Transportation Law

TRANSPORTATION LAW: WRITTEN REPORT
San Beda College Alabang School of Law

Chapter One
AVERAGES
Averages in General
Article 806 of the Code of Commerce provides that 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; and (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.
Classification of Averages
 Simple Average (Art. 809)
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. If the damage caused is not a general average, the same can be considered particular
average.
By Whom Borne
Since simple or particular averages do not inure to the common benefit, the owner of the goods
that suffered the damage bears the loss. Article 810 provides that the owner of the goods which gave rise
to the expense or suffered the damage shall bear the simple or particular averages. The rules on simple
or particular average are consistent with the maxim res perit domino. However, under Art. 732, if the
vessel or goods are hypothecated by a loan on bottomry or respondentia, the lender shall also bear the
loss in proportion to his interest.
 General Average (Art. 811)
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A general or gross average 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 real and known risk.
Requisites of General Average

 There must be a common danger;
 That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately;
 That from the expenses or damages caused follows the successful saving of the vessel and cargo;
and
 That the expenses or damages should have been incurred or inflicted after taking proper legal
steps and authority.
Common Danger
The requirement that there must be common danger means that both the ship and the cargo, after
has been loaded, are subject to the same danger, whether during the voyage, or in the port of loading and
unloading; that the danger arises from the accidents of the sea, dispositions of the authority, or faults of
men, provided that the circumstances during the peril should be ascertained and imminent or may
rationally be said to be certain and imminent (Magsaysay Inc. v Agan). It follows that there can be no
general average if there was no danger at all. There is also no common danger if the measure was
undertaken against a distant peril. Even if there is a common peril, the same may not justify a voluntary
sacrifice if the same can easily be avoided by the ship without such sacrifice.
In the case of National Development Company v Court of Appeals, the Supreme Court ruled
that the law on averages does not apply in collision cases where the same was caused by the negligence
of the captains of the colliding vessels and the cargoes were not jettisoned to save some of the cargoes
and the vessel. In the case of Philippine Home Assurance v Court of Appeals, fire is not considered a
natural disaster or calamity since it almost always arises from some act of man or by human means. It
cannot be an act of God unless caused by lightning. General averages include all damages and expenses
which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from real
and known risk. The formalities prescribed under the law were not complied with.
Deliberate Sacrifice
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There must be voluntary sacrifice of a part for the benefit of the whole in order to justify general
average contribution. It cannot involve a damage which resulted beyond the control of the captain and
crew or without any intention on their part. As a matter of fact, Article 813 prescribes a procedure in
deciding whether a sacrifice should be made.
Normally, the sacrifice is made through the jettison of the cargo or part of the ship is thrown
overboard during the voyage. However, there can also be general average even if the sacrifice was not
made during the voyage in at least two cases: (1) where the sinking of a vessel is necessary to extinguish
a fire in a port, roadstead, creek or bay; and (2) where cargo is transferred to lighten the ship on account
of a storm to facilitate entry into a port.
Successful Sacrifice
No general contribution can be demanded if the vessel and other cargo that are sought to be saved
were in fact not saved (Art. 860, Code of Commerce).
Example
Goods belonging to Mr. A were sacrificed to save the ship from sinking because of a typhoon.
There will be no general average contribution if the ship still sank because of the same typhoon. Hence,
the sacrifice was not successful in saving the ship. However, if the ship was saved from typhoon, there
will be liability for general average contribution even if the vessel will be subsequently lost for some
other reason during the voyage (Art. 861, Code of Commerce).
Compliance with Proper Legal Steps

Expenses or damages should have been incurred or inflicted after taking proper legal steps and
authority. In this connection, the proper steps and authority for making the sacrifice are prescribed in
Articles 813 to 815 of the Code of Commerce.
Who Bears General Average

The Code of Commerce expressly provides that gross or general average shall be borne by those
who benefited from the sacrifice. These include the ship owner and the owners of the cargoes that were
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saved. Contribution may also be imposed on the insurers of the vessel or cargoes that were saved as well
as lenders on bottomry or respondentia (Arts. 732 and 859). 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 (Art. 812). It must however be pointed out that a claimant
(ship or cargo) is not entitled to obtain contribution from the other parties even if there is common danger
when he or his employees are at fault, or negligent in law.
Maritime Insurance
Article 859 provides that the insures 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. On the other hand, the Insurance Code of the Philippines provides that the insured
is liable for any general average in proportion to the contribution attaching to his policy value where the
said value is less than the contributing value of the thing insured (PD 1460, as amended).
A marine insurer is liable for a loss falling upon the insured, through a contribution in respect to
the thing insured, required to be made by him towards a general average loss called for by a peril insured
against: Provided, that the liability of the insurer shall be limited to the proportion of contribution
attaching to his policy value where this is less than the contributing value of the thing insured (Sec. 166
of the Insurance Code).
When a person insured by a contract of marine insurance has a demand against others for
contribution, he may claim the whole loss from the insurer, subrogating him to his own right to
contribution. But no such claim can be made upon the insurer after the separation of the interests liable
to contribution, nor when the insured, having the right and opportunity to enforce contribution from
others, has neglected or waived the exercise of that right (Sec. 167 of the Insurance Code).
Who Is Entitled to Indemnity

The owner of the goods which were sacrifices is entitled to receive the general average
contribution. However, the following goods even if sacrificed are not covered:
 goods carried on deck unless the rule, special law or customs of the place allow the same (Art.
855);
 goods that are not recorded in the books or records of the vessel (Art. 855, Par. 2);
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 fuel for the vessel if there is more than sufficient fuel for the voyage (Rule IX, York-Antwerp
Rule).
Effect of Negligence
Art. 848 provides that claims for averages shall not be admitted if they do not exceed (5%) of the
interest which the claimant may have in the vessel or in the cargo if it be gross average and (1%) of the
goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is
an agreement to the contrary.
However, common carriers cannot limit their liability for injury or loss of goods when such injury
or loss was caused by its own negligence. The law on average under the Code of Commerce cannot be
applied in determining liability where there is negligence. The issue of negligence must first be addressed
before the proper provision of the Code of Commerce on the extent of liability may be applied (American
Home Assurance Co. v. CA).
Apportionment
Art. 854 provides that after the amount of the gross average has been determined in accordance
with the provisions of the Code, it shall be distributed pro rata among the goods which are to cover the
same (Art. 858). Apportionment of general average is to be made in accordance with the following
mechanics: “The value of each of the contributing interests is multiplied by a fraction which has as its
numerator the sum of the general average expense and has as its denominator the sum of the contributing
values.”
Proof and Liquidation of Average: Code of Commerce

As a rule, there shall be no general average contribution if the procedure prescribed under the
Code of Commerce is not complied with. With respect to proof and liquidation of Averages, the rules
are provided for under Articles 846 to 869 of the Code of Commerce. In the absence of any agreement,
the following rules shall be observed:
 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.
 The liquidation shall be made in the port of unloading, if it is a Philippine port.
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 If the average occurred outside of the jurisdictional waters of the Philippines, or the cargo has
been hold in a foreign port by reason of an arrival under stress, the liquidation shall be made in
the port of arrival.
 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.
Chapter Two
SALVAGE
Marine salvage is the process of recovering a ship and its cargo after a shipwreck or other
maritime casualty. Salvage may encompass towing, re-floating a vessel, or effecting repairs to a ship.
Today, protecting the coastal environment from spillage of oil or other contaminants is a high priority.
Before the invention of radio, salvage services would be given to a stricken vessel by any ship that
happened to be passing by, nowadays most salvage is carried out by specialist salvage firms with
dedicated crew and equipment.
The legal significance of salvage is that a successful salvor is entitled to a reward, which is a
proportion of the total value of the ship and its cargo. The common-law concept of salvage was
established by the English Admiralty Court, and is defined as "a voluntary successful service provided
in order to save maritime property in danger at sea, entitling the salvor to a reward"; and this definition
has been further refined by the 1989 International Salvage Convention.
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Originally, a "successful" salvage was one where at least some of the ship or cargo was saved,
otherwise the principle of "No Cure, No Pay" meant that the salvor would get nothing. In the 1970s, a
number of marine casualties of single-skin-hull tankers led to serious oil spills. Such casualties were
unattractive to salvors, so the Lloyd's Open Form (LOF) made provision that a salvor who acts to try to
prevent environmental damage will be paid, even if unsuccessful. This Lloyd's initiative proved so
advantageous that it was incorporated into the 1989 Convention.
All vessels have an international duty to give reasonable assistance to other ships in distress in
order to save life, but there is no obligation to try to salve the vessel. Any offer of salvage assistance may
be refused; but if it is accepted a contract automatically arises to give the successful salvor the right to a
reward under the 1989 Convention.1
Definition
In general, salvage may be defined as a service which one person renders to the owner of a ship
or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the
care of them have either abandoned in distress at sea, or are unable to protect and secure.
Rationale
Salvage is founded on the equity of remunerating private and individual services performed in
saving, in whole or in part, a ship or its cargo from impending peril, or recovering them after actual loss.
It is a compensation for actual services rendered to the property charged with it, and is allowed for
meritorious conduct of the salvor, and in consideration of a benefit conferred upon the person whose
property he has saved.
A claim for salvage rests on the principle that, unless the property be in fact saved by those who
claim the compensation, it cannot be allowed, however benevolent their intention and however heroic
their conduct. The compensation for voluntary salvage is dictated by public policy to encourage the hardy
and adventurous marine to engage in a laborious and sometimes dangerous enterprise and with a view to
1 Marine Salvage. (https://en.wikipedia.org/wiki/Marine_salvage#History)
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withdraw from him every temptation to embezzlement and dishonesty and in case he is successful, to
grant him compensation.
Claim for Valid Salvage

The Salvage Law provides for a reward for voluntary salvage. Sec. 1 of the Salvage Law provides
that when in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall
have been abandoned by them, and picked up and conveyed to a safe place by other persons, the latter
shall be entitled to a reward for the salvage. Other persons who assist in saving the vessel or its cargo
from shipwreck shall be entitled to a similar reward.
Elements of a Valid Salvage

 There must be a marine peril;
 The service is voluntary rendered and is not required as an existing duty or from a special contract;
and
 There must be success in whole or in part or that the service rendered contributed to such success;
 The vessel is shipwrecked beyond the control of the crew or shall have been abandoned (Barrios
v Go Thong & Company, Sec. 1 of Salvage Law).
Persons Not Entitled to Salvage Compensation

The salvor, under the Salvage Law, must have no relation, contractual or otherwise, upon the ship
in distress. Under Sec. 8 of the Salvage Law, the following persons shall have no right to a reward,
namely:
 The crew of the vessel shipwrecked or which was in danger of shipwreck;
 He who shall have commenced the salvage in spite of opposition of the captain or of his
representatives; and
 He who shall have failed to comply with the provisions of Sec. 3, Salvage Law.
Derelict Required
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The requirement of Sec. 1 of the Salvage Law that the vessel sought to be salvaged is shipwrecked
beyond the control of the crew or abandoned, is present when the vessel is considered a derelict. A
derelict is defined as “a ship or her cargo which is abandoned and deserted at sea by those who were in
charge of it, without any hope of recovering it (sine spe recuperandi), or without any intention of
returning to it (sine animo revertendi).”
A derelict is a boat or vessel found entirely deserted or abandoned on the sea without hope or
intention of recovery or return by the master or the crew, whether resulting from wreck, accident,
necessity, or voluntary abandonment.
Basis of Entitlement to Salvage Reward

A salvage reward should neither be too literal nor too stingy. It should constitute a sufficient
compensation for the outlay and effort of the salvors, taking into account the rules prescribed by Sec. 10
of the Salvage Law. It should be liberal enough to offer an inducement to others to render services in
similar emergencies in the future.
“Quantum Meruit” Not Applicable

Compensation as salvage should not be viewed by the admiralty courts merely as pay on the
principle of quantum meruit or as a remuneration pro opere et labore, but as a reward given for perilous
services, voluntary rendered, and as an inducement to mariners to embark in such dangerous enterprises
to save life and property.
The amount should be liberal enough to cover the expenses and to give an extra sum as a reward
for the services rendered. There is no fixed rule for salvage allowance. The allowance rests on the sound
discretion of the court or judge who hears the case, hears the witnesses testify, and is familiar with the
environments of the rescue. An allowance for salvage should not be weighed in golden scales, but should
be made as a reward for meritorious voluntary services, rendered at a time when danger of loss is
imminent and for the purpose of encouraging others in like services.
Circumstances to Consider
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Sec. 10 of the Salvage Law provides that in fixing the reward, the trial court shall take into account
the following:
 Principally the expenditures made to recover or save the vessel or the cargo or both;
 The zeal demonstrated, the time employed, the services rendered;
 The excessive express occasioned the number of persons who aided;
 The danger to which they and their vessels were exposed as well as that which menaced the things
recovered or salvaged; and
 The value of such things after deducting the expenses.
In fixing the amount of compensation to be awarded for salvage service, the principal
circumstances to be taken into consideration are:
 The labor expended by the salvors in rendering the salvage service;
 The promptitude, the skill, and energy displayed in rendering the service and saving the property;
 The value of the property employed by the salvors in rendering the service, and the danger to
which such property was exposed;
 The risk incurred by the salvors in rescuing the property from the impending peril;
 The value of the property saved; and
 The degree of danger from which the property was rescued.
Rights and Obligations of Salvors and Owners

The salvor is of course entitled to compensation for services rendered, and in the enforcement of
that right, he has, under the Salvage Law, a lien upon the property salvaged whereby he is not bound to
part with the possession of the vessel salvaged or of the cargo saved until he is paid his duly
compensation. The salvor has a right of possession of a derelict for purposes of a salvage claim.
The salvor who saves or picks up a vessel or merchandise at sea, in the absence of the ship captain,
ship owner, or a representative of either of them, they being unknown, shall convey and deliver the vessel
or merchandise as soon as possible, to the provincial treasurer or municipal mayor (Sec. 3, Salvage Law).
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Maritime Lien
A salvor, in maritime law, has an interest in the property; this is called a lien, but it never goes,
in the absence of a contract expressly made, upon the idea of debt due from the owner to the salvor but
upon the principle that the service creates a property in the thing saved. The salvor is, to all intents and
purposes, a joint owner and if the property is lost he must bear his share like the other joint owners.
Chapter Three
Carriage of the Goods

by Sea Act
The Carriage of Goods by Sea Act (COGSA) was originally passed by the Congress of the United
States on April 16,1936 as Public Act No. 521. The said Act of Congress contains advanced legislation,
which is in consonance with modern maritime rules and the practices of the great shipping countries of
the world. Moreover, shipping companies, shippers, and marine insurance companies, and various
chambers of commerce, which are directly affected by such legislation, have expressed their desire that
said Congressional Act be made applicable and extended to the Philippines. The United States Congress
gave the Philippine Commonwealth the option to decide whether or not to adopt the Act which was then
later adopted on October 22, 1936 through Commonwealth Act No. 65. The principal purpose of the
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COGSA is to bring about uniformity to ocean bills of lading and to give effect to the Brussels Treaty
(Preamble, Commonwealth Act. No. 65).
COGSA acts as a supplement to the Civil Code and applies to all contracts of carriage of goods
coming to or from Philippine ports in foreign trade. The said Act governs the rights and responsibilities
between shippers of cargo and ship-owners regarding ocean shipments. The law prescribes the maximum
amount for the limitation of the ship-owner’s liability and stipulates the period for prescription.
Applicability in International Shipping

Article 1753 provides that the law of the country to which the goods are to be transported shall
govern the liability of the common carrier for their loss, destruction or deterioration. The New Civil Code
is the primary law on goods that are being transported from a foreign port to the Philippines.
Nevertheless, the COGSA remains to be a suppletory law for such type of transportation – international
shipping.
Furthermore, under Section 1 of CA No. 65, the said act is applicable to all contracts for the
carriage of goods by sea to and from Philippine ports in foreign trade. COGSA does not apply to purely
domestic transport. To know whether which law is applicable to a contract for the carriage of goods by
sea, it is important first to: (a) distinguish whether the carrier is a common carrier or private carrier; and
(b) know where the vessel is going:
 From the Philippines to a foreign country: the law applicable are the laws of such foreign
country (Article 1753, Civil Code);
 From a foreign country to the Philippines:
(a) If common carrier: primarily governed by the Civil Code, and supplemented by COGSA if
applicable (when it comes to foreign trade); Code of Commerce
(b) If private carrier: governed primarily by COGSA, Code of Commerce secondarily, and Civil
Code as to provisions for damages, torts, and contracts.2
2 NOTE: The COGSA is only applicable in contracts of carriage of goods by sea in foreign trade. However, the
parties to a domestic maritime trade may, by express stipulation, validly agree to incorporate the provisions of
the COGSA in their contract of carriage, in which case said Act is applicable; provided that a contractual clause
in the bill of lading limiting the liability of the Carrier in a manner contrary to the provisions of the COGSA shall
be null and void.
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Duties of Carrier
The Civil Code requires international carriers to exercise extraordinary diligence in the
performance of their contractual obligations. Sec. 2 of COGSA expressly covers the carrier’s obligation
and liabilities in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such
goods. Sec. 3 of the law enumerates the responsibilities of the carrier under COGSA subject to the
provisions of the Civil Code which serves as the primary law.
Responsibilities and Liabilities

Sec. 3(1) The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to —
 Make the ship seaworthy3;

 Properly man, equip, and supply the ship;
 Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods
are carried, fit and safe for their reception, carriage, and preservation.
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge
the goods carried.
(3) After receiving the goods into his carrier, or the master or agent of the carrier shall, on demand
of the shipper, issue to the shipper a bill of lading showing among other things —
3
A vessel is “seaworthy” if it is reasonably fit to encounter the ordinary perils to be expected during her voyage,
to receive and discharge cargo, and to carry safely the particular cargo on the voyage undertaken. A vessel must
also be provided with a crew adequate in number and competent for their duty with reference to all the
exigencies of the intended route, and with a competent and skillful master, of sound judgment and discretion,
and with sufficient knowledge of the route and experience in navigation to be able to perform in a proper manner
all the ordinary duties required of him as master of the vessel (Germania Insurance Co. vs. The Lady Pike, 21 US
1, 22 L. ed., 499). Sea worthiness must exist at the beginning of the voyage, at the time she sails, and when she
breaks ground.
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 The loading marks necessary for identification of the goods as the same are furnished in writing
by the shipper before the loading of such goods starts, provided such marks are stamped or
otherwise shown clearly upon the goods if uncovered, in such a manner as should ordinarily
remain legible until the end of the voyage.
 Either the number of packages or pieces, or the quantity or weight, as the case may be, as
furnished in writing by the shipper.
 The apparent order and conditions of the goods: Provided, that no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight
which he has reasonable ground for suspecting not accurately to represent the good actually
received or which he has had no reasonable means of checking.
(4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods
as therein described in accordance with paragraphs (3) (a), (b), and (c), of this section; (The rest of the
provision is not applicable to the Philippines).
(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of
shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall
indemnify the carrier against all loss, damages, and expenses arising or resulting from inaccuracies in
such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and
liability under the contract of carriage to any person other than the shipper.
Notice of Claim and Prescriptive Period

The notice of claim must be made within (3) days from delivery if the damage is not apparent.
The same period is not mandatory. However, the prescriptive period of (1) year from delivery for the
filing of the case is a condition precedent or mandatory. The reason behind the one-year prescription is
to provide the carrier an opportunity to look for the lost goods, to discover who is at fault and in case of
transshipment, to determine, when and where the damage occurred.
Sec. 3(6) of COGSA provides that unless notice or loss or damage and the general nature of such
loss or damage be given in writing to the carrier or his agent at the port of discharge or at the time of the
removal of the goods into the custody of the person entitled to delivery thereof under the contract of
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carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as
described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three
days of the delivery.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after delivery of the goods or the date when the goods
should have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is
not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to
bring suit within one year after the delivery of the goods or the date when the goods should have been
delivered. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give
all reasonable facilities to each other for inspecting and tallying the goods.4
As held in the case of Chua Kuy vs. Everett Steamship Corporation, pendency of an
extrajudicial claim for damages (include arbitration, negotiations, amicable settlement) filed with the
carrier does NOT suspend the running of the prescriptive period, unless there is an express agreement to
the contrary. However, prescription of actions is interrupted when they are filed before the court (Art.
1155 NCC). Also, Section 49 of Act No. 190 provides that if an action commenced in due time, the
plaintiff fails otherwise that upon the merits, and the time limited for the commencement of such action
has, at the date of such failure, expired, the plaintiff may commence a new action within one year after
such date (F.H. Stevens & Co., Inc. vs. Norddeuscher Llyod, 6 SCRA 182-183).
Defenses and Immunities

Sec. 4 of COGSA provides the common carrier with defenses and immunities. Sec. 4(1) provides,
as a rule, that the carrier shall not be liable for loss or damage arising from unseaworthiness. Under the
Civil Code, the carrier will not be liable only if it can present proof of the circumstances specified in
Article 1734 of Civil Code. However, there is a presumption that the unseaworthiness is due to the
negligence of the carrier and its agent.
4 NOTE: The one year prescriptive period does not apply to cases of misdelivery or conversion. “Loss”
contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same
had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot
be recovered. It does not include a situation where there was indeed delivery – but delivery to the wrong person,
or a misdelivery. The prescriptive is designed to meet the exigencies of maritime hazards.
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The immunities enumerated in Sec. 4(2) are likewise not controlling except in so far as they are
embraced under any of the defenses of Art. 1734. Any defense under Sec. 4(2) that are inconsistent with
or are not contemplated under Art. 1734 and other provisions of the Civil Code are already deemed
repealed. The Civil Code provisions on common carriers are legally controlling.5
Waiver
The ship owner and the ship agent may waive the benefit of any of the defenses in its favor
provided not only under COGSA but also under other laws. For example, the carrier may assume liability
even if the loss was due to the defective packing. Note that what the law allows the carrier to do is to
increase any of his responsibilities but not to unilaterally diminish the same. He is also allowed to
surrender any of his rights and immunities but not to unilaterally increase his rights and immunities.
Sec. 5 of COGSA provides that a carrier shall be at liberty to surrender in whole or in part all or
any of his rights and immunities or to increase any of his responsibilities and liabilities under this Act,
provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. The
provisions of this Act shall not be applicable to charter parties; but if bills of lading are issued in the case
of a ship under a charter party, they shall comply with the terms of this Act. Nothing in this Act shall be
held to prevent the insertion in a bill of lading of any lawful provisions regarding general average.
Limiting Provision
The COGSA contains a provision that allows the shipper to recover only US$500.00 per package
unless there is a special declaration unless the real value of the goods is declared [See Sec. 4(5), COGSA].
5 It is well to emphasize that an absolute obligation of the carrier of goods by sea to provide a seaworthy ship is
not continuous under common law. It requires, for example, that the ship must be fit to receive her cargo at the
commencement of loading only as a ship for the ordinary perils of lying afloat in harbor and need not be fit for
sailing. Then on the completion of each stage she must have the degree of fitness which is required for the next
stage. Thus, absolute common law undertaking of seaworthiness is not a continuous one but applies at the
beginning of each separate stage of voyage, while stages are marked either by the completion of a particular
operation, e.g. loading, or by changes in the nature of the operation to be performed, e.g. river transit or ocean
transit (Common Law Doctrine of Stages).
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The declaration made by the shipper stating an amount bigger than $500.00 per package will make the
carrier liable for such bigger amount but only if the amount so declared is the real value of the goods.
While the declaration in the bill of lading shall be prima facie evidence of the value of the goods, the
carrier may be allowed to prove the real value which may be less than that the declared amount.
Sec. 3(8) of COGSA provides that any clause, covenant, or agreement in a contract of carriage
relieving the carrier of the ship from liability for loss or damage to or in connection with the goods,
arising from negligence, fault, or failure in the duties and obligations provided in this section or lessening
such liability otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of
insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the carrier
from liability.
Right to Discharge Dangerous Cargo

COGSA allows the carrier to discharge the good if the carrier discovers that the goods are
dangerous, inflammable or are explosives. This is subject to the condition that the carrier did not give its
consent to the carriage of cargoes of such nature [See Sec. 4(6) of COGSA].
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TRANSPORTATION LAW: WRITTEN REPORT

San Beda College Alabang School of Law

 General Average (Art. 811)

Requisites of General Average

Compliance with Proper Legal Steps

Who Bears General Average

Who Is Entitled to Indemnity

Proof and Liquidation of Average: Code of Commerce

1 Marine Salvage. (https://en.wikipedia.org/wiki/Marine_salvage#History)

Claim for Valid Salvage

Elements of a Valid Salvage

Persons Not Entitled to Salvage Compensation

Basis of Entitlement to Salvage Reward

“Quantum Meruit” Not Applicable

Rights and Obligations of Salvors and Owners

Carriage of the Goods

Applicability in International Shipping

Responsibilities and Liabilities

 Make the ship seaworthy3;

Notice of Claim and Prescriptive Period

Defenses and Immunities

Right to Discharge Dangerous Cargo

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