty-four hours, specifying therein all the incidents of the wreck, in accordance with subdivision 8 of this article. 16. To comply with the obligations imposed by the laws and regulations on navigation, customs, health, and others. ARTICLE 613. A captain who navigates for freight in common or on shares may not make any separate transaction for his own account; and should he do so, the profit which may accrue shall belong to the other persons interested, and the losses shall be borne by him exclusively.

ARTICLE 614. A captain who, having made an agreement to make a voyage, fails to perform his undertaking, without prevented by fortuitous accident or force majeure, shall indemnify for all the losses which he may cause without prejudice to the criminal penalties which may be proper. ARTICLE 615. Without the consent of the agent, the captain cannot have himself substituted by another person; and should he do so, besides being liable for all the acts of the substitute and bound to the indemnities mentioned in the foregoing articles, the captain as well as the substitute may be discharged by the ship agent. ARTICLE 616. If the provisions and fuel of the vessel should be consumed before arriving at the port of destination, the captain shall order, with the consent of the officers of the same, the arrival at the nearest port to get a supply of either; but if there are persons on board who have provisions of their own, he may force them to deliver said provision for the common consumption of all those who may be on board, paying the price thereof at the same time, or at the latest, at the first port reached. ARTICLE 617. The captain may not contract loans on respondentia secured by the cargo; and should he do so, the contracts shall be void. Neither may he borrow money on bottomry for his own transactions, except on the portion of the vessel he owns, provided no money has been previously borrowed on the whole vessel, and there does not exist any other kind of lien or obligation chargeable against the vessel. If he may do so, he must state what interest he has in the vessel. In case of violation of this article, the principal, interest, and costs shall be for the personal account of the captain, and the ship agent may furthermore discharge him. ARTICLE 618. The captain shall be civilly liable to the ship agent, and the latter to the third persons who may have made contracts with the former; 1. For all the damages suffered by the vessel and its cargo by reason of want of skill or negligence on his part. If a misdemeanor or crime has been committed, he shall be liable in accordance with the Penal Code. cda 2. For all the thefts committed by the crew, reserving his right of action against the guilty parties. 3. For the losses, fines, and confiscations imposed an account of violation of customs, police, health, and navigation laws and regulations. 4. For the losses and damages caused by mutinies on board the vessel or by reason of faults committed by the crew in the service and defense of the same, if he does not prove that he made timely use of all his authority to prevent or avoid them. 5. For those caused by the misuse of the powers and the non-fulfillment of the obligations pertaining to him in accordance with Articles 610 and 612. 6. For those arising by reason of his going out of his course or taking a course which he should not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting with the shippers or supercargoes who may be on board. No exceptions whatsoever shall exempt him from this obligation. 7. For those arising by reason of his voluntarily entering a port other than that of his destination, outside of the cases or without the formalities referred to in Article 612. 8. For those arising by reason of non-observance of the provisions contained in the regulations on situation of lights and maneuvers for the purpose of preventing collisions. ARTICLE 619. The captain shall be liable for the cargo from the time it is delivered to him at the dock or afloat alongside the at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless the contrary has been expressly agreed upon. ARTICLE 620. The captain shall not be liable for the damages caused to the vessel or to the cargo by force majeure; but he shall always be so for those arising through his own fault, no agreement to the contrary being valid. Neither shall he be personally liable for the obligations he may have contracted for the repair, equipment, and provisioning of the vessel, which shall devolve upon the ship agent, unless the former

has expressly bound himself personally or has signed a bill of exchange or promissory note in his name. ARTICLE 621. A captain who borrows money on the hull, engine, rigging or tackle of the vessel, or pledges or sells merchandise or provisions outside of the cases and without the formalities prescribed in this Code, shall be liable for the principal, interests, and costs, and shall indemnify for the damages he may cause. He who commits fraud in his accounts shall pay the amount defrauded and shall be subject to the provisions of the Penal Code. ARTICLE 622. If while on a voyage the captain should learn of the appearance of privateers or men of war against his flag, he shall be obliged to make the nearest neutral port, inform his agent or shippers, and await an occasion to sail under convoy, or until the danger is over or he has received express orders from the ship agent or the shippers. ARTICLE 623. If he should be attacked by a privateer, and, after having tried to avoid the encounter and having resisted the delivery of the effects of the vessel or its cargo, they should be forcibly taken away from him, or he should be obliged to deliver them, he shall make an entry thereof in his freight book and shall prove the fact before the competent authority at the first port he touches. cdasia After the force majeure has been proved, he shall be exempted from liability. ARTICLE 624. A captain whose vessel has gone through a hurricane or who believes that the cargo has suffered damages or averages, shall make a protest thereon before the competent authority at the first port he touches, within twenty-four hours following his arrival and shall ratify it within the same period when he arrives at his destination, immediately proceeding with the proof of the facts, and he may not open the hatches until after this has been done. The captain shall proceed in the same manner, if, the vessel having been wrecked; he is saved alone or with part of his crew, in which case he shall appear before the nearest authority, and make a sworn statement of facts. The authority or the consul shall verify the said facts receiving sworn statements of the members of the crew and passengers who may have been saved; and taking such other steps as may assist in arriving at the facts he shall make a statement of the result of the proceedings in the log book and in that of the sailing mate, and shall deliver to the captain the original record of the proceedings, stamped and folioed, with a memorandum of the folios, which he must rubricate, in order that it may be presented to the judge or court of the port of destination. The statement of the captain shall be accepted if it is in accordance with those of the crew and passengers; if they disagree, the latter shall be accepted, always saying proof to the contrary. ARTICLE 625. The captain, under his personal responsibility as soon as he arrives at the port of destination, should get the necessary permission from the health and customs officers, and perform the other formalities required by the regulations of the administration, delivering the cargo without any defalcation, to the consignee, and in a proper case, the vessel, rigging, and freightage to the ship agent. If by reason of the absence of the consignee or on account of the nonappearance of a legal holder of the bills of lading, the captain should not know to whom he is to legally make the delivery of the cargo, he shall place it at the disposal of the proper judge or court or authority, in order that he may determine what is proper with regard to its deposit, preservation and custody. SECTION THREE OFFICERS AND CREW OF VESSELS ARTICLE 626. In order to be a sailing mate it shall be necessary: 1. To have the qualifications required by the marine or navigation laws or regulations. 2. Not to be disqualified in accordance therewith for the discharge of his duties. ARTICLE 627. The sailing mate, as the second chief of the vessel, and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then

assume all his powers, duties, and responsibilities. ARTICLE 628. The sailing mate must provide himself with charts of the seas in which he will navigate with the astronomical tables and instruments for observation which are in use and which are necessary for the discharge of his duties, being liable for the accidents which may arise by reason of his omission in this regard. ARTICLE 629. The sailing mate shall particularly and personally keep a book, folioed and stamped on all its pages, denominated "Binnacle Book" with a memorandum at the beginning stating the number of folios it contains, signed by the competent authority, and shall enter therein daily the distance, the course travelled, the variations of the needle, the leeway, the direction and force of the wind, the condition of the atmosphere and of the sea, the rigging set, the latitude and longitude observed, the number of furnace heated, the steam pressure, the number of revolutions, and under the title "incidents," the maneuvers made, the meeting with other vessels, and all the details and incidents which. may occur during the voyage. ARTICLE 630. In order to change the course and to take the one most convenient for a good voyage of the vessel, the sailing mate shall come to an agreement with the captain. If the latter should object, the sailing mate shall state to him the proper observations in the presence of the other officers of the sea. If the captain should still insist on his negative decision, the sailing mate shall make the proper protest, signed by him and by one other officer, in the log book, and shall obey the captain, who alone shall be responsible for the consequences of his decision. ARTICLE 631. The sailing mate shall be responsible for all the damages caused to the vessel and the cargo by reason of his negligence or want of skill without prejudice to the criminal liability which may arise, if a felony or misdemeanor has been committed. aisadc ARTICLE 632. The following shall be the obligations of the second mate: 1. To watch over the preservation of the hull and rigging of the vessel, and to take charge of the preservation of the tackle and equipment which make up her outfit, suggesting to the captain the repairs necessary and the replacement of the goods and implements which are rendered useless and are lost. 2. To take care that the cargo is well arranged, keeping the vessel always ready for maneuver. 3. To preserve order, discipline, and good service among the crew, requesting the necessary orders and Instructions of the captain, and giving him prompt information of any occurrence in which the intervention of his authority may be necessary. 4. To assign to each sailor the work he is to do on board, in accordance with the instruction received and to see that it is promptly and accurately carried out. 5. To take charge under inventory of the rigging and all the equipment of the vessel, if it should be laid up, unless the ship agent has ordered otherwise. With regard to engineers the following rules shall govern: 1. In order to be taken on board as a marine engineer forming part of the complement of a merchant vessel, it shall be necessary to have the qualifications which the laws and regulations require, and not be disqualified in accordance therewith for the discharge of his duties. Engineers shall be considered officers of the vessel but they shall have no authority or intervention except in matters referring to the motor apparatus. 2. When there are two or more engineers on board a vessel, one of them shall be the chief, and the other engineers and all the personnel of the engines shall be under his orders; he shall also have charge of the motor apparatus, the spare parts, the instruments and tools pertaining thereto, the fuel, the lubricating material and, finally, whatever is entrusted to an engineer on board a vessel. 3. He shall keep the engines and boilers in good condition and state of cleanliness, and shall order what may be proper in order that they may always be ready to work with regularity, being liable for the accidents or damages which his negligence or want of skill may cause to the motor apparatus, to the vessel and to the cargo, without prejudice to the criminal liability which may be proper if there has been a felony or misdemeanor.

4. He shall not make any change in the motor apparatus, or proceed to repair the averages he may have noticed in the same, or change the normal speed of its movement without the prior authorization of the captain., to whom, if he should object to their being made, he shall state the proper observations in the presence of the other engineers or officers; and if, notwithstanding this, the captain should insist on his objection, the chief engineer shall make the proper protests, entering the same in the engine book, and shall obey the captain, who, alone shall be responsible for the consequences of his decision. 5. He shall inform the captain of any average which may occur in the motor apparatus, and shall advise him whenever it may be necessary to stop the engines for some time, or when any other incident occurs in his department of which the captain should be immediately informed, besides frequently advising him of the consumption of fuel and lubricating material. 6. He shall keep a book or registry called the "engine book," in which shall be entered all the date referring to the work of the engines, such as, for example, the number of furnaces heated, the vacuum in the condenser, the temperature, the degree of saturation of the water in the boilers the consumption of fuel and lubricating material, and under the heading of "noteworthy occurrences," the averages and maladjustments which occur in the engines and boilers, the causes thereof and the means employed to repair the same likewise, the force and direction of the wind, the rigging set and the speed of the vessel shall be stated, taking the information from the Binnacle Book. ARTICLE 633. The second mate shall take command of the vessel in case of the inability or disqualification of the captain and the sailing mate, assuming in such case their powers and responsibility. ARTICLE 634. The captain may make up the crew of his vessel with such number of men as he may consider proper, and in the absence of Filipino sailors, he may take on foreigners residing in the country, the number thereof not to exceed one-fifth of the crew. If in foreign ports the captain should not find a sufficient number of Filipino sailors, he may complete the crew with foreigners, with the consent of the consul or marine authorities. The agreement which the captain may make with the members of the crew and others who go to make up the complement of the vessel, to which reference is made in Article 612, must be reduced to writing in the account book, without the intervention of a notary public or clerk of court ("escribano"), signed by the parties thereto and visaed by the marine authority if they be executed in Philippine territory or by the consuls or consular agents of the Republic of the Philippines if executed abroad, stating therein all the obligations which each one contracts and all the rights he acquires said authorities taking care that these obligations and rights are recorded in a clear and definite manner which give no room for doubts or claims. cd The captain shall take care to read to them the articles of this Code which concern them, stating in said document that they were read. If the book contains the requisites prescribed in Article 612, and there should not appear any signs of alterations in its entries, it shall be admitted as evidence in questions which may arise between the captain and the crew with respect to the agreements contained therein and the amounts paid on account of the same. Every member of the crew may demand of the captain a copy, signed by the latter, of the agreement and of the liquidation of his wages, as they appear in the book. ARTICLE 635. A seaman who has been contracted to serve on a vessel may not rescind his contract or fail to comply therewith except by reason of a legitimate impediment which may have happened to him. Neither may he transfer from the service of one vessel to another without obtaining the written permission of the captain of the vessel on which he may be. If, without obtaining said permission, the seaman who has signed for one vessel should sign for another one, the second contract shall be void, and the captain may choose between forcing him to fulfill the service to which he first bound himself, or at his expense to look for a person to substitute

him. Furthermore, he shall lose the wages earned on his first contract, to the benefit of the vessel for which he had signed. A captain who, knowing that a seaman is in the service of another vessel, should have made a new agreement with him without having required of him the permission referred to in the preceding paragraphs, shall be subsidiarily responsible to the captain of the vessel to which the seaman first belonged, for that part of the indemnity, referred to in the third paragraph of this article, which the seaman may not be able to pay. ARTICLE 636. If there is no fixed period for which a seaman has been contracted he may not be discharged until the end of the return voyage to the port where he enlisted. ARTICLE 637. Neither may the captain discharge a seaman during the time of his contract except for just cause, the following being considered as such: 1. The perpetration of a crime which disturbs order on the vessel. 2. Repeated insubordination, want of discipline, or non-fulfillment of the service. 3. Repeated incapacity and negligence in the fulfillment of the service he should render. 4. Habitual drunkenness. 5. Any occurrence which incapacitates the seaman to perform the work entrusted to him, with the exception of that provided in Article 644. 6. Desertion. The captain may, however, before getting out on a voyage and without giving any reason, refuse to permit a seaman whom he may have engaged to go on board, and leave him on land, in which case he will be obliged to pay him his wages as if he had rendered services. This indemnity shall be paid from the funds of the vessel if the captain should have acted for reasons of prudence and in the interest of the safety and good services of the farmer. Should this not be the case, it shall be paid by the captain personally. aisadc After the voyage has begun, during the same, and until the conclusion thereof, the captain may not abandon any member of his crew on land or on sea, unless, by reason of some crime, his imprisonment and delivery to the competent authority in the first port touched should be proper, a matter obligatory for the captain. ARTICLE 638. If, after the crew has been engaged, the voyage is revoked by the will of the ship agent or of the charterers before or after the vessel has put to sea, or if the vessel is for the same reason given a destination different from that fixed in the agreement with the crew, the latter shall be indemnified on account of the rescission of the contract, according to the cases follows: 1. If the revocation of the voyage should be decided upon before the departure of the vessel from the port, each sailor engaged shall be given one month's salary, besides what may be due him, in accordance with his contract, for the services rendered to the vessel up to the date of the revocation. 2. If the agreement should have been for a fixed amount for the whole voyage, that which may be due for said month and days shall be determined in proportion to the approximate number of days the voyage should have lasted, in the judgment of experts, in the manner established in the law of Civil Procedure; and if the proposed voyage should be of such short duration that it is calculated at approximately one month, the indemnity shall be fixed for fifteen days, discounting in all cases the sums advanced. 3. If the revocation should take place after the vessel has put to sea, the seamen engaged for a fixed amount for the voyage shall receive in full the salary which may have been offered them as if the voyage had terminated; and those engaged by the month shall receive the amount corresponding to the time they might have been on board and to the time they may require to arrive at the port of destination, the captain being obliged, furthermore, to pay the seamen in both cases, the passage to the said port or to the port of sailing of the vessel, as may be convenient for them. 4. If the ship agent or the charterers of the vessel should give it a destination different from that

fixed in the agreement, and the members of the crew should not agree thereto, they shall be given by way of indemnity half the amount fixed in case No. 1, besides what may be owed them for the part of the monthly wages corresponding to the days which have elapsed from the date of their agreements. If they accept the change, and the voyage, on account of the greater distance or of other reasons, should give rise to an increase of wages, the latter shall be adjusted privately or through amicable arbitrators in case of disagreement. Even though the voyage should be shortened to a nearer point, this shall not give rise to a reduction in the wages agreed upon. If the revocation or change of the voyage should come from the shippers or charterers, the agent shall have a right to demand of them the indemnity which may be justly due. ARTICLE 639. If the revocation of the voyage should arise from a just cause independent of the will of the ship agent and charterers, and the vessel should not have left the port, the members of the crew shall have no other right than to collect the wages earned up to the day on which the revocation took place. ARTICLE 640. The following shall be just causes for the revocation of the voyage. 1. A declaration of war or interdiction of commerce with the power to whose territory the vessel was bound. 2. The blockade of the port of its destination, or the breaking out of an epidemic after the agreement. 3. The prohibition to receive in said port the goods which make up the cargo of the vessel. 4. The detention or embargo of the same by order of the government, or for any other reason independent of the will of the ship agent. 5. The inability of the vessel to navigate. cdasia ARTICLE 641. If, after a voyage has been begun, any of the first three causes mentioned in the foregoing article should occur, the sailors shall be paid at the port which the captain may deem advisable to make for the benefit of the vessel and cargo, according to the time they may have served thereon; but if the vessel is to continue its voyage, the captain and the crew may mutually demand the enforcement of the contract. In case of the occurrence of the fourth cause, the crew shall continue to be paid half wages, if the agreement is by month; but if the detention should exceed three months, the contract shall be rescinded and the crew shall be paid what they should have earned according to the contract if the voyage had been concluded. And if the agreement should be for a fixed sum for the voyage, the contract must be complied within the terms agreed upon. In the fifth case, the crew shall have no other right than to collect the wages earned; but if the disability of the vessel should have been caused by the negligence or lack of skill of the captain, engineer, or sailing mate, they shall indemnify the crew for the damages suffered, always without prejudice to the criminal liability which may be proper. ARTICLE 642. If the crew have been engaged on shares, they shall not be entitled, by reason of the revocation, delay, or greater extension of the voyage, to anything but the proportionate part of the indemnity which way be paid into the common funds of the vessel by the persons liable for said occurrences. ARTICLE 643. If the vessel and her cargo should be totally lost, by reason of capture or wreck, all rights shall be extinguished, both as regards the crew to demand any wages whatsoever, and as regards the ship agent to recover the advances made. If a portion of the vessel or of the cargo, or of both, should be saved, the crew engaged on wages, including the captain, shall retain their rights on the salvage, so far as they go, on the remainder of the vessel as well as on the amount of the freightage of the cargo saved; but sailors who are engaged on shares shall not have any right whatsoever on the salvage of the hull, but only on the portion of the freightage saved. If they should have worked to recover the remainder of the shipwrecked vessel they shall be given from the amount of the salvage an award in proportion of the efforts made and to the

risks, encountered in order to accomplish the salvage. ARTICLE 644. A seaman who falls sick shall not lose his right to wages during the voyage, unless the sickness is the result of his own fault. At any rate, the costs of the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the sickness should come from an injury received in the service or defense of the vessel, the seaman shall be attended and cured at the expense of the common funds deducting, before anything else, from the proceeds of the freightage the cost of the attendance and cure. ARTICLE 645. If a seaman should die during the voyage, his heirs will be given the wages earned and not received according to his contract and the cause of his death, namely If he died a natural death and was engaged on wages, that which may have been earned up to the date of his death shall be paid. If the contract was for a fixed sum for the whole voyage, half the amount earned shall be paid if the seamen died on the voyage out, and the whole amount if he died on the return voyage. And if the contract was on shares and death occurred after the voyage was begun, the heirs shall be paid the entire portion due the seaman; but if the latter died before the departure of the vessel from the port, the heirs shall not be entitled to claim anything. If death occurred in the defense of the vessel, the seaman shall be considered as living, and his heirs shall be paid, at the end of the voyage, the full amount of wages or the integral part of the profits which may be due him as to others of his class. In the same manner, the seaman captured while defending the vessel shall be considered present so as to enjoy the same benefits as the rest; but should he have been captured on account of carelessness or other accident not related to the service, he shall only receive the wages due up to the day of his capture. ARTICLE 646. The vessel with her engines, rigging, equipment, and freightage shall he liable for the wages earned by the crew engaged per month or for the trip, the liquidation and payment to take place between one voyage and the other. After a new voyage has been undertaken, credits of such kind pertaining to the preceding voyage shall lose their right of preference. ARTICLE 647. The officers and the crew of the vessel shall be free from all obligations if they deem it proper, in the following cases: 1. If, before beginning the voyage, the captain attempts to change it, or a naval war with the power to which the vessel was destined occurs. 2. If a disease should break out and be officially declared an epidemic in the port of destination. 3. If the vessel should change owner or captain. ARTICLE 648. By the complement of a vessel shall be understood all the persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service, and therefore, the complement shall include the crew, the sailing mates, engineers, stokers and other employees on board not having specific designations; but it shall not include the passengers or the persons whom the vessel is transporting. SECTION FOUR SUPERCARGOES ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties which the ship agent or the shippers may have assigned to them; they shall keep an account and record of their transactions in a book which shall have the same conditions and requisites as required for the accounting book of the captain, and they shall respect the latter in his capacity as chief of the vessel. cdtai The powers and responsibilities of the captain shall cease, when there is a supercargo, with regard to that part of the administration legitimately conferred upon the latter, but shall continue in force for all acts which are inseparable from his authority and office.

ARTICLE 650. All the provisions contained in the second section of Title III, Book II, with regard to capacity, manner of making contracts, and liabilities of factors, shall be applicable to supercargoes. ARTICLE 651. Supercargoes may not, without special authorization or agreement, make any transaction for their own account during the voyage, with the exception of the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither shall they be permitted to invest in the return trip more than the profits from the ventures, unless there is an express authorization from the principals. TITLE THREE SPECIAL CONTRACTS OF MARITIME COMMERCE SECTION ONE CHARTER PARTIES PART I FORMS AND EFFECTS OF CHARTER PARTIES ARTICLE 652. A charter party must be drawn in duplicate and signed by the contracting parties, and when either does not know how or is not able to do so, by two witnesses at his request. The charter party shall contain, besides the conditions freely stipulated, the following circumstances: 1. The kind, name, and tonnage of the vessel. 2. Its flag and port of registry. 3. The name, surname, and domicile of the captain. 4. The name, surname, and domicile of the ship agent, if the latter should make the charter party. 5. The name, surname, and domicile of the charterer; and if he states that he is acting by commission, that of the person for whose account he makes the contract. 6. The port of loading and unloading. 7. The capacity, number of tons or the weight or measurement which they respectively bind themselves to load and to transport, or whether the charter party is total. 8. The freightage to be paid, stating whether it is to be a fixed amount for the voyage or so much per month, or for the space to be occupied, or for the weight or measure of the goods of which the cargo consists, or in any other manner whatsoever agreed upon. 9. The amount of primage to be paid to the captain. 10. The days agreed upon for loading and unloading. 11. The lay days and extra lay days to be allowed and the demurrage to be paid for each of them. ARTICLE 653. If the cargo should be received without the charter party having been signed, the contract shall be understood as executed in accordance with what appears in the bill of lading, the sole evidence of title with regard to the cargo for determining the rights and obligations of the ship agent, of the captain, and of the charterer. cdt ARTICLE 654. The charter parties executed with the intervention of a broker, who certifies to the authenticity of the signatures of the contracting parties because they were signed in his presence, shall be full evidence in court; and if they should be conflicting, that which accords with one which the broker must keep in his registry, if kept in accordance with law, shall govern. The contracts shall also be admitted as evidence, even though a broker has not taken part therein, if the contracting parties acknowledge the signatures to be the same as their own. If no broker has intervened in the charter party and the signatures are not acknowledged, doubts shall be decided by what is provided for in the bill of lading and in the absence thereof, by the proofs submitted by the parties. ARTICLE 655. Charter parties executed by the captain in the absence of the ship agent shall be valid and effective, even though in executing them he should have acted in violation of the orders and instructions of the ship agent or shipowner; but the latter shall have a right of action against the captain for indemnification of damages.

ARTICLE 656. If in the charter party the time in which the loading and unloading are to take place is not stated, the usages of the port where these acts take place shall be observed. After the stipulated or the customary period has passed, and there is no express proviso in the charter party fixing the indemnity for the delay, the captain shall be entitled to demand demurrage for the lay days and extra lay days which may have elapsed in loading and unloading. ARTICLE 657. If during the voyage the vessel should be rendered unseaworthy, the captain shall be obliged to charter at his expense another one in good condition to receive the cargo and carry it to its destination, for which purpose he shall be obliged to look for a vessel not only at the port of arrival but also in the neighborhood within distance of 150 kilometers. If the captain, through indolence or malice, should not furnish a vessel to its destination, the shippers, after requiring the captain to charter a vessel within an inextendible period, may charter one and petition the judicial authority to summarily approve the charter party which they may have made. The same authority shall judicially ("por la via de appremio") compel the captain, to carry out, for his account and under his responsibility, the charter made by the shippers. If the captain, notwithstanding his diligence, should not find a vessel for the charter, he shall deposit the cargo at the disposal of the shippers, to whom he shall communicate the facts on the first opportunity which presents itself, the freight being adjusted in such cases by the distance covered by the vessel, with no right to any indemnification whatsoever. ARTICLE 658. The freightage shall accrue according to the conditions stipulated in the contract, and should they not be expressed, or should they be ambiguous, the following rules shall be observed: 1. If the vessel has been chartered by months or by days, the freightage shall begin to run from the day the loading of the vessel is begun. 2. In charters made for a fixed period, the freightage shall begin to run from that very day. 3. If the freightage is charged according to weight, the payment shall be made according to gross weight, including the containers, such as barrels or any other objects in which the cargo is contained. ARTICLE 659. The merchandise sold by the captain to pay for the necessary repairs to the hull, machinery or equipment, or for unavoidable and urgent needs, shall pay freightage. cdt The price of this merchandise shall be fixed according to the result of the voyage, namely: 1. If the vessel should arrive safely at the port of destination, the captain shall pay the price which the sale of merchandise of the same kind brings at that port. 2. If the vessel should be lost, the captain shall pay the price realized from said merchandise in the sale. The same rule shall be observed in the payment of the freightage, which shall be in full if the vessel arrives at her destination, and in proportion to the distance covered if she should be lost before arrival. ARTICLE 660. Merchandise jettisoned for the common safety shall not pay freightage; but the amount of the latter shall be considered as general average computing the same in proportion to the distance covered when they were jettisoned. ARTICLE 661. Neither merchandise lost by reason of shipwreck or stranding nor those seized by the pirates or enemies, shall pay freightage. If the freightage should have been paid in advance, it shall be returned, unless there is an agreement to the contrary. ARTICLE 662. If the vessel or the merchandise should be redeemed, or the effects of the shipwreck be salvaged, the freightage corresponding to the distance covered by the vessel transporting the cargo shall be paid; and should the vessel, after being repaired, transport said merchandise to the port of destination, the full freightage shall be paid, without prejudice to what may be due by reason of the average. ARTICLE 663. Merchandise which suffer deterioration or diminutions on account of inherent defects or bad quality and condition of the packing, or because of fortuitous event, shall pay freightage in full and as stipulated in the charter party.

ARTICLE 664. The natural increase in weight or size of the merchandise loaded on the vessel shall accrue to the benefit of the owner, and shall pay the proper freightage fixed in the contract for the same. ARTICLE 665. The cargo shall be specially liable for the payment of the freightage, expenses and duties arising therefrom, which must be reimbursed by the shippers, as well as for the part of the general average which may correspond to it; but it shall not be legal for the captain to delay unloading on account of suspicion that this obligation may not be complied with. Should there be reasons for distrust, the judge or court, at the instance of the captain, may order the deposit of the merchandise until he has been paid in full. ARTICLE 666. The captain may request the sale of the cargo to the amount necessary to pay the freightage, expenses, and averages due him, reserving the right to demand the balance due him therefor if the proceeds of the sale should not suffice to cover his credit. ARTICLE 667. The goods loaded shall be liable in the first place for the freight and expenses thereof during twenty days, to be counted from the date of their delivery or deposit. During this period, the sale of the same may be requested, even though there be other creditors and the bankruptcy of the shipper or consignee should occur. This right may not he made use of, however, on the goods which, after being delivered, were turned over to a third person without malice on the part of the latter and for a valuable consideration. cdasia ARTICLE 668. If the consignee should not be found or should refuse to receive the cargo, the judge or court, at the instance of the captain, shall order its deposit and the sale of what may be necessary to pay the freightage and other expenses on the same. The sale shall likewise be allowed when the goods deposited run the risk of deteriorating, or by reason of their condition or other circumstances the expenses of preservation and custody should be disproportionate. PART 2 RIGHTS AND OBLIGATIONS OF SHIPOWNERS ARTICLE 669. The shipowner or the captain shall observe in charter parties the capacity of the vessel or that expressly designated in its registry, a difference greater than 2 per cent between that stated and her true capacity not being permissible. If the shipowner or the captain should contract to carry a greater amount of cargo than the vessel can carry in view of her tonnage, they shall indemnify the shippers whose contracts they do not fulfill for the losses they may have caused when by reason of their default, according to the following cases, viz: If the vessel has been chartered by one shipper only, and there should appear to be an error or fraud in her capacity, and the charterer should not wish to rescind the contract, when he has a right to do so, the freightage shall he reduced in proportion to the cargo which the vessel can not receive, the person from whom the vessel is chartered being furthermore obliged to indemnify the charterer for the losses he may have caused him. If, on the contrary there should be several charter parties, and by reason of want of space all the cargo contracted for cannot be loaded, and none of the charterers desires to rescind the contract, preference shall be given to the person who has already loaded and arranged the freight in the vessel, and the rest shall take the places corresponding to them in the order of the dates of their contracts. Should there be no priority, the charterers may load, if they wish, in proportion to the amounts of weight or space for which each may have contracted, and the person from whom the vessel was chartered shall he obliged to indemnify them for losses and damages. ARTICLE 670. If the person from whom the vessel is chartered, after receiving a part of the freight, should not find sufficient to make up at least three-fifths of the amount which the vessel may hold, at the price he may have fixed, he may substitute for the transportation another vessel inspected and declared suitable for the same voyage, the expenses of transfer and the increase in the price of the charter, should there be any, being for his account. Should he not be able to make this change, he shall

undertake the voyage at the time agreed upon; and should no time have been fixed, within fifteen days from the time the loading began, unless otherwise stipulated. If the owner of the part of the freight already loaded should procure some more at the same price and under similar or proportionate conditions to those accepted for the freight received, the person from whom the vessel is chartered or the captain can not refuse to accept the rest of the cargo; and should he do so, the shipper shall have a right to demand that the vessel put to sea with the cargo which it may have on board. ARTICLE 671. After three-fifths of the vessel has been loaded, the person from whom she is chartered may not, without the consent of the charterers or shippers, substitute the vessel designated in the charter party by another one, under the penalty of making himself thereby liable for all the losses and damages occurring during the voyage to the cargo of those who did not consent to the change. ARTICLE 672. If the vessel has been chartered in whole, the captain may not, without the consent of the charterer, accept cargo from any other person; and should he do so, said charterer may oblige him to unload it and to indemnify him for the losses suffered thereby. ARTICLE 673. The person from whom the vessel is chartered shall he liable for all the losses caused to the charterer by reason of the voluntary delay of the captain in putting to sea, according to the rules prescribed, provided he has been requested, notarially or judicially, to put to sea at the proper time. ARTICLE 674. If the charterer should carry to the vessel more cargo than that contracted for, the excess may be admitted in accordance with the price stipulated in the contract, if it can be well stowed without injuring the other shippers; but if in order to load it, the vessel would be thrown out of trim, the captain must refuse it or unload it at the expense of its owner. In the same manner, the captain may, before leaving the port, unload merchandise clandestinely placed on board, or transport them, if he can do so with the vessel in trim, demanding by way of freightage the highest price which may have been stipulated for said voyage. ARTICLE 675. If the vessel has been chartered to receive the cargo in another port, the captain shall appear before the consignee designated in the charter party; and, should the latter not deliver the cargo to him, he shall inform the charterer and wait his instructions, the lay days agreed upon or those allowed by custom in the port beginning to run in the meantime, unless there is an express, agreement to the contrary. Should the captain not receive an answer within the time necessary therefor, he shall make efforts to find freight; and should he not find any after the lay days and extra lay days have elapsed, he shall make a protest and return to the port where the charter was made. The charterer shall pay the freightage in full, discounting that which may have been earned on the merchandise which may have been carried on the voyage out or on the return trip, if carried for the account of third persons. The same shall be done if a vessel, having been chartered for the round trip, should not be given any cargo on its return. ARTICLE 676. The captain shall lose the freightage and shall indemnify the charterers if the latter should prove, even against the certificate of inspection, if one has been made at the port of departure, that the vessel was not in a condition to navigate at the time of receiving the cargo. ARTICLE 677. The charter party shall subsist if a declaration of war or a blockade should take place during the voyage, the captain not having any instructions from the charterer. In such case the captain must proceed to the nearest safe and neutral port, requesting and awaiting orders from the shipper, and the expenses and salaries paid during the detention shall be paid as general average. If, by orders of the shipper, the cargo should be discharged at the port of arrival, the freightage for the voyage out shall be paid in full. ARTICLE 678. If the time necessary, in the opinion of the judge or court, to receive the orders of the shipper should have elapse, without the captain having received any instructions, the cargo shall be

deposited, and it shall be liable for the payment of the freightage and expenses on its account during the delay, which shall be paid from the proceeds of the part first sold. PART 3 OBLIGATIONS OF CHARTERERS ARTICLE 679. The charterer of an entire vessel may sub-charter the whole or part thereof on such terms as he may consider most convenient, the captain not being allowed to refuse to receive on board the freight delivered by the second charterers, provided that the conditions of the first charter are not change, and that the price agreed upon is paid in full to the person from whom the vessel is chartered, even though the full cargo is not embarked, with the limitation established in the next article. cdtai ARTICLE 680. A charterer who does not complete the full cargo he bound himself to ship shall pay the freightage of the amount he fails to ship, if the captain does not take other freight to complete the load of the vessel, in which case the first charterer shall pay the difference, should there be any. ARTICLE 681. If the charterer should load goods different from those stated at the time of executing the charter party, without the knowledge of the person from whom the vessel was chartered or of the captain, and should thereby give rise to losses, by reason of confiscation, embargo, detention, or other causes, to the person from whom the vessel was chartered or to the shippers, the person giving rise thereto shall be liable with the value of his shipment and furthermore with his property, for the full indemnity to all those injured through his fault. ARTICLE 682. If the merchandise should have been shipped for the purpose of illicit commerce, and were taken on board with the knowledge of the person from whom the vessel was chartered or of the captain, the latter, jointly with the owner of the same, shall be liable for all the losses which may be caused the other shippers; and even though it may have been stipulated, they can not demand any indemnity whatsoever from the charterer for the damaged caused to the vessel. ARTICLE 683. In case of making a port to repair the hull, machinery, or equipment of the vessel, the shippers must await until the vessel is repaired, being permitted to unload it at their own expense should they deem it proper. If, for the benefit of the cargo subject to deterioration, the shippers or the court, or the consul, or the competent authority in a foreign country, should order the merchandise to be unloaded, the expenses of unloading and reloading shall be for the account of the former. ARTICLE 684. If the charterer, without the occurrence of any of the cases of force majeure mentioned in the foregoing article, should wish to unload his merchandise before arriving at the port of destination, he shall pay the full freightage, the expenses of the arrival made at his request, and the losses and damages caused the other shippers, should there be any. ARTICLE 685. In charters for transportation of general freight, any of the shippers may unload the merchandise before the beginning of the voyage, paying one-half of the freightage, the expense of stowing and restowing the cargo, and any other damage which for his reason he may cause the other shippers. ARTICLE 686. After the vessel has been unloaded and the cargo placed at the disposal of the consignee, the latter must immediately pay the captain the freightage due and the other expenses for which said cargo may be liable. The primage must be paid in the same proportion and at the same time as the freightage, all the changes and modifications to which the latter should be subject also governing the former. ARTICLE 687. The charterers and shippers may not abandon merchandise damaged on account of inherent defect or fortuitous event, for the payment of the freightage and other expenses. aisadc The abandonment shall be proper, however, if the cargo should consist of liquids and they have leaked out, nothing remaining in the containers but one-fourth part of their contents. PART 4 TOTAL OR PARTIAL RESCISSION OF CHARTER PARTIES

ARTICLE 688. A charter party may be rescinded at the request of the charterer: 1. If before loading the vessel he should not agree with that stated in the certificate of tonnage, or if there should be an error in the statement of the flag under which she sails. 2. If the vessel should not be placed at the disposal of the charterer within the period and in the manner agreed upon. 3. If after the vessel has put to sea, she should return to the port of departure, on account of risk from pirates, enemies, or bad weather, and the shippers should agree to unload her. In the second and third cases the person from whom the vessel was chartered shall indemnify the charterer for the voyage out. 4. If the charter should have been made by the months, the charterers shall pay the full freightage for one month, if the voyage is for a port in the same waters, and for two months, if for a port in different waters. From one port to another of the Philippines and adjacent islands, the freightage for one month only shall be paid. 5. If the vessel should make a port during the voyage in order to make urgent repairs, and the charterers should prefer to dispose of the merchandise. When the delay does not exceed thirty days, the shippers shall pay the full freightage for the voyage out. Should the delay exceed thirty days, they shall only pay the freightage in proportion to the distance covered by the vessel. ARTICLE 689. At the request of the person from whom the vessel is chartered the charter party may be rescinded: 1. If the charterer, at the termination of the extra lay days, does not place the cargo alongside the vessel. In such case the charterer must pay half the freight stipulated, besides the demurrage due for the lay days and extra lay days. 2. If the person from whom the vessel was chartered should sell it before the charterer has begun to load it, and the purchaser should load it for his own account. In such case the vendor shall indemnify the charterer for the losses he may suffer. If the new owner of the vessel should not load it for his own account, the charter party shall be respected, and the vendor shall indemnify the purchaser if the former did not inform him of the charter pending at the time of making the sale. ARTICLE 690. The charter party shall be rescinded and all actions arising therefrom shall be extinguished, if, before the vessel puts to sea from the port of departure, any of the following cases should occur: 1. A declaration of war or interdiction of commerce with the power to whose ports the vessel was to make its voyage. 2. A condition of blockade of the port of destination of said vessel, or the breaking out of an epidemic after the contract was executed. 3. The prohibition to receive at the said port the merchandise constituting the cargo of the vessel. 4. An indefinite detention, by reason of an embargo of the vessel by order of the government, or for any other reason independent of the will of the ship agent. 5. The inability of the vessel to navigate, without fault of the captain or ship agent. The unloading shall be made for the account of the charterer. ARTICLE 691. If the vessel cannot put to sea on account of the closing of the port of departure or any other temporary cause, the charter shall remain in force, with neither one of the contracting parties having a right to claim damages. The subsistence and wages of the crew shall be considered as general average. During the interruption, the charterer may at the proper time and for his own account, unload and load

the merchandise, paying demurrage if he delays the reloading after the cause for the detention has ceased. ARTICLE 692. A charter party shall be partially rescinded, unless there is an agreement to the contrary, and the captain shall only be entitled to the freightage for the voyage out, if, by reason of a declaration of war, closing of ports, or interdiction of commercial relations during the voyage, the vessel should make the port designated for such a case in the instructions of the charterer. PART 5 PASSENGERS ON SEA VOYAGES ARTICLE 693. If the passage price has not been agreed upon, the judge or court shall summarily fix it, after a declaration of experts. ARTICLE 694. Should the passenger not arrive on board at the time fixed, or should leave the vessel without permission from the captain when the latter is ready to leave the port, the captain may continue the voyage and demand the full passage price. ARTICLE 695. The right to passage, if issued to a specified person, may not be transferred without the consent of the captain or of the consignee. ARTICLE 696. If before beginning the voyage the passenger should die, his heirs shall only be obliged to pay half of the fare agreed upon. If the expenses of subsistence are included in the price stipulated, the judge or court, after hearing experts if he considers it necessary, shall fix the amount which has to be left for the benefit of the vessel. Should another passenger be received in the place of the deceased, no payment shall be made by said heirs. ARTICLE 697. If before the voyage is begun it is suspended through the exclusive fault of the captain or ship agent, the passengers shall have the right to a refund of their fares and to recover losses and damages; but if the suspension is due to fortuitous events, or to force majeure, or to any other cause independent of the captain or ship agent, the passengers shall only be entitled to the return of the fare. cd ARTICLE 698. In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or to force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account. In case of delay in the departure of the vessel, the passengers have the right to remain on board and to be furnished with food for the account of the vessel unless the delay is due to fortuitous events or to force majeure. If the delay should exceed ten days, passengers requesting the same shall be entitled to the return of the fare; and if it is due exclusively to the fault of the captain or ship agent, they may also demand indemnity for losses and damages. A vessel exclusively devoted to the transportation of passengers must take them directly to the port or ports of destination, no matter what the number of passengers may be, making all the stops indicated in its itinerary. ARTICLE 699. If the contract is rescinded, before or after the commencement of the voyage, the captain shall have a right to claim payment of what he may have furnished the passengers. ARTICLE 700. In all matters pertaining to the preservation of order and discipline on board the vessel passengers shall be subject to the orders of the captain, without any distinction whatsoever. ARTICLE 701. The convenience or the interest of the passengers shall not obligate or empowers the captain to stand in shore or enter places which may take the vessel out of her course, or to remain in the ports he must or in under necessity of touching for a period longer than that required by the needs

of navigation. ARTICLE 702. In the absence of an agreement to the contrary, it shall be understood that the subsistence of the passengers during the voyage is included in the price of the passage; but should it be for the account of the latter, the captain shall be under obligation, in case of necessity, to furnish the supply of food necessary for their sustenance at a reasonable price. ARTICLE 703. A passenger shall be considered a shipper insofar as the goods he carries on board are concerned, and the captain shall not be responsible for what the former may keep under his immediate and special custody, unless the damage arises from an act of the captain or of the crew. ARTICLE 704. The captain, in order to collect the passage-money and expenses of sustenance, may retain the goods belonging to the passenger, and in case of the sale of the same he shall be given preference over other creditors acting the same way as in the collection of freightage. ARTICLE 705. In case of the death of a passenger during the voyage, the captain shall be authorized, with regard to the body, to take the steps required by the circumstances, and shall carefully take care of the papers and goods which may be on board belonging to the passenger, observing the provisions of case No. 10 of Article 612 with regard to members of the crew. PART 6 BILLS OF LADING ARTICLE 706. The captain of the vessel and the shipper shall have the obligation of drawing up the bill of lading in which shall be stated: 1. The name, registry, and tonnage of the vessel. 2. The name of the captain and his domicile. 3. The port of loading and that of unloading. 4. The name of the shipper. 5. The name of the consignee, if the bill of lading is issued in the name of a specified person. 6. The quantity, quality, number of packages and marks of the merchandise. 7. The freightage and the primage stipulated. The bill of lading may be issued to bearer, to order, or in the name of a specified person, and must be signed within twenty-four hours after the cargo has been received on board, the shipper being entitled to demand the unloading at the expense of the captain should the latter not sign it, and, in every case, the losses and damages suffered thereby. cdasia ARTICLE 707. Four true copies of the original bill of lading shall be made, and all of them shall be signed by the captain and the shipper. Of these, the shipper shall keep one and send another to the consignee; the captain shall take two, one for himself and another for the ship agent. There may also be drawn up as many copies of the bill of lading as may be considered necessary by the person interested; but when they are issued to order or to bearer, they shall be stated in all the copies, be they the first four or the subsequent ones, the destination of each one, stating whether it is for the agent, for the captain, for the shipper, or for the consignee. If the copy sent to the latter should have a duplicate, this circumstance and the fact that it is not valid except in default of the first one must be stated therein. ARTICLE 708. Bills of lading issued to bearer and sent to the consignee shall be transferable by actual delivery of the instrument; and those issued to order, by virtue of an indorsement. In either case, the person to whom the bill of lading is transferred shall acquire all the rights and actions of the transferor or indorser with regard to the merchandise mentioned in the same. ARTICLE 709. A bill of lading drawn up in accordance with the provisions of this title shall be proof as between all those interested in the cargo and between the latter and the insurers, proof to the contrary being reserved for the latter. ARTICLE 710. If the bills of lading do not agree, and no change or erasure can be observed in any of them, those possessed by the shipper or consignee signed by the captain shall be proof against the captain or ship agent in favor of the consignee or shipper; and those possessed by the captain or

ship agent signed by the shipper shall be proof against the shipper or consignee in favor of the captain or ship agent. ARTICLE 711. The legitimate holder of a bill of lading who fails to present it to the captain of the vessel before the unloading obliging the latter thereby to unload it and place it in deposit, shall be responsible for the expenses of warehousing and other expenses arising therefrom. ARTICLE 712. The captain may not by himself change the destination of the merchandise. In admitting this change at the instance of the shipper, he must first take up the bill of lading which he may have issued, under pain of being liable for the cargo to the legitimate holder of the same. ARTICLE 713. If before the delivery of the cargo a new bill of lading should be demanded of the captain, on the allegation that the failure to present the previous ones is due to their loss or to any other just cause, he shall be obliged to issue it, provided that security for the value of the cargo is given to his satisfaction, but without changing the consignment, and stating therein the circumstances prescribed in the last paragraph of Article 707, under penalty, should he not so state, of being held liable for said cargo if improperly delivered through his fault. ARTICLE 714. If before the vessel puts to sea the captain should die or should cease to hold his position through any cause, the shippers shall have the right to demand of the new captain the ratification of the first bills of lading, and the latter must do so, provided that all the copies previously issued be presented or returned to him, and it should appear from all examination of the cargo that they are correct. The expenses arising from the examination of the cargo shall be defrayed by the ship agent, without prejudice to the right of action of the latter against the first captain if he ceased to be such through his own fault. Should said examination not be made, it shall be understood that the new captain accepts the cargo as it appears from the bills of lading issued. ARTICLE 715. Bills of lading will give rise to a most summary action or to judicial, compulsion ("accion sumarisima o de apremios"), according to the case, for the delivery of the cargo and the payment of the freightage and the expenses thereby incurred. ARTICLE 716. If several persons should present bills of lading issued to bearer or to order, indorsed in their favor, demanding the same merchandise, the captain shall prefer, in making delivery the person who presents the copy first issued, except when the latter one was issued on proof of the loss of the first, and both are presented by different persons. In such case, as well as when only second subsequent copies, issued without this proof, are presented, the captain shall apply to the judge or court, so that he may order the deposit of the merchandise and their delivery, through him, to the proper person. ARTICLE 717. The delivery of the bill of lading shall effect the cancellation of all the provisional receipts of prior date given by the captain or his subordinates for partial deliveries of the cargo which may have been made. ARTICLE 718. After the cargo has been delivered the bill of lading which the captain signed, or at least the copy by reason of which the delivery is made, shall be returned to him, with the receipt for the merchandise mentioned therein. The delay on the part of the consignee shall make him liable for the damages which such delay may cause the captain. SECTION TWO LOANS ON BOTTOMRY AND RESPONDENTIA ARTICLE 719. A loan in which under any condition whatever, the repayment of the sum loaned and of the premium stipulated depends upon the safe arrival in port of the goods on which it is made, or of the price they may receive in case of accident, shall be considered a loan on bottomry or respondentia. ARTICLE 720. Loans on bottomry or respondentia may be executed: 1. By means of a public instrument.

2. By means of a policy signed by the contracting parties and the broker taking part therein. cdt 3. By means of a private instrument. Under whichever of these forms the contract is executed, it shall be entered in the certificate of the registry of the vessel and shall be recorded in the registry of vessels, without which requisites the credits of this kind shall not have, with regard to other credits, the preference which, according to their nature, they should have, although the obligation shall be valid between the contracting parties. The contracts made during a voyage shall be governed by the provisions of Articles 583 and 611, and shall be effective with regard to third persons from the date of their execution, if they should be recorded in the registry of vessels of the port of registry of the vessel before the lapse of eight days following its arrival. If said eight days should elapse without the record having been made in the corresponding registry, the contracts made during the voyage of a vessel shall produce no effect with regard to third persons, except from the day and date of their inscription. In order that the policy of the contracts executed in accordance with No. 2 may have binding force, they must conform to the registry of the broker who took part therein. With respect to those executed in accordance with No. 3 the acknowledgment of the signature shall be required. Contracts which are not reduced to writing shall not give rise to judicial action. ARTICLE 721. In a contract on bottomry or respondentia the following must be stated: 1. The kind, name, and registry of the vessel. 2. The name, surname, and domicile of the captain. 3. The names, surnames, and domiciles of the person giving and the person receiving the loan. 4. The amount of the loan and the premium stipulated. 5. The time for repayment. 6. The goods pledged to secure repayment. 7. The voyage during which the risk is run. ARTICLE 722. The contract may be made to order, in which case they shall be transferable by indorsement, and the indorsee shall acquire all the rights and shall incur all the risks corresponding to the indorser. ARTICLE 723. Loans may be made in goods and in merchandise, fixing their value in order to determine the principal of the loan. ARTICLE 724. The loans may be constituted jointly or separately: 1. On the hull of the vessel. 2. On the rigging. 3. On the equipment, provisions, and fuel. 4. On the engine, if the vessel is a steamer. 5. On the merchandise loaded. If the loan in constituted on the hull of the vessel, the rigging, equipment and other goods, provisions, fuel, steam engines, and the freightage earned during the voyage on which the loan is made shall also be considered as included in the liability for the loan. cdtai If the loan is made on the cargo, all that which constitutes the same shall be subject to the repayment; and if on a particular object of the vessel or of the cargo, only the object concretely and specifically mentioned shall be liable. ARTICLE 725. No loans on bottomry may be made on the salaries of the crew or on the profits expected. ARTICLE 726. If the lender should prove that he loaned an amount larger than the value of the object liable for the bottomry loan, on account of fraudulent measures employed by the borrower, the loan shall be valid only for the amount at which said object is appraised by experts. The surplus principal shall be returned with legal interests for the entire time required for repayment. ARTICLE 727. If the full amount of the loan contracted in order to load the vessel should not be used for the cargo, the balance shall be returned before clearing.

The same procedure shall be observed with regard to the goods taken as loan, if they were not loaded. ARTICLE 728. The loan which the captain takes at the point of residence of the owners of the vessel shall only affect that part thereof which belongs to the captain, if the other owners or their agents should not have given their express authorization therefor or should not have taken part in the transaction. If one or more of the owners should be requested to furnish the amount necessary to repair or provision the vessel, and they should not do so within twenty-four hours, the interest which the parties in default may have in the vessel shall be liable for the loan in the proper proportion. Outside of the residence of the owners the captain may contract loans in accordance with the provisions of Articles 583 and 611. ARTICLE 729. Should the goods on which money is taken not be subjected to risk, the contract shall be considered a simple loan, with the obligation on the part of the borrower to return the principal and interest at the legal rate, if that agreed upon should not be lower. ARTICLE 730. Loans made during the voyage shall have preference over those made before the clearing of the vessel, and they shall be graduated in the inverse order of their dates. The loans for the last voyage shall have preference over prior ones. Should several loans have been made at the same port of arrival under stress and for the same purpose, all of them shall be paid pro rata. ARTICLE 731. The actions pertaining to the lender shall be extinguished by the absolute loss of the goods on which the loan was made, if it arose from an accident of the sea at the time and during the voyage designated in the contract, and it is proven that the cargo was on board; but this shall not take place if the loss was caused by the inherent defect of the thing, or through the fault or malice, of the borrower, or barratry on the part of the captain, or if it was caused by damages suffered by the vessel as a consequence of being engaged in contraband, or if it arose from having loaded the merchandise on a vessel different from that designated in the contract, unless this change should have been made by reason of force majeure. Proof of the loss as well as of the existence in the vessel of the goods declared to the lender as the object of the loan is incumbent upon him who received the loan. ARTICLE 732. Lenders on bottomry or respondentia shall suffer, in proportion to their respective interest, the general average which may take place in the goods on which the loan is made. In particular averages, in the absence of an express agreement between the contracting parties, the lender on bottomry or respondentia shall also contribute in proportion to his respective interest, should it not belong to the kind of risks excepted in the foregoing article. ARTICLE 733. Should the period during which the lender shall run the risk not have been stated in the contract, it shall last, with regard to the vessel, engines, rigging, and equipment, from the moment said vessel puts to sea until she drops anchor in the port of destination; and with regard to the merchandise, from the time they are loaded at the shore or wharf of the port of shipment until they are unloaded in the port of consignment. aisadc ARTICLE 734. In case of shipwreck, the amount liable for the payment of the loan shall be reduced to the proceeds of the goods saved, after deducting the costs of the salvage. If the loan should be on the vessel or any of its parts, the freightage earned during the voyage for which said loan was contracted shall also be liable for its payment, as far as it may reach. ARTICLE 735. If the same vessel or cargo should be the object of a loan on bottomry or respondentia and marine insurance, the value of what may be saved in case of shipwreck shall be divided between the lender and the insurer, in proportion to the legitimate interest of each one, taking into consideration, for this purpose only, the principal with respect to the loan, and without prejudice to the right of preference of other creditors in accordance with Article 580. ARTICLE 736. If there should be delay in repayment of the principal and premiums of the loan, only the former shall bear of legal interest.

SECTION THREE MARINE INSURANCE ARTICLES 737 to 805. (These provisions are expressly repealed by Section 204 of Act No. 2497, otherwise known as "The Insurance Act.") The new law of governing insurance is PD No. 612, as amended, which took effect on Dec. 18, 1974. TITLE FOUR RISKS, DAMAGES AND ACCIDENTS OF MARITIME COMMERCE SECTION ONE AVERAGES ARTICLE 806. For the purposes of this code the following shall be considered averages: 1. All extraordinary or accidental expenses which may be incurred during the voyage in order to preserve the vessel, the cargo, or both. 2. Any damages or deteriorations which the vessel may suffer from the time it puts to sea from the port of departure until it casts anchor in the port of destination, and those suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment. ARTICLE 807. The petty and ordinary expenses incident to navigation, such as those of pilotage of coasts and ports, those of lighterage and towage, anchorage, inspection, health, quarantine, lazaretto, and other so-called port expenses, costs of barges and unloading until the merchandise is placed on the wharf, and any other usual expenses of navigation, shall be considered ordinary expenses to be defrayed by the shipowner, unless there is an express agreement to the contrary. ARTICLE 808. Averages shall be: 1. Simple or particular. 2. General or gross. ARTICLE 809. As a general rule, simple or particular averages shall include all the expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the persons interested in the vessel and her cargo, and especially the following: 1. The losses suffered by the cargo from the time of its embarkation until it is unloaded, either on account of inherent defect of the goods or by reason of an accident of the sea or force majeure, and the expenses incurred to avoid and repair the same. 2. The losses and expenses suffered by the vessel in its hull, rigging, arms, and equipment, for the same causes and reasons, from the time it puts to sea from the port of departure until it anchors and lands in the port of destination. 3. The losses suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it. 4. The wages and victuals of the crew when the vessel is detained or embargoed by legitimate order or force majeure, if the charter has been contracted for a fixed sum for the voyage. 5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions. 6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to meet any other need of the vessel, against which the proper amount shall be charged. 7. The victuals and wages of the crew while the vessel is in quarantine. 8. The loss inflicted upon the vessel or cargo by reason of an impact or collision with another, if it is accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the losses caused. 9. Any loss suffered by the cargo through the fault, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freightage.

ARTICLE 810. The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular averages. cd ARTICLE 811. As a general rule, general or gross averages shall include all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk, and particularly the following: 1. The goods or cash invested in the redemption of the vessel or of the cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the settlement or redemption is being made. 2. The goods jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the crew, and the damage suffered through said act by the goods which are kept on board. 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned, in order to save the cargo, the vessel, or both. 4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place it in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred. 5. The damage suffered by the goods of the cargo by the opening made in the vessel in order to drain it and prevent its sinking. 6. The expenses caused in order to float a vessel intentionally stranded for the purpose of saying it. 7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo. 8. The expenses for the treatment and subsistence of the members of the crew who may have been wounded or crippled in defending or saying the vessel. 9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it. 10. The wages and victuals of the crew of a vessel chartered by the month, during the time that it is embargoed or detained by force majeure or by order of the government, or in order to repair the damage caused for the common benefit. 11. The depreciation resulting in the value of the goods sold at arrival under stress in order to repair the vessel by reason of gross average. 12. The expenses of the liquidation of the average. ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute. ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross average, there must be a resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after hearing the persons interested in the cargo who may be present. If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his responsibility, without prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous deliberations was wanting. ARTICLE 814. The resolution adopted to cause the damages which constitute general average must necessarily be entered in the log book, stating the motives and reasons for the dissent, should there be any, and the irresistible and urgent causes which impelled the captain if he acted of his own accord. In the first case the minutes shall be signed by all the persons present who could do so before taking

action, if possible; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the officers of the vessel. In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make, within twentyfour hours after his arrival, and to ratify it immediately under oath. ARTICLE 815. The captain shall direct the jettison, and shall order the goods cast overboard in the following order: 1. Those which are on deck, beginning with those which embarrass the maneuver or damage of the vessel, preferring, if possible, the heaviest ones with the least utility and value. cda 2. Those which are below the upper deck, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable. ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure in accordance with the first paragraph of Article 812. ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate its entry into a port or roadstead, part of the cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof being distributed between the vessel and cargo from which it came. If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability may be demanded of the salvage. ARTICLE 818. If, as a necessary measure to extinguish a fire in a port, roadstead, creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute. SECTION TWO ARRIVALS UNDER STRESS ARTICLE 819. If during the voyage the captain should believe that the vessel can not continue the trip to the port of destination on account of the lack of provisions, well-founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea disabling it to navigate, he shall assemble the officers and shall summon the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstances of the case, the reason should be considered well-founded, the arrival at the nearest and most convenient port shall be agreed upon, drafting and entering the proper minutes, which shall be signed by all, in the log book. The captain shall have the deciding vote, and the persons interested in the cargo, may make the objections and protests they may deem proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable. ARTICLE 820. An arrival shall not be considered lawful in the following cases: 1. If the lack of provisions should arise from the failure to take the necessary provisions for the voyage according to usage and customs, or if they should have been rendered useless or lost through bad stowage or negligence in their care. 2. If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and provable facts. 3. If the defect of the vessel should have arisen from the fact that it was not repaired, rigged, equipped, and prepared in a manner suitable for the voyage, or from some erroneous order of the captain. 4. When malice, negligence, want of foresight, or lack of skill on the part of the captain exists in the act causing the damage.

ARTICLE 821. The expenses of an arrival under stress shall always be for the account of the shipowner or agent, but they shall not be liable for the damages which may be caused the shippers by reason of the arrival provided the latter is legitimate. Otherwise, the ship agent and the captain shall be jointly liable. ARTICLE 822. If in order to make repairs to the vessel or because there is danger that the cargo may suffer damage, it should be necessary to unload, the captain must request authorization from the competent judge or court for the removal, and carry it out with the knowledge of the person interested in the cargo, or his representative, should there be any. In a foreign port, it shall be the duty, of the Philippine Consul, where there is one, to give the authorization. In the first case, the expenses shall be for the account of the ship agent or owner, and in the second, they shall be chargeable against the owners of the merchandise for whose benefit the act was performed. If the unloading should take place for both reasons, the expenses shall be divided proportionately between the value of the vessel and that of the cargo. ARTICLE 823. The custody and preservation of the cargo which has been unloaded shall be intrusted to the captain, who shall be responsible for the same, except in cases of force majeure. ARTICLE 824. If the entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged, the captain may request of the competent judge or court, or of the consul in a proper case, the sale of all or of part of the former, and the person taking cognizance of the matter shall authorize it, after an examination and declaration of experts, advertisements, and other formalities required by the case, and an entry in the book, in accordance with the provisions of Article 624. The captain shall, in a proper case, justify the legality of his conduct, under the penalty of answering to the shipper for the price the merchandise would have brought if they had arrived in good condition at the port of destination. ARTICLE 825. The captain shall be responsible for the damages caused by his delay, if after the cause of the arrival under stress has ceased, he should not continue the voyage. If the cause of arrival should have been the fear of enemies, privateers, or pirates, a deliberation and resolution in a meeting of the officers of the vessel and persons interested in the cargo who may be present, in accordance with the provisions contained in Article 819, shall precede the departure. SECTION THREE COLLISIONS ARTICLE 826. If a vessel should collide with another, through or the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. aisadc ARTICLE 827. If the collision is imputable to both vessels, each one shall suffer its own damages, and both shall be solidarily responsible for the losses and damages occasioned to their cargoes. ARTICLE 828. The provisions of the preceding article are applicable to the use in which it cannot be determined which of the two vessels has caused the collision. ARTICLE 829. In the cases above mentioned the civil action of the owner against the person causing the injury as well as the criminal liabilities, which may be proper, are reserved. ARTICLE 830. If a vessel should collide with another, through fortuitous event or force majeure, each vessel and its cargo shall bear its own damages. ARTICLE 831. If a vessel should be forced by a third vessel to collide with another, the owner of the third vessel shall indemnify the losses and damages caused, the captain thereof being civilly liable to said owner. ARTICLE 832. If by reason of a storm or other cause of force majeure, a vessel which is properly

anchored and moored should collide with those nearby, causing them damages, the injury occasioned shall be considered as particular average of the vessel run into. ARTICLE 833. A vessel which, upon being run into, sinks immediately, as well as that which, having been obliged to make a port to repair the damages caused by the collision, is lost during the voyage or is obliged to be stranded in order to be saved, shall be presumed as lost by reason of collision. ARTICLE 834. If the vessels colliding with each other should have pilots on board discharging their duties at the time of the collision, their presence shall not exempt the captains from the liabilities they incur, but the latter shall have the right to be indemnified by the pilots, without prejudice to the criminal liability which the latter may incur. ARTICLE 835. The action for the recovery of losses and damages arising from collisions cannot be admitted if a protest or declaration is not presented within twenty-four hours before the competent authority of the point where the collision took place, or that of the first port of arrival of the vessel, if in Philippine territory, and to the consul of the Republic of the Philippines if it occurred in a foreign country. ARTICLE 836. With respect to damages caused to persons or to the cargo, the absence of protest may not prejudice the persons interested who were not on board or were not in a condition to make known their wishes. ARTICLE 837. The civil liability incurred by the shipowners in the case prescribed in this section, shall be understood as limited to the value of the vessel with all its appurtenances and freightage earned during the voyage. ARTICLE 838. When the value of the vessel and her appurtenances should not be sufficient to cover all the liabilities, the indemnity due by reason of the death or injury of persons shall have preference. ARTICLE 839. If the collision should take place between Philippine vessels in foreign waters, or if having taken place in the open seas, and the vessels should make a foreign port, the Consul of the Republic of the Philippines in said port shall hold a summary investigation of the accident, forwarding the proceedings to the Secretary of the Department of Foreign Affairs for continuation and conclusion. aisadc SECTION FOUR SHIPWRECKS ARTICLE 840. The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding shall be individually for the account of the owners, the part which may be saved belonging to them in the same proportion. ARTICLE 841. If the wreck or stranding should be caused by the malice, negligence, or lack of skill of the captain, or because the vessel put to sea was insufficiently repaired and equipped, the ship agent or the shippers may demand indemnity of the captain for the damages caused to the vessel or to the cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621. ARTICLE 842. The goods saved from the wreck shall be specially bound for the payment of the expenses of the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference over any other obligation if the merchandise should be sold. ARTICLE 843. If several vessels sail under convoy, and any of them should be wrecked, the cargo saved shall be distributed among the rest in proportion to the amount which each one is able to take. If any captain should refuse, without sufficient cause, to receive what may correspond to him, the captain of the wrecked vessel shall enter a protest against him, before two sea officials, of the losses and damages resulting therefrom, ratifying the protest within twenty-four hours after arrival at the first

port, and including it in the proceedings he must institute in accordance with the provisions contained in Article 612. If it is not possible to transfer to the other vessels the entire cargo of the vessel wrecked, the goods of the highest value and smallest volume shall be saved first, the designation thereof to be made by the captain with the concurrence of the officers of his vessel. ARTICLE 844. A captain who may have taken on board the goods saved from the wreck shall continue his course to the port of destination, and on arrival shall deposit the same, with judicial the intervention, at the disposal of their legitimate owners. In case he changes his course, if he can unload them at the port of which they were consigned, the captain may make said port if the shippers or supercargoes present and the officers and passengers of the vessel consent thereto; but he may not do so, even with said consent, in time of war or when the port is difficult and dangerous to make. The owners of the cargo shall defray all the expenses of this arrival as well as the payment of the freightage which, after taking into consideration the circumstances of the case, may be fixed by agreement or by a judicial decision. ARTICLE 845. If on the vessel there should be no person interested in the cargo who can pay the expenses and freightage corresponding to the salvage, the competent judge or court may order the sale of the part necessary to cover the same. This shall also be done when its preservation is dangerous, or when in a period of one year it should not have been possible to ascertain who are its legitimate owners. In both cases the proceedings shall be with the publicity and formalities prescribed in Article 579, and the net proceeds of the sale shall be safely deposited, in the discretion of the judge or court, so that they may be delivered to the legitimate owner thereof. TITLE FIVE PROOF AND LIQUIDATION OF AVERAGES SECTION ONE PROVISIONS COMMON TO ALL KINDS OF AVERAGES ARTICLE 846. Those interested in the proof and liquidation of averages may mutually agree and bind themselves at any time with regard to the liability, liquidation, and payment thereof. cdt In the absence of agreements, the following rules shall be observed: 1. The proof of the average shall take place in the port where the repairs are made, should any be necessary, or in the port of unloading. 2. The liquidation shall be made in the port of unloading, if it is a Philippine port. 3. If the average occurred outside of the jurisdictional waters of the Philippines, or the cargo has been sold in a foreign port by reason of an arrival under stress, the liquidation shall be made in the port of arrival. 4. If the average has occurred near the port of destination, so that said port can be made, the proceedings mentioned in Rules 1 and 2 shall be held there. ARTICLE 847. In the case where the liquidation of the averages is made privately by virtue of agreement, as well as when a judicial authority intervened at the request of any of the parties interested who do not agree thereto, all of them shall be cited, and heard, should they not have renounced this right. Should they not be present or should the have no legal representative, the liquidation shall be made by the Consul in a foreign port, and where there is none, by the competent judge or court, according to the laws of the country and for the account of the proper party. When the representative is a person well known in the place where the liquidation is made, his intervention shall be admitted and shall produce legal effects, even though he be authorized only by a letter of the ship agent, the shipper, or the insurer. ARTICLE 848. Claims for averages shall not be admitted if they do not exceed 5 per cent of the

interest which the claimant may have in the vessel or in the cargo if it be gross average and 1 per cent of the goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to the country. ARTICLE 849. The damages, averages, loans on bottomry and respondentia and their premiums and any other losses, shall not earn interest by reason of delay until after the lapse of the period of three-days, to be counted from the day on which the liquidation may have been concluded and communicated to the persons interested in the vessel, in the cargo, or in both at the same time. ARTICLE 850. If by reason of one or more accidents of the sea, particular and gross averages of the vessel, of the cargo, or of both, should take place on the same voyage, the expenses and damages corresponding to each average shall be determined separately in the port where the repairs are made, or where the merchandise are discharged, sold, or utilized. For this purpose the captains shall be obliged to demand of the expert appraisers and of the contractors making the repairs, as well as of those appraising and taking part in the unloading, repair, sale, or utilization of the merchandise, that in their appraisements or estimates and accounts they set down separately and accurately the expenses and damages pertaining to each average, and in those of each average those corresponding to the vessel and to the cargo, also stating separately whether or not there are damages proceeding from inherent defect of the thing and not from accident of the sea; and in case there should be expenses common to the different averages and to the vessel and its cargo, the amount corresponding to each must be estimated and stated distinctly. SECTION TWO LIQUIDATION OF GROSS AVERAGES ARTICLE 851. At the instance of the captain, the adjustment, liquidation, and distribution of gross averages shall be held privately, with the consent of all the parties in interest. For this purpose, within forty-eight hours following the arrival of the vessel at the port, the captain shall convene all the person interested in order that they may decide as to whether the adjustment or liquidation of the gross average is to be made by experts and liquidators appointed by themselves, in which case it shall so done if the interested parties agree. If an agreement is not possible, the captain shall apply to the competent judge or court, who shall be the one in the port where these proceedings are to be held in accordance with the provisions of this code, or to the consul of the Republic of the Philippines should there be one, and should there be none, to the local authority when they are to be held in a foreign port. cdtai ARTICLE 852. If the captain does not comply with the provisions of the preceding article, the ship agent or the shippers shall demand the liquidation without prejudice to the action they may bring to demand indemnity from him. ARTICLE 853. After the experts have been appointed by the persons interested, or by the court, and after the acceptance, they shall proceed to the examination of the vessel and of the repairs required and to the appraisal of their cost, separating these losses and damages from those arising from the inherent defect of the things. The experts shall also declare whether the repairs may be made immediately, or whether it is necessary to unload the vessel in order to examine and repair it. With regard to the merchandise, if the average should be visible at a mere glance, the examination thereof must be made before they are delivered. Should it not be visible at the time of unloading, said examination may be made after the delivery, provided that it is done within forty-eight hours from the unloading and without prejudice to the other proofs which the experts may deem proper. ARTICLE 854. The valuation of the objects which are to contribute to the gross average, and that of those which constitute the average, shall be subject to the following rules: 1. The merchandise saved which are to contribute to the payment of the gross average shall be valued at the current price at the port of unloading, deducting the freightage, customs duties, and expenses of unloading, as may appear from a material inspection of the same, without taking the bills

of lading into consideration unless there is an agreement to the contrary. 2. If the liquidation is to be made in the port of departure, the value of the merchandise loaded shall be determined by the purchase price, including the expenses until they are placed on board, the insurance premium excluded. 3. If the merchandise should be damaged, they shall be appraised at their true value. 4. If the voyage having been interrupted, the merchandise should have been sold in a foreign port, and the average cannot be estimated, the value of the merchandise in the port of arrival, or the net proceeds obtained at the sale thereof, shall be taken as the contributing capital. 5. Merchandise lost, which constitute the gross average, shall be appraised at the value which merchandise of its kind may have in the port of unloading, provided that its kind and quality appear in the bill of lading; and should they not appear, the value shall be that stated in the invoices of the purchase issued in the port of shipment, adding thereto the expenses and freightage subsequently arising. cd 6. The masts cut down, the sails, cables, and other equipment of the vessel rendered useless for the purpose of saying it, shall be appraised at the current value, deducting one-third by reason of the difference between new and old. This deduction shall not be made with respect to anchors and chains. 7. The vessel shall be appraised at its true value in the condition in which it is found. 8. The freightage shall represent 50 per cent by way of contributing capital. ARTICLE 855. The merchandise loaded on the upper deck of the vessel shall contribute to the gross average should they be saved; but there shall be no right to indemnity if they should be lost by reason of having been jettisoned for common safety, except when the marine ordinances allow their shipment in this manner in coastwise navigation. The same shall take place with that which is on board and is not included in the bills of lading or inventories, according to the cases. In any case the shipowner and the captain shall be liable to the shippers for the damages from the jettison, if the storage on the upper deck was made without the consent of the latter. ARTICLE 856. Provisions and munitions of war which the vessel may have on board, and the clothing used by the captain, officers, and crew, shall not contribute to the gross average. The clothing used by the shipper, supercargoes, and passenger who may be on board at the time of the jettison, shall also be accepted. Neither shall the goods jettisoned contribute to the payment of the gross averages which may occur to the merchandise saved to a different and subsequent risk. ARTICLE 857. After the appraisement of the goods saved and of those lost which constitute the gross average, has been concluded by the experts, the repairs, if any, made on the vessel, and in this case, the accounts of the same approved by the persons interested or by the judge or court, the entire record shall be turn over to the liquidator appointed, in order that he may proceed with the distribution of the average. ARTICLE 858. In order to effect the liquidation, the liquidator shall examine the protest of the captain, comparing it, if necessary, with the log book, and all the contracts which may have been made among the persons interested in the average, the appraisements, expert examinations, and accounts of repairs made. If, as a result of this examination, he should find any defect in the procedure which might injure the rights of the person interested or affect the liability of the captain, he shall call attention thereof in order that it may be corrected, if possible, and otherwise he shall include it in the exordial of the liquidation. Immediately thereafter he shall proceed with the distribution of the amount of the average, for which purpose he shall fix: 1. The contributing capital, which he shall determine by the value of the cargo, in accordance with the rules established in Article 854.

2. That of the vessel in her actual condition, according to the statement of experts. 3. The 50 per cent of the amount of the freightage, deducting the remaining 50 per cent for wages and maintenance of the crew. After the amount of the gross average has been determined in accordance with the provisions of this Code, it shall be distributed pro rata among the goods which are to cover the same. cdasia ARTICLE 859. The insurers of the vessel of the freightage and of the cargo shall be obliged to pay for the indemnification of the gross average, insofar as is required of each one of the objects respectively. ARTICLE 860. If, notwithstanding the jettison of merchandise, breakage of masts, ropes, and equipment, the vessel shall be lost running the same risk, no contribution whatsoever by jettison of gross average shall be proper. The owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost, or damaged. ARTICLE 861. If, after the vessel has been saved from the risk which gave rise to the jettison, it should be lost through another accident taking place during the voyage, the goods saved and existing from the first risk shall continue liable to contribution by reason of the gross average according to their value in the condition in which they may be found, deducting the expenses incurred in saving them. ARTICLE 862. If, in spite of having saved the vessel and the cargo in consequence of the cutting down of masts or of any other damage deliberately done to the vessel for said purpose, the merchandise should subsequently be lost or stolen, the captain can not demand of the shippers or consignees that they contribute to the indemnity for the average, unless the loss should occur by reason of an act of the owner or consignee himself. ARTICLE 863. If the owner of the jettisoned goods should recover them after having received the indemnity for gross average, he shall be obliged to return to the captain and to the other persons interested in the cargo the amount he may have received, deducting the amount of the damage caused by the jettison and of the expenses incurred in their recovery. In this case, the amount returned shall be distributed among the vessel and the persons interested in the cargo in the same proportion in which they contributed to the payment of the average. ARTICLE 864. If the owner of the goods jettisoned should recover them without having demanded any indemnity, he shall not be obliged to contribute to the payment of the gross average which may have been suffered by the rest of the cargo after the jettison. ARTICLE 865. The distribution of the gross average shall not be final until it has been agreed to, or in the absence thereof, until it has been approved by the judge or court, after an examination of the liquidation and a hearing of the persons interested who may be present or of their representatives. ARTICLE 866. After the liquidation has been approved, it shall be the duty of the captain to collect the amount of the contributions, and he shall be liable to the owners of the goods averaged for the damages they may suffer through his delay or negligence. ARTICLE 867. If the person contributing should not pay the amount of the contribution at the end of the third day after having been required to do so, the goods saved shall be proceeded against, in the request of the captain, until payment has been made from their proceeds. ARTICLE 868. If the person interested in receiving the goods saved should not give security sufficient to answer for the amount corresponding to the gross average, the captain may defer the delivery thereof until payment has been made. aisadc SECTION THREE LIQUIDATION OF ORDINARY AVERAGES ARTICLE 869. The experts whom the court or the person interested may appoint, as the case may be, shall proceed with the examination and appraisement of the averages in the manner prescribed in Articles 853 and 854, Rules 2 to 7, insofar as they are applicable. Footnotes

1. "Art. 6. The married woman, over twenty-one years of age, can engage in commerce with the authorization of her husband, stated in a public instrument which shall be inscribed in the commercial registry." An opinion has been expressed that this provision is still applicable where the husband objects to the wife's engaging in commerce and the family council or the court sustains him. Furthermore, according to this opinion, should the husband thereafter change his mind, his consent must be given in accordance with this article. 2. "Art. 7. The married woman who, with the knowledge of her husband, engages in commerce shall also be presumed authorized to trade." (See fn. 35, supra.) 3. "Art. 9. The woman who, upon contracting marriage, should be engaged in commerce, shall need the authorization of her husband to continue the same. "This authorization shall be presumed granted so long as the husband does not make known, in the form prescribed in the preceding article, the discontinuance by his wife of the practice of commerce. (See fn. 25, under Art. 6, supra.) 4. "Art. 10. Should the wife engaged in commerce in the cases mentioned in Articles 6, 7, and 9 of this Code, all her dotal and paraphernal property, and all the property rights which both spouses may have in the conjugal community or partnership shall be solidarity liable for the results of her commercial activity, the wife having the power to alienate and mortgage her own private property as well as that owned in common. "The private property of the husband may also be alienated and mortgaged by the wife, if the authority granted by him should have been or be extended to such property." It is believed that this article is no longer in force. Its provisions are based on the consent given by the husband as required under Article 6 of this Code. At present, however, Article 117 of the New Civil Code authorizes the wife to engage in commerce without the consent of the husband, as that authority is given by the law itself. Said Code has thus practically equalized the legal positions of the husband and the wife relative to their capacity to engage in business. It would, therefore, be just and equitable to treat them equally in respect to the effects of their commercial transactions. Accordingly, at present, as to what property is liable for the acts of commerce done by the wife shall be governed by the provisions of the New Civil Code on the subject. (See Title VI of Book 1.) The conjugal partnership shall be liable for all debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose in the cases where she may legally bind the partnership, (Par. 1, Art. 161, NCC). 5. "Art. 11. The married woman, over twenty-one years of age, may likewise engage in commerce in any of the following cases: "1. When she lives separate from her husband by reason of a final decree of divorce. "2. When her husband is under guardianship. "3. When her husband is absent, his whereabouts being unknown, and his return not expected. "4. When her husband is serving the penalty of civil interdiction." (See fn. 31, under Art. 6, supra). 6. "Art. 12. In the cases referred to in the preceding article, only the private property of wife and that of the community of conjugal partnership acquired through her commercial transactions shall be liable for the results thereof, the wife having the power to alienate and mortgage one or the other. cd "When the absence of the husband is legally declared, the wife shall furthermore have the powers granted to her in such case by the civil law." (See fn. 31, under Art. 6, supra). 7. Par. 6. "General powers of attorney, and the revocation of the same, should there be any, given to managers, factors, employees and any other agents". 8. Par. 7 "The authorization of the husband for his wife to engage in commerce and the legal or judicial authority of the wife to administer her property on account of the absence or incapacity of the

husband." 9. Par. 8. "The revocation of the permission given to the wife to trade." 10. "Par. 11. "The issues of bank notes, stating the date, class, series, quantity and value of each issue." 11. "Par. 12. "The titles of industrial property, patents, and trademarks, in the form and manner established by law." 12. This article has been superseded by Secs. 1170 and 1171 of the Revised Administrative Code. 13. Art. 29. Unregistered powers of attorney shall give rise to actions between the principal and the agent, but they cannot be used to the prejudice of third persons, who, however, may rely thereon in so far as they may be favorable." This article has been repealed by Article 2270 of the New Civil Code which has repealed all provisions of the Code of Commerce on agency. 14. These articles have been impliedly repealed by Commonwealth Acts No. 83 and 287, and by Sec. 66 of the Revised Administrative Code. 1. See PD No. 1 and Integrated Reorganization Plan, (Art. III, Chapter 1, Part X) appendix, infra. 2. But See Sec. 17 PD 1521, Ship Mortgage Decree of 1978 which took effect June 11, 1978, infra and a different list of preferred claims and Sec 2, PD 214, Appendix infra, repealing or modifying Arts 580 and 584. C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.