Republic of the Philippines

City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

College of Business and Accountancy

Program: Bachelor of Science in Customs Administration
Course Code: CM103
Course Title: CUSTOMS OPERATIONS AND CARGO HANDLING
Course Description:
Discussion regarding the different customs operations. This will also tackle cargo handling
including issuances issued by the Philippine Ports Authority (PPA), warehousing port operations.
This module will also explain the different transportation laws, such as, Code of Commerce,
Carriage of Goods and Sea Act (COGSA), and lastly the Salvage law.

Course Learning Outcome:

1. To recognize the different cargo handling operation.
2. To master the PPA-Administrative Order 23-77.
3. To explain the difference between the different transport laws.

Grading Rubric:
Midterm Grade Final Grade
Major Exam 30% Major Exam 30%
Quizzes 40% Quizzes 40%
Recitation 30% Recitation 30%
Midterm Grade 100%
FINAL GRADE 50% (Midterm Grade)
50%(Tentative Final Grade)

1
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Schedule Learning Teaching and

(Week Objectives Learning
Module Number and Topics and Key Learning
Number and Material
Title (most essential Concepts Tasks
Approximate Resources
learning
hours)
competencies)
Week 1 CLASS ORIENTATION
Week 2 -3 MODULE 1:  Understand and
master the
Approximately PHILIPPINE PORT - Definition of - PPA
3 hours per AUTHORITY- definition of Terms Administrative
terms, which will -To answer
week ADMINISTRATIVE 23-17
be used al questions or
ORDER 23-77
throughout the activities given
every end of
entire discussion -PC/Internet
the module.
of the topic.

 To have an idea -Google

how the defined
terms may be
used for the easy
understanding of
the topic.

Week 4 -5 MODULE 2:
Approximately WAREHOUSING  To understand -Philippine
3 hours per PORT the Philippine Ports Authority
week OPERATIONS Ports Authority
and what are
their functions. -Dues and Rates
-Philippine Port
Operation
 To enumerate the Issuances
-Pre-arrival and
dues and rates in -To answer
Arrival
the port. questions or
Formalities
-PC/Internet activities given
 To differentiate every end of

2
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

the Pre-arrival -Berthing -Google the module.

and Arrival Regulations
formalities.

 To master the -Storage fees

berthing
regulations.
-Disposotion of
Overstaying
 To know how
and/or
much would the abandoned
storage fee costs goods
 To learn how to
dispose of the
overstaying -Auction
and/or abandoned Methodology
goods

 To identify the -Port Operations

proper auction
methodology.

 To understand
and master the
different port
operations.

Week 6-7 MODULE 3:

Approximately CARGO  To know how -Scope of Cargo -Philippine Port
3 hours per HANDLING broad scope of Handling Operation
week the cargo Operators may Issuances
handling Provide
operators may -To answer
provide. -PPA AO 02-
questions or
-Various 2010
activities given
operations
 To be -PPA AO 03- every end of
happening
knowledgeable

3
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

with the different within the port 2011 the module.

port operations.
-PPA AO 04-
2011
 To be familiar -Different
with the procedures -PPA AO 01-
operations in the within the port 2012
that is related to
port which has PPA MC 11-
some PPA
something to do 2011
issuances
with the PPA
issuances.
-PC/Internet

-Google
Week 8 ACADEMIC READING/ WELNESS BREAK
Week 9 MIDTERM EXAMINATION
Week 10 and 11 MODULE 4:
 To understand
Approximately COMMON -Common -To answer
the basic
3 hours per CARRIER Carrier questions or
information -Civil Code
week activities given
about the -General Articles 1732-
every end of
common carriers. Provisions 1766
the module.
 To master the -Vigilance over
articles which Goods
-PC/Internet
explain the -Safety of
different topics Passengers
clearly related to -Google
the common -Common
carriers. Provisions

Week 12 to 13 MODULE 5:
Approximately CODE OF  To understand -Overland -Code of
3 hours per COMMERCE the articles 349- Transportation Commerce
-To answer
week 379 of the
-Articles 349- questions or
overland
379 Overland activities given
transport of code -Maritime
every end of

4
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

of commerce. Commerce Transport the module.

-Articles 573-
 To learn and be
736 Maritime
able to explain
Commerce
the maritime
commerce
tackling the
articles 573-736 -PC/Internet

-Google

Week 14 and 15 MODULE 6:

Approximately CARRIAGE OF  To understand -Carriage of - -To answer
3 hours per GOODS AND SEA the Goods by Sea Commonwealth questions or
week ACT Commonwealth Act Act No. 65 of activities given
Act No 2616 of 1936 every end of
-Risk
1936 the module.

 To be -PC/Internet
knowledgeable -Responsibilities
regarding matters and Liabilities
relates to -Google
COGSA.
-Rights and
Immunities

-Surrender of
Rights and
Responsibilities
and Increase of
Responsibilities
and Liabilities

-Special
Conditions

5
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Week 16 MODULE 7:  To be able to -To answer

explain the questions or
Approximately SALVAGE LAW -Salvage Law -Act No. 2616
procedures under activities given
3 hours per OF 1916
the Salvage law. every end of
week
the module.
 To identify what -PC/Internet
are the goods
subject of the law
-Google
 To make an
understanding for
the purpose of
the law.

Week 17 ACADEMIC READING / WELLNESS BREAK

Week 18 FINAL EXAMAMINATION

6
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Title: Customs Operations and Cargo Handling

Module No. 1

I. Introduction
This module will discuss the basic definition of terms which are essential to learn and
understand the Customs operations and Cargo Handling.

II. Learning Objectives

 Understand and master the definition of terms, which will be used al throughout the entire
discussion of the topic.
 To have an idea how the defined terms may be used for the easy understanding of the topic.

III. Topics and Key Concepts

SECTION 1. - TITLE
These regulations shall be known and cited as the “PPA ADMINISTRATIVE ORDER NO.13-
77”

SECTION II – DEFINITION OF TERMS

For purposes of those regulations, the terms used herein shall, unless the contact indicates
otherwise. Mean or be understood to mean as follows:

 AD VALOREM
Means rate based upon the value of the goods.

7
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 ANCHORAGE
Means place with sufficient depth of water where
vessels anchor or may ride at anchor within harbor.

 APPROACHESS
Mean the water area at the port entrance via which vessels
navigate to make for the sheltered or protected water areas
in the port.

 APRON
Means the area between the transit shed and quay
wall.

 AUTHORITY
Means the Philippines Port Authority created by PD 505 dated July 11,1974 as
amended by substitution by PD 857 dated December 23, 1975

8
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 BAD ORDER CONTAINER

Means container that is physically damaged which may
allow exposure of cargoes to adverse conditions natural
elements and pilferage

 BERTH
Means the part of the pier/wharf that is occupied by a vessel or a place where a
vessel may tie up.

 BERTHING
Means the maneuvering of a vessel from the anchorage or pilot station to a berth, including the
action to make fast the vessel alongside

 BILL OF LADING
Means the written contract of carriage of goods
whereby by common carrier for a consideration
agrees to deliver on behalf of the consignor of
goods to the consignee at a specified time

9
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 BOLLARD
Means a strong post on a ship or dock for holding a hawser fast.

 BOW
Means the extreme forward end of a vessel.

 BULLION
Means ingot of gold or silver regarded as raw materials.

 “Buoy”
Means floating object moored to the bottom to make channel,
anchor, shoal, rock, etc.

10
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

CONTROL BUOY DIVING BUOY

marks an area where boating marks an area where diving HAZARD BUOY
is restricted activity is taking place. horizontal bandmarks random
hazards such as rocks and
shoal

11
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

BIFURCATION BUOY
INFORMATION BUOY is used to mark the point at
to the driver of the boat ANCHORAGE BUOY which a channel divides into
marks the outer limits of
two branches.
designated anchorage areas.

CARDINAL BUOY
point out a danger while CAUTIONARY BUOY ISOLATED DANGER
referring to the four cardinal marks an area where mariners BUOY
points are to be warned of dangers. marks an isolated danger on
the water.

12
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

KEEP OUT BUOY MOORING BUOY PORT HAND BUOY

indicates an area closed to marks an area for mooring or Is on the left side of the
navigation securing vessels. channel when heading
upstream.

Unlike a port hand lateral

buoy, a Port Hand Junction Daybeacon Unlike a starboard hand lateral
Daybeacon is fixed marks a point where a channel buoy, a Starboard Hand
divides Daybeacon is fixed.

13
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

STAR HAND BUOY

the right side of the channel
when heading upstream.

 CHANNEL
Means a natural or artificial waterway of perceptible
extend which is either periodically or continuously contains
moving water or which forms a connecting link between
two bodies of water, or part of a body water deep enough to
be used for navigation through the area otherwise too law
for navigation

 CHASSIS
Means an equipment used carry containers from
one place to another under the law by prime movers
14
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

or tractors as an extension of ships gear unless declared an extension ships gear unless declared
as an important.

 CONTAINER
Means a structure so designated to hold and
keep articles, materials and product together
inside a hold in the form of boxes, tank or the
like for singular or unit handling and transport,
generally having an internal volume or capacity
of not less than cubic meter containers are
further defined according to their uses as cargo.
Refrigerated, liquid bulk, bulk, platform, open
top, solid bulk, and ventilated etc.

 CONTAINER BERTH
Means berthing space especially designed and construed
to accommodate containerships.

 CONTAINERIZED/ CONTAINER
CARGOES

15
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Means cargoes packed a containers for easy handling or transporting of the same as unit.

 CONTAINER EQUIPMENT RECEIPT

Means shipping issued by container operators, agents or
shipping companies relative to bringing in and tracking out
of containers in the Port/Customs Zone. This document
(IN/OUT) shows among others the inspectors conducted on
the container at the time of receipt and of delivery.

 CONTAINER FREIGHT
STATION
Means normally a warehouse or a transit shed
adjacent to the container yard (CY) used for
sorting and storage of container cargo both for
import and export

 CONTAINERSHIP
Means cargo vessel designed and
constructed primarily to carry
containers

16
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 CONTAINER TALLY SHEET

Means cargo receipt issued by the ships checker or
agent an acknowledge by arrastre checker as evidence
or receipt of containers. It indicates among others the
physically condition of the containers and their content

 CONTAINER TERMINAL
Means a port facility designed to provide an integrated use of berthing
facilities for containership and harbor transport system for containers
and their contents

 CONTAINER YARD
Means a designated area in a container terminal usually
adjacent to the marshalling yard, where containers and
chassis are received, stocked and arranged/dispatched.

17
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 CONTROL TOWER
Means a signal stations generally located at place
which commands a full view of the container
terminal. It supervises by signals, telephone or
other means of communicating the movements,
stacking and handling of container in the
terminal.

 CONVENTIONAL SHIP
Means a cargo vessel designed and constructed
primarily to
carry break
bulk and
limited
quantity.

 DECK
Means a platform or roof which a section of a ship holds,
serving as floors.

 DOCK
Includes locks, cuts, entrances, graving docks, inclined
planes, shipways, quays and other works and things
appertaining to other dock.

18
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 DOLPHIN
Means buoy or spar used in mooring a boat.

 DRAFT
Means the depth/level of the
vessel below the waterline,
measured vertically from this
waterline to the lowest part of
the hull.

 DRY-DOCK
Means a dock from which the water can be
temporarily excluded, in order to effect
repairs to hull and keels of ships or vessels.

19
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 DUES
Includes fees, tonnage and wharfage dues, berthing
charges and port dues and any other dues or fees
imposed by virtue of existing law or decree 857.

 DUNNAGE
Means a loose packing of any bulky materials part
around cargo for protection

 EXCRETA
Means waste matter extracted from the body as sweat or urine
or feces.

 FAIRWAY
Means part of waterway kept open and unobstructed for
navigation.

20
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 FENDER
Means a cushion of rope, wood, etc. Hung over a ships
side to protect it in docking.

 FILTH
Means a foul dirt or disgusting matter.

 FULL CONTAINER LOAD

Means a container loaded with cargoes belong to a
single consignee and/or covered by only one bill of
lading.

 FUNNEL
Means a cylindrical chimney or smoke stock.

21
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 GANG
Means the number of workers employed to work.

 GOODS
Include animals, carcasses, baggage and any movable/property of any
kind.

 GRIT
Means rough hard particles of sand stone
etc.

 HARBOR

22
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Means a protected part of the sea, lake or other body of water used by vessel as a place of safety.

 HATCH
Means an opening in ship’s deck through which
cargo can be lowered

 LASH BARGE
Means a barge on lighter which for all intents and purpose.
Is an extension of the ships equipment or gears and vessels
or gears used purely in such ship’s cargo operation

 LASH SHIP
Means a vessel designed and constructed to carry
lash barges as containers of cargoes.

 LATRINE
Means a toilet or privy for the use of many people

23
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 LENGTH OVER ALL

Means the length over of a vessel
between the extreme end of the
bow and extreme end of the stern

 LESS CONTAINER LOAD

Means a container loaded with cargoes belonging to more
than one consignee and/or covered by more than one bill of
lading

 LIFT OFF CONTAINERSHIP/

NON SUSTAINING
Means a containership especially designed
and constructed to carry containers but not
provided with the ships gears to handle.

24
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 LIFT ON CONTAINERSHIP/ SELF-

SUSTAINING
Means a containership especially designed and constructed
to carry containers. It is provided with gears like ship’s
deck crane and the like and is capable of loading and
discharging containers by itself

 MARSHALING YARD
Means a place where containers are stacked
and arranged according to the sequence of
withdrawal to consignee or transferred by
CY-CFS or inside customs zone. It is also
where the container is arranged prior to
loading to a carrying vessel in accordance
with the sequence of loading on the storage
plant

 MOOR
Means to secure a vessel alongside the berth by means of
mooring ropes.

25
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 “NUISSANCE PER ACCIDENT”

Means a nuisance under certain circumstances
like a factory emitting smoke in residential
district.

 “PACKING OR STUFFING”
Means loading of cargoes inside a container.

 PIER
Means any structure built into the sea but not
parallel to the coastline and includes any stage,
stair, landing place, landing stage, jetting
floating, barge, and any bridge or other works
connected there with.

26
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 PORT
Means a place where ship’s may
anchor or tie up for the purpose of
shelter, repair, loading, or
discharge of cargo, or for other
such activities connected with
water-borne commerce and
industry all the land and water-
borne commerce including all the
land and water areas and the
structures, equipment and
facilities related to these functions

 PORT DISTRICT
Means the territorial jurisdiction under the control, supervision
or ownership of the authority over an area(land/sea) declared as
such in accordance with sec.5 of PD 857, including but not
limited, to any port within the said district

 RATES
Means any rates or charges including any toll
or rent under the existing law or imposed by
the authority by virtue of PD 857 for facilities
used of services rendered.

27
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 REFUSE
Means the fitting of a ship’s sails or shrouds to the mast
or yard

 ROLL-ON/ROLL-OFF
Means containership especially
designed and constructed to carry
containers and chassis and allows
loading and unloading of container
on chassis or trailers by providing a
ramp over the side, at the bow or at
the step of the vessel

 RUBBISH
Means also waste, trash.

28
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 SEMI CONTAINERSHIP/ COMBO

SHIP
Means cargo vessels designed and constructed
to carry at least fifty percent of its load in
containers

 SHIPPERS LOAD AND COUNT

Means a container packed with cargo by one shipper
where the quantity, description and condition by the cargo
is the sole responsibility.

 SHIP STORES
Includes ship’s gear, equipment, parts or its
properties not being goods or merchandise

29
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 SOOT
Means black substance consisting chiefly of carbon
particles formed by the incomplete combustion of
burning matter

 STERN
Means the extreme AFT end
of a vessel.

 STRIPPING
Means unloading of goods from a
container

30
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 STUFFING
Means loading goods from container

 TRANSIT SHED
Means a building or shed which
is situated at or near a quay,
wharf or pier and is used for the
temporary or short term storage
of goods in transit or to be
shipped or discharges from a
vessel

 TERMINAL
FACILITY
Includes the seaport and its
facilities of wharves, piers,
ship’s, docks, dry docks, bulk
head, basins, warehouses, cold

31
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

storage and loading or unloading equipment

 UNFIT FOR USED CONTAINER

Means refrigerated containers or reefer containers whose
cooling machinery is not functioning normally. Dry
cargo containers intend for packing is declared unfit for
use if the standard of cleanliness and/or sanitation are not
satisfied. It shall be certified by completed authority or
any agency licensed or authorized to clean fumigate and
sanitize

 TRIMMING
Means a place of sails or balancing ship by shifting cargo,
etc.

 VERMIN
Means any troublesome, filthy, or
destructive animals

 VESSEL

32
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Includes every sort of boat or craft or other artificial contrivances used or capable of being used
as a means of transportation on water

 WHARF
Means a continuous structure built parallel
along the margin of the sea or along the margin
of the sea or alongside riverbanks canals or
waterways where vessels may lie alongside to
receive or discharge cargo, embark or
disembark passengers or lie at rest

 WAREHOUSE
Means a building or shed used for storage of cargo

WINCH MAN
Means the one who operates a lifting
machinery or device on the deck of a ship
to hoist a lower cargo

33
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

REFERENCE:
- PPA Administrative 23-17

ACTIVITY FOR MODULE 1

Identify the following terms described below.
_____________________________ 1. Means black substance consisting chiefly of carbon
particles formed by the incomplete combustion of burning matter
_____________________________ 2. Means to secure a vessel alongside the berth by means of
mooring ropes.

_____________________________ 3. Means a toilet or privy for the use of many people.

________________________________ 4. Means the depth/level of the vessel below the waterline,
measured vertically from this waterline to the lowest part of the hull.
______________________________ 5. Means floating object moored to the bottom to make
channel, anchor, shoal, rock, etc.
______________________________ 6. Means the area between the transit shed and quay wall.
______________________________ 7. Means part of waterway kept open and unobstructed for
navigation.
______________________________ 8. Means an opening in ship’s deck through which cargo can be
lowered.

________________________________ 9. Mean the water area at the port entrance via which
vessels navigate to make for the sheltered or protected water areas in the port.
_____________________________ 10. Means buoy or spar used in mooring a boat.
_____________________________ 11. Means place with sufficient depth of water where
vessels anchor or may ride at anchor within harbor.
_____________________________ 12. Means the territorial jurisdiction under the control,
supervision or ownership of the authority over an area(land/sea) declared as such in accordance
with sec.5 of PD 857, including but not limited, to any port within the said district
_____________________________ 13. Means the number of workers employed to work.

34
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

________________________________ 14. Means a cargo vessel designed and constructed

primarily to carry break bulk and limited quantity.
_____________________________ 15. Means the maneuvering of a vessel from the anchorage
or pilot station to a berth, including the action to make fast the vessel alongside

Title: Customs Operations and Cargo Handling

Module No. 2

I. Introduction
This module will talk about the Warehousing Port Operations, this shall include
Philippine Port Authority, dues and rates, pre-arrival and arrival formalities, berthing
regulations, storage fees, disposition of overstaying and/or abandoned goods, auction
methodology, and various port operations.

II. Learning Objectives

 To understand the Philippine Ports Authority and what are their functions.
 To enumerate the dues and rates in the port.
 To differentiate the Pre-arrival and Arrival formalities.
 To master the berthing regulations.
 To know how much would the storage fee costs
 To learn how to dispose of the overstaying and/or abandoned goods
 To identify the proper auction methodology.
 To understand and master the different port operations.

35
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

III. Topics and Key Concepts

PORT OPERATIONS COVERAGE
GOVERNMENT AGENCIES
- PPA
- BOC
- Participation of PCG, Bureau of Quarantine, Bureau of Immigration

VESSEL OPERATIONS
-Pre-Arrival, Arrival Formalities

CARGO HANDLING
PPA
• Created under pursuant PD 505 as amended by PD 857
• Composition of Board of Directors
- Secretary of DOTC as Chairman
- The General Manager as Vice-Chairman
- Director General, NEDA as Director
- Secretary, DOF as Director
- Secretary, DENR as Director
- Secretary, DTI as Director
- One Representative from the Private Sector who will hold office for 3 years.

STRUCTURE AND KEY OFFICERS

• General Manager (GM)
• Assistant General Managers (AGM) which should not exceed 3
- Engineering Services Office

36
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- Operations Office
- Finance and Administration Office
• Port District Offices headed by Port District Managers and Ports under PDOs are headed
by Port Managers

- MANILA/NORTHERN LUZON
 North Harbor
 South Harbor
 Limay
 San Fernando

- SOUTHERN LUZON
 Batangas
 Calapan
 Legazpi
 Puerto Princesa

- VISAYAS
 Dumaguete
 Iloilo
 Pulupandan
 Ormoc
 Tacloban
 Tagbiliran

- NORTHERN MINDANAO
 Cagayan De Oro

37
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 Iligan
 Nasipit
 Ozamis
 Surigao

- SOUTHERN MINDANAO
 Cotabato
 Davao
 Gen Santos
 Zamboanga

• President appoints GM and AGM upon the recommendation of the Board.

• The GM appoints and remove personnel below the AGM subject to approval of Board.
• The GM reports to the Board

PPA FUNCTIONS
• To prescribe rules and regulations in the operations of all ports.
- A place where ships may anchor or tie up for the purpose of shelter, repair,
loading or discharge of cargo, or for other activities includes all the land and
water areas and structures, equipment and facilities related to these functions.
- To provide services whether by its own or otherwise among others berthing,
towing, mooring, slipping, docking any vessel.

- Loading or discharging any vessel

- Sorting, weighing, warehousing.

• To control, regulate and supervise pilotage and the conduct of pilots

38
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- Act of navigating vessel from anchorage to berthing place.

• To prescribe rules on establishment, construction, maintenance, operations of all ports

including private ports.

DUES AND RATES

• DUES – harbor fees, tonnage and wharfage dues, berthing charges, and port dues and any
other dues or fees imposed by virtue of existing law or PD 857.
- President may upon recommendation of PPA increase or decrease such dues,
collectible PPA to protect the interest of the Government and to provide a
satisfactory return on the PPA’s assets, and may adjust the schedule of such dues
so as to reflect the costs of providing the services.

• RATES – toll or rent for facilities used or services rendered

- PPA may impose, fix, prescribe, increase or decrease such rates, charges or fees
for the use of the port premises, works, appliances or equipment belonging to
PPA and port facilities provided, and for services rendered by PPA or by a
Contractor.

REMISSION OF DUES, RATES AND OTHER CHARGES

• No amount due in respect of dues, rates, or charges, prescribed by PPA shall be
waived or reduced except:
a) Where the states has arrangements with a foreign government in respect of vessels are not
normally engaged in the conveyance of cargo or passengers; and
b) For vessels seeking shelter from inclement weather or entering the port for medical help
and other maritime necessity.

REMEDIES FOR NON-PAYMENT

• If the master, owner or agent of any vessel refuses or neglects to pay on demand any
dues, rates, or changes PPA may, in addition to any other remedy provided by law,
distrain, or arrest on its own authority such vessel and tackle, apparel or furniture

39
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

belonging to the vessel, and detain the same until the amount or amounts due have been
paid.

WHEN RATES PAYABLE AND LIEN

a) Rates or charges in respect of goods to be landed become payable immediately on
landing such goods.
b) Rates or charges in respect of goods to be shipped are payable before the goods are
loaded.
c) Rates or charges in respect of goods to be removed from the premises of PPA are payable
on demand.
d) For the amount of rates of charges leviable under PD 857 in respect of goods, PPA shall
have lien on such goods and is entitled to detain them until the amount of rates or charges
is fully paid. Such lien shall have priority over all other liens and claims, except claims
for duties and taxes due to the Government and expenses of the sale.

RECOVERY OF LIEN
• Without prejudice to the authority and rights of the Bureau of Customs in the disposition
of property in Customs custody as provided for in the TCCP
- If any goods which have been placed in or on the premises of PPA are not
removed therefrom within the prescribed period after the legal permit for their
withdrawal and/or release from Customs custody; or
- The authority to load, in case of export, has been issued by the Bureau of
Customs, the authority with the prior concurrence of the Bureau of Customs.
- May dispose of any such goods in the manner as it deems fit in order to recover
the lien. Provide, that the proceeds of the sale shall be applied in the following
manner.
a) Firstly, in the payment of duties and taxes due to the Government;
b) Secondly, in payment of expenses of the sale;
c) Thirdly, in payment of the rates, charges, and fees due to the Authority in respect of the
goods;

40
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

d) Fourthly, in payment of freight, lighterage or general average, on voyage of importation

and in case of exports in payment of domestic freight, lighterage and cartage, of which
due notice shall have been given to the Authority;
e) And finally in rendering on demand the surplus, if any, to the person legally entitled
thereto: Provided, That in case no such demand is made within a period of one year from
the date of sale of the goods, the surplus, if any, shall become part of the general funds of
the Authority, whereupon all rights to the same by such person shall be extinguished.

POWERS OF HARBOR MASTER

a) Direct where any vessel shall be berthed, moored, or anchored, and the method of
anchoring, to the port;
b) Direct the removal of any vessel from any berth or anchorage to another berth or
anchorage and the time within such removal is to be effected; and
c) Regulate the mooring of vessels within the port and the approaches to the port.

PRE-ARRIVAL FORMALITIES
 In case of aircrafts advance notice of arrival:
- Required for non-scheduled arrivals. (Sec. 1102)
- - Not required for scheduled arrivals. (lbid.)
 All applications for berthing in pier/wharf-anchorage shall be submitted
- 24 hours before arrival for vessels on scheduled runs
- 36 hours for tramping vessels (without regular schedules e.g. chartered vessels)
(Sec. 29, PPA 13-77)
 Submission of ICM
- Master or agent should provide PPA at least 24 hours before arrival or as
practicable one copy of Inward Cargo Manifest (ICM) in English language.
- Gross weight, measurement, marks, numbers, contents of each package, including
origin;

41
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- The names of consignees per B/L or the names of the persons actually paying for
the freight and their respective addresses;
- For short voyages manifest may be submitted upon arrival. (PPA 13-77, Sec. 48)

ARRIVAL FORMALITIES
• All vessels entering port shall show their colors and signal letters which shall be
kept flying till the vessels is boarded by proper officials.
- Those arriving within 2 miles before arriving at designated quarantine anchorage.
(CAO 75-73, Part II (4.A)]

• Vessels entering or leaving port between sunrise and sunset shall hoist its national
color which shall continue to be hoisted while the vessels remains at port. (PPA 13-
77, Se. 6)

• General rule:
- No vessel authorized to approach within 200 meters to a vessel who is exhibiting
required signals. (PPA AO 13-77)

• Exception:
- Immigration, Health or Customs, Pilot Launch or PCG vessel. (lbid)

• Flag for vessels carrying dangerous goods

- Dangerous goods shall mean any goods listed in the “Classification of Dangerous
Goods” by the Intergovernmental Maritime Consultative Organization (IMCO) or
by any appropriate gov’t agency and/or United Kingdom Carriage of Dangerous
Goods in Ships (The Blue Book). (PPA 13-77, Sec. 84)
- - vessel should hoist a red flag and by night red light visible all around the horizon. (lbid. , Sec.
88)

42
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

• Signals prescribed shall remain hoisted until proper officer has given the permission to
lower such signals. (PPA AO 13-77)
• All vessels entering a harbor shall be considered in quarantine and shall keep the
quarantine flag flying until boarded and given pratique by the quarantine officer. (CAO
75-73, Part II (4.D.1)
• Only after being boarded and given pratique shall be vessel lower the quarantine flag.
(Part II (4.D.2)

• BERTHING REGULATIONS
(PPA AO 13-77, Sec. 29)
1. First come first served basis.
- If larger vessel is in priority list but cannot fit in the berth the small vessel next in
priority list shall be given priority. However if space will be available for the
larger vessel even before smaller vessel can unload, the latter will move to the
anchorage area.
2. When vessel scheduled to berth encounters 13 mechanical trouble an allowance of 1 hour
for repairs shall be given. Otherwise, the next vessel in priority list will be given the right
to berth.
3. Vessels with passengers disembarking will be given priority of berthing.
4. Vessels berthing solely for chandling purposes shall be given priority.
5. Government owned vessels on official business, vessels of foreign gov’t not engaged on
foreign trade, vessels under stress and vessel carrying perishable articles shall be given
berthing priority.
6. Passenger liner or tourist vessel subject to the discretion of the Port Manager will be
given limited number of hours stay at berth over purely cargo vessel.
• Berthing priority shall not be waived in favor of another vessel.
• Vessels waiting for cargoes shall be moved to anchorage to allow the next vessel to berth.
They will be allowed to berth again provided cargoes are ready for loading. Unless
another vessel is allowed to take berth temporarily.
• A time limitation at berth shall be determined by the volume of cargo to be handled or 48
hours whichever is earlier.

43
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

STORAGE FEES
Schedule of free storage period:
1. Imported cargoes: 5 calendar days after the day that last cargo is discharged from the
carrying vessel.
2. Export cargoes: 4 calendar days from the day the cargo is received at the port.
3. Foreign transshipment: 15 calendar days from the day of arrival to the day of departure.
4. Domestic cargoes entering any port: 2 calendar days after the date the cargo entry to the
port.
5. Domestic cargoes discharged at any port: 2 calendar days after the day the last item is
unloaded from the carrying vessel.
6. Domestic cargoes that are “shut out”: 2 calendar days after the vessels departure.

EXEMPTION FROM PORT CHARGES

1. All vessels of AFP and those by owned by other government agencies used exclusively
for training purposes are exempted from payment of usage fee.
2. Naval, diplomatic and academic vessels owned by any foreign government not carrying
cargo or passengers and are not hire shall be exempted from the payment of all vessel
charges.
- but there should be reciprocity
1. Vessel in discharge or seeking shelter from inclement weather or other necessity and
other humanitarian reasons.
2. Vessels or dry docking or repair at any MARINA accredited dry-dock facilities shall be
exempted from dockage/usage fees from time it calls at a shipyard facility up to time
work on it is finished/ vessels departs.
5. Vessels foreign or domestic certified by MARINA for ship breaking at duly accredited
ship breaking yard. Scraps shall be exempt from paying wharfage.
6. Whenever any vessel is stopped by the authority from discharging/loading cargo to avoid
congestion on the pier/wharves.
7. Donations from International or local organizations duly authorized or registered by the
DSWD or office of the President are exempt from wharfage and storage charges .

44
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

8. Empty containers which are imported or brought into the Philippines and/or transshipped
to other domestic ports for use in the exportation of Philippine product.
9. Mail bags are not subject to wharfage.

HOW DUES/ CHARGES PAID/SETTLED

1. General policy: cash and carry system.
2. Other methods:
2.1 Cash and carry system with revolving deposit.
2.2 To qualify for modified cash and carry system:
- applicant should be a liner vessel acting as representative of its client/shipper/consignees
- it has filled in application to avail of the modified cash and carry system.
- it has settled all outstanding accounts.
- it has deposited a fixed cash/guarantee deposit equivalent to its voyage 7-day transaction
volume subject to updating.
Provided that: port charges of tramping vessels should always be on cash and carry basis.

PROTEST ON COLLECTION OF PORT CHARGES

1. When in ruling or decision of the Port Manager is made whereby liability for port charges
is determined the party adveresely affected may protest such action by present at the time
of payment or 15days thereafter a written protest setting forth his objection with reasons
therefore.
2. No protest shall be considered unless payment of the amount due has first been made.
3. Protest exclusively remedy.
4. Form of protest: Every protest shall point out the particular decision or ruling shall
indicate with reasonable precision the grounds why protest is being made. The scope of
the protest shall be limited to the subject matter of a single adjustment but any number of
issued may be raised. Single adjustments refers to the entire content of one liquidation.
5. The Port Manager must make a decision within 30 days from receipt of protest.

45
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

6. A person adversely affected by the decision of the Port Manager has 15days from receipt
of decision shall give a written notice to the PM copy furnish GM of his desire to have
the decision reviewed by the GM. The PM will forward the records of the case to the
GM.
7. If PM renders decision adverse to government, it shall be subject to automatic review by
GM and if GM affirms subject to automatic review by the PPA Board. If within 30days
from receipt of the records of the case GM does not render a decision, the decision under
review becomes final and executory.
8. Any aggrieved by the decision of the GM as affirmed by the PPA Board may appeal
such decision to the Office of the President within 30 days from receipt of decision.
9. To each protest against payments of port charges and appeal from the denial of such
protest, there shall be paid each an amount of protest fee, legal research fee and
documentary and stamp tax.

REFUND OF DUES AND CHARGES

1. Who may file refund:
1.1 Shipping agent or payor of vessel charges.
1.2 For cargo charges, the shipping/consignee.
1. In the event broker/agent files claim an Authorization to Claim And Received Refund
shall be signed by the shipper/consignee.
2. Refund processing fee is P100.00
3. Claim of refund must be made within 3 months from payment otherwise claim is
forfeited.
4. Common causes of refunds:
- excess check payments
- exempt entity but paid
- short shipped cargo
- cancelled booking

46
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

DISPOSITION OF OVERSTAYING AND/OR ABANDONED DOMESTIC CARGOES

For disposition:
a.) overstaying domestic cargoes
- remained at the port premises when the free storage period until the same have been
deemed abandoned.
b.) abandoned domestic cargoes
- overstaying and have remained at the port premises after 30 days from discharge from
carrying vessel or acceptance by CHO in the case of outbound cargoes; and
- the owners/consignees have been notified but failed to claim or expressly abandoned
cargo.

NOTICE TO OWNERS
1. To known owners
- in writing by Port Manager within the 30 day period from discharge of acceptance.
- served personally or by registered mail at least 3 times allowing 10 days interval.
1. To unknown owners
- P20k and below
- posting on the 10th day after discharge or acceptance for 15 consecutive days within the 30 day
period conspicuous place at PMO.
- more than P20k
- by publication simultaneous within posting for 3 consecutive issue in local newspaper or other
effective means.

47
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

IN BOTH CASES IF WITHIN 10 DAYS NO OWNER APPEARS SOLD AT PUBLIC

AUCTION BUT OWNER HAS OPTION TO RECLAIM A WEEK BEFORE THE
ACTUAL
AUCTION METHODOLOGY
• Auction Committee
- Port Manager or representative acts as Chairman.
- Members : Port Division Manager, Resource Management Division Manager, Legal Affairs
Division Manager or in his absence Administrative office.
- a representative from COA to serve as witness.

• Procedure
1) Notice of sale to be advertised in Official Gazette or for not less than 3 consecutive days
in any newspaper of gen circ
or if value does not warrant publication by posting of notices in 3 public places in locality.
2) Drop sealed bid together with bidders bond equivalent to 10% of bid amount.
3) Opened by Chairman.
4) The highest bid wins provided it is at least equal to estimated pre-determined charges and
other expense.
5) In case of tie, Committee has discretion to decide.
6) Winner to be required to post performance bond 20% of bid price. Failure to post will
mean automatic forfeiture of bidder’s bond.
7) Winning bid price of less than P100k shall be awarded immediately , if more than P100k
to be rewarded by the GM upon recommendation OF Auction Committee.
- Balance shall be paid within 3 days from receipt of notice of award and articles immediately
withdrawn upon full payment, otherwise 20% performance bond is forfeited.

PORT OPERATIONS
• PROHIBITIONS ON BERTHING
a) Double banking not allowed

48
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- subject to approval of PPA but it will not be responsible in case of damage

a) Repair not allowed without prior permit from PPA.
- vessels must be ready to leave berth at anytime
a) Tugboats not allowed to leave barges/lighters
b) No movement/shifting allowed without prior permit
c) No Master of any vessel shall leave his vessel lying at berth or anchorage without
stationing on duty the next ranking officer with proper authority and adequate men to
move the vessel when so ordered by PPA.
- failure to do so shall empower PPA to remove the vessel at vessel’s expense without prejudice
to imposition of penalty.

• OTHER RULES ON BERTHING

a) A vessel shall be berthed by its Master or crew with advice or direction of the Pilot board
- To be attended by dock labor, if available at the wharf or pier in taking ashore, making fast or
casting off wire hawsers or ropes or other similar assistance if due notice is given to PPA
a) PPA shall not be responsible for any loss or damage caused to any act or omission of the
Master or employees of any vessel while moving the same
b) PPA shall not be liable for the unsecured or improper mooring, berthing of any vessel nor
for any damage or loss occasioned thereof.

• RULE ON ANCHORAGE
• Special quarantine, explosives, dangerous goods, prohibited anchorages and prohibited
areas shall be those defined or delimited by proper gov’t agencies or respective ports.
• No vessel shall anchor or moor in any prohibited anchorage except for the purpose of
assisting in berthing alongside or unberthing
• No vessel shall anchor in or use an anchorage other than for the purpose for which the
anchorage is designated or intended
• No vessel shall anchor, berth, moor or lie;

49
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

(1)in the approaches to a port (2) in any principal fairway (3) in such manner as to obstruct the
approach to an anchorage or pier/wharf used by other vessels (4) in a position that is likely to
foul a vessel which is anchored, moored or made fast to a buoy.

LINE HANDLING (MAKING FAST AND LETTING GO LINES OR MOORING AND

UNMOORING)
• CHO responsible for providing the line handling service
a. Linemen should always wear hardhats and gloves
b. CHO to give instructions to linemen on proper and safe tying
c. Ensure proper hooking at bollards
d. Service of securing or releasing vessel’s mooring lines shall not be sub-contracted by the
cargo handle to a third party.
e. Line handling area must be cleared of equipment at least 10 minutes prior to vessel’s
arrival.

VESSELS MUST BE READY FOR WORK WITH DISPATCH

1) After mooring or berthing vessel must have all its working hatches ready to commerce
working cargo
2) Adequate lights must be provided
3) Must work continuously night and day
- otherwise may be ordered to vacate berth
- reberthed only at discretion of PPA
1) PPA not responsible for delays
2) Vessel required to present any docs that may be required in relation to cargo

VESSEL READINESS TO MOVE

50
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

• While in port, no vessel without the written permission from PPA, carry out engine
impairs or other related work which may render the vessel unable to move when required
to do so
• While in port and without the written permission from PPA no vessel shall reduce its
steam or power below a level adequate to move the vessel when so required
• If a vessel is unable to move when so required by PPA, the same shall be or caused to be
moved by PPA and all expenses shall be for the account of the vessel
• No vessel shall remain idle at berth for more than 1 hour if there are other vessels waiting
to berth
• No unpropelled lighter or barge shall be allowed to berth without any written
authorization from PPA and without any stand by tug boat to move out said lighter or
barge

PORT DUES
• Following shall be subject to payment of port dues
1. Vessels entering the port for the purpose of loading/discharging cargo or
embarking/disembarking passengers
2. Vessels entering the port for the purpose of bunkering or taking provisions, repairs or
changing members of the crew.
- provided that: vessels that call on several ports within the same harbor shall be charged only for
one call and paid at the first port of call

DOCKAGE
A. Dockage at berth shall be levied on following:
1. Cargo vessel engaged in international/foreign trade which berth for the purpose of
discharging and/or loading
2. Non-cargo vessels engaged in international/foreign trade which berth only for the
purpose of loading and/or taking passengers or taking fresh water supply or
receiving bunker fuel or changing members of the crew
-Provided that vessels engaged in international/foreign trade that do not berth but drop anchor at
either a government or privately owned port shall be charged dockage at anchorage or 50% of

51
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

the corresponding dockage at berth at government owned port subject to the maximum of 50,000
GRT.

DOCKAGE: OTHER CONDITIONS

1. A vessel engaged in international/foreign trade which is diverted from a government to
private port due to congestion or other causes shall be charged 50% of the dockage fee at
government berth
2. Guidelines in the imposition of port charges on vessels with status changed from foreign
to coastwise or vice-versa:
a. From foreign to coastwise, Certificate of Philippine Registry (CPR) and
Certificate of Ownership, which will be the basis of the issuance of Certificate of
Inspection by MARINA
b. For bareboat charter, the Temporary Certificate of Philippine Registry (TCPR) for
temporary conversion from foreign to coastwise and copy of Special Permit
issued by MARINA

ASSESSMENT OF PORT DUES AND ANCHORAGE

1. Fraction of a day is counted as 1 whole day. Vessels which stays the same day but not
exceeding 12:00 midnight shall be charged 1 day
2. Time spent on anchorage shall not subject to payment of dockage or usage fee at
anchorage provided no loading or unloading is done
3. Vessels whose agent have preferred berth shall not be entitled to the free dockage or
usage fee while waiting at designated anchorage area
4. Vessels which have completed loading or unloading operations but not ready to leave but
had to wait at anchorage shall not be entitled to free dockage or usage fee
5. Dockage/usage fee subject to maximum 50,000 GRT

WHARFAGE DUES
1. Wharfage on non-containerized cargoes shall be based on total Revenue Ton indicated in
the bill of lading

52
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

2. 100% wharfage to be charged at government wharves/piers while 50% to be charged on

cargoes loaded or unloaded at private wharves
3. Export products of BOI and PEZA registered companies exempt from wharfage
4. Empty Containers shall not be charged wharfage provided such empty containers are
owned by the carrying vessel. However, empty containers which are transported to any
Philippine port and are manifested as commercial cargo shall still be subject to wharfage

DISPOSITION OF PROCEEDS
In following order:
1) Taxes, if any is due to government
2) Expenses of appraisal, advertisement and sale
3) Port charges due to PPA
4) Government share on CH income to PPA
5) Freight, lighters or shipping expenses
6) If there is surplus to owner
-period to claim: within 1 year from date of sale

DISPOSITION FOR WANT OF BIDDERS

• If unsold after at least 2 public biddings
- Port Manager reports to GM
- subject to approval of DOTC secretary
- authorize the official use of article in following order: (1) by PPA
(2) other government offices
- if not disposed as above subject to negotiated sale at price
fixed by Auction Committee and approved by the GM or
concerned government office
-

53
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

DISPOSITION OF OVERSTAYING AND/OR ABANDONED CARGOES UNFIT FOR

USE OR MENACE TO PUBLIC HEALTH
Any overstaying and/or abandoned cargo which in the opinion of the PM is a menace to public
health shall be ordered destroyed in such manner as the case may warrant, in coordination with
health authorities, the BOC and the COA at the port.
CLAIM AND LIABILITY FOR CARGO LOSSES/DAMAGE
1. Amount of claim
- CH Operator shall be liable up to the extent of the declared value per Bill of Lading

1. Qualified Liability
- for loss, damage or non-delivery. Arrastre Operator is liable to the extent of the actual invoice
value of each package which is no case shall be more than P3.0 million for imported goods and
P1.0 million for domestic cargo for each package;
- unless the value of cargo is specified in writing together with declared B/L value and
supported by certified packing list before discharge or loading.
(Note that one container is considered as one package)

3) Exceptions from liability

- not responsible for any loss/damage before or while the goods are being received or remains in
the premises of the port
- - if loss, injury or damage is caused by force majeure or other causes beyond its control or
capacity to prevent remedy.

4) Types of claims
- loss or damage which may be in the form of pilferage, spillage, or damage, i.e. destruction,
decay, breakage, tears, cuts, puncture, holes, etc.
- - operator guarantees to PPA that maximum pilferage is 1/10 of 1%
- short delivery claim i.e. when shipment is not delivered completely
- short delivery and bad order claims

54
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- non-delivery

5) Time frame to file claim (both operator and shipping line)

- formal claim must be filed within 15 calendar days from date of issuance by the CH Operator
of a certificate of non-delivery, damage to goods
- if Operator fails to issue such certification within 15 calendar days from receipt of a written
request or consignee such certification is deemed issued and thereafter the 15 calendar day
period within which to file claim commences

6) Time frame to claim (continuation)

- request for certification of loss must be made within 30 calendar days from the date of delivery
of last package to the shipper or consignee, without prejudice to the company’s internal policy on
settlement of claims
- in case of damage
- -request BO certificate at the time of delivery

7) Attachments to claim
- machine or certified true copy of B/L or manifest
- certified copy of invoice or invoice, tally sheet
- delivery gate pass or delivery receipt, report on losses and/or damage, surveys of BO
cargoes
- other documents of probative value

CLAIMS HANDLING PROCEDURE BY CH OPERATOR AND SHIPPING LINE

• Time frame to settle claim
- CH or shipping line shall resolve the claim within 30 days from receipt of claim
- The number of days to file claim is deemed complied with even if consignee merely flies a
provisional claim. It does not matter that the provisional claim is for the whole amount of the

55
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

invoice; it is sufficient as long as the name of the carrying vessel, its date of arrival and the
corresponding B/L are attached. (Metro Port Service, Inc. v. IAC, 213 SCRA 103)
- liability shall be settled within 7 days from time of decision or resolution of claim
- payment shall be made within 7 days from expiration of the 30 day period
• Time frame to settle (cont)
- if the claim is contested the claim folder shall be transmitted or upon the expiration of the 30
day period to the Cargo Claims Arbitration Committee (CCAC)
- - composition of CCAC
a) Port Manager or rep as Chairman
b) members
- shipping line rep
- CH operator rep
- consignee or rep who filed claim
- any reason or ground not stated in the transmittal shall be deemed waived

• Procedure at CCAC
- vote of at least 2 members is required
- Chairman to vote only in case of tie
- if no appeal made on the decision of CCAC its decision becomes final, executor and binding
upon the parties
- within 5 days from notice of appeal and position papers the CCAC shall forward case folder to
the GM
- the decision of the GM is final without prejudice to recourse in court

PROTEST ON COLLECTION OF PORT CHARGES: AO 13-77

1. Party affected may protest such action by Port Manager
- at time of payment or within 15 days from payment

56
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. Port Manager to decide within 30 days from receipt of protest

2. If PM decides against protesting party
- appeal to GM within 15 days from notice of decision
- by the way of notice to appeal to PM cc: GM
- if affirmed by GM and affirmed by PPA Board can appeal to OP within 30 days from receipt of
decision
- if within 30 days no decision by GM decision of PM becomes final and executory
1. If PM decides adverse to government
- subject to automatic review by GM
- If GM affirms
- PPA board to affirm for effectivity purposes

CLAIMS PROCEDURE
1. Qualified Liability
- not more than 3.0 m for imported articles and 1.0 m for domestic articles: per package basis
- unless value of the cargo importation is otherwise specified or manifested or communicated in
writing together with the declared B/L value and supported by packing list before the discharge
or loading unto vessel (AO 10-81)

1. Formal claim must be made within 15 days from date of issuance of CHO of a
certificate of non-delivery
- if no certificate issued within 15 days from request the count of 15 days period to file claim
counts from lapse of the period.

3) Cargo Claims Arbitration Committee (CACC)

- PM or authorized rep as chairman
- Members: (1) Rep of shipping company (2) Rep of CHO (3) Consignee or rep who filed claim

57
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

- Types of claims: (1) Loss or damaged claim (2) short delivery claim (3) short delivery and bad
order claim

4) When and where to file claim

- directly with shipping line or agent (and CHO)
- supporting docs: true copy of B/L; PL; Cl; Delivery Gate Pass or Delivery Receipt
- provisional claims shall be accepted by shipping lines.

5) Period to settle claim

- decide within 30 days from receipt of claim
- if claim admitted in whole or in part the liability shall be settled within 7 days from decision.
Payment to be made within 7 days from expiration of the 30-day period.
- if claim contested transmit to CACC decision within 5 days from decision or upon expiration of
30- day period whichever is earlier
- with reasons for disallowance. Reasons not raised shall be deemed waived.

6) CACC
- to decide asap but not exceeding 45 days from receipt: at least 2 votes required. Chairman
votes only in case of tie
- payment by shipping line/ CHO must be made within & days from receipt of decision unless
appeal is made to PPA Head Office
- within 5 days from receipt of appeal
- transmit to Head Office

7) PPA GM
- decision final and executor but without prejudice to appeal to judicial courts

58
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

REFERENCE:
-Philippine Port Operation Issuances

ACTIVITY FOR MODULE 2

1. Explain the PPA Functions.

2. Differentiate Dues from Rates

3. How lien may be recovered?

4. Who are the harbor masters?

5. Create a table showing the differences between the pre-arrival and arrival formalities.

59
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

6. Draw a flowchart representing the procedures on how protest on collection of port

charges happens.

7. Explain further the Auction procedures.

8. Discuss Claims procedures.

Title: Customs Operations and Cargo Handling

Module No. 3

I. Introduction
This module will go into details of the procedures on how goods were being handled in
the port. This will also discuss services that the cargo handling operator nay provide which
includes the arrastre and stevedoring, container handling, porterage services. This module
will also tackle all of the various operations inside the port and lastly this will give a brief
explanation for different issuances issued by the Philippine Port Authority.

II. Learning Objectives

 To know how broad scope of the cargo handling operators may provide.
 To be knowledgeable with the different port operations.
 To be familiar with the operations in the port which has something to do with the PPA
issuances.

III. Topics and Key Concepts

Scope of services that the CH Operator may provide
a. Arrastre and stevedoring
b. Container handling
c. Porterage services
d. Other related services: (1) checking services (2) shifting or restowing of cargoes
within the same hatch (3) shifting of cargoes from one hatch to another or from a hold
to dock/pier or barge and vice-versa (4) shifting of cargoes from ship to pier and vice-
versa or from one hatch to another hatch (5) bagging/ re-bagging (6) issuance of short

60
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

or over landed certificate (7) extra labor (8) checkers services (9) standby (10) line
handling (11) equipment hire (12) extra hustling (13) extra piling.

1. Arrastre service: shore-based CH activities that include (1) receive and load cargoes
from and to ship’s tackle with the use of dock (arrastre) gang and CH gears and
equipment (2) deliver or transfer cargo onto or receive from truck’s tail of consignee or
shipper’s transportation or ship’s tackle.

2. Stevedoring service: work performed onboard vessel i.e., the process or act of loading
and unloading cargo, stowing inside hatches, compartment and on deck or open cargo
spaces on board vessel.

Others: (1) rigging and unrigging of ship’s gear (2) opening and closing of hatches (3)
snatching, centering to the hatch opening, passing of cargo and trimming.

Related stevedoring services which are considered extra services and therefore
chargeable under extra labor services: (1) cleaning holds (2) shifting of cargoes (3)
dunnage provision (4) building bulkheads (5) shoring or unshoring cargoes (6)
lashing/unlashing cargoes (7) breaking of hardened cargoes (8) re-bagging and sweeping
of cargoes (9) stuffing or unstuffing or stripping of containers on board vessel (10)
recouping of bad order cargo.

3. Outward Cargo Manifest (OCM); to be submitted within 12 to 24 hours before the

departure of the vessels

4. Damaged, Defective or Bad Order Cargoes, Surveys: The CHO shall segregate for
survey all cargoes landed in BO or damaged, immediately upon its discharge from a
vessel and place same in a place which must be provided for the purpose. Damaged,
defective or bad order cargo shall be surveyed 24 hours from request of the shipping
company and a representative of the CHO.

5. Cargo or container location system: CHO binds itself to locate containers/cargoes

within 1 hour from demand to locate.

6. Release of cargo: (1) Domestic cargo shall be released from transit sheds or warehouses
only upon presentation of the corresponding B/L or Delivery Orders duly endorsed by the
agents of the carrying vessel, and after payment of lawful charges (2) import and export
cargoes shall be released, transferred or loaded on board vessel only after payment of

61
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

lawful revenues collectible by BOC and upon presentation of required release, transfer
and loading orders or documents and also after payment of PPA charges.

7. Time requirement to commence delivery: (a) Imported cargo – upon completion of

vessel operations and presentation of consignee of the required BOC clearance delivery
permit, CHO shall commence delivery of the cargoes (b) Domestic Cargo – commence
delivery immediately upon presentation of a delivery permit.

8. Out-turn Reports: CHO shall within 15 days after discharge of the last package shall
furnish (1) Collector of Customs in case of foreign cargoes (2) vessel’s agent (3) Port
Manage concerned

9. Unclaimed and Undelivered Cargoes: Transfer – The CHO shall submit monthly to
PPA within the first 7 days of each succeeding month a list of all unclaimed and
undelivered cargo which remain in the piers for a period of more than 30 days after the
discharge of the last package from the vessel. CHO shall transfer upon request to a
designated place together with cargoes/containers which have been abandoned or
confiscated by the government.

The abandoned cargoes/containers shall thereafter be turned over to the concerned

government agency and the responsibility of the CHO with regard to loss, damage or
shortage shall cease.

10. Dangerous and obnoxious cargoes:

a.) General restriction: no person shall cause any dangerous cargoes to be imported or
exported and no vessel shall cause such to be loaded, discharged or transported.
b.) Except: in accordance with permission or direction by PPA or requirements imposed
by concerned government agencies.
c.) Declaration of Dangerous Goods:
c.1 no dangerous goods shall be brought into any port unless such goods are properly
documented, marked, packed, labelled in accordance with the IMDG Code;
c.2 such certificate or declaration shall indicate the correct technical name, the United
Nations Number, and the class to where it belongs;
c.3 Phrase “limited quantity” when is used in relation to a dangerous chemical, shall
have the same meaning as that ascribed to it in the Intergovernmental Maritime
Consultative Organization (IMCO) Classification of the Blue Book.
d.) Handling and storage of dangerous goods:

62
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

d.1 Authority to handle inflammable liquid and dangerous cargoes, together with
preliminary manifest and cargo storage plan shall be duly approved by PCG
d.2 Letter request and permit to handle dangerous cargoes duly approved by PPA
d.3 Dangerous Cargo List to be submitted to PPA for information
d.4 Inward or Outward Foreign Manifest to be submitted to PPA, BOC and PCG for
information or statistical purposes and assessment of port charges.
e.) Contamination of other cargo: (1) if a cargo deteriorates as to contaminate other
cargo, PPA has the right to require complete removal thereof from transit shed or
warehouse within 24 hours after notice is given and payment of charges due (2) if the
notice given is not complied with PPA shall have the option (a) to remove the cargo from
the warehouse or transit shed to the open storage (b) sell by public auction (3) destroy or
otherwise dispose of such goods, if domestic cargo and with coordination with BOC if
import or export cargo. PPA shall not be liable to pay any compensation for any goods
dealt with accordingly.
f.) Removal of Offensive Cargo: (1) PPA after giving at least 12 hours notice to owner
which are of offensive nature landed in the premises and without PPA permission, order
its removal and or its destruction if it deems urgently necessary in the public interest. If
the owner cannot be found mere publication in the Bulletin Board for 1 day is enough. (2)
expenses incurred for removal or destruction shall be for the account of the cargo (3)
offensive cargo shall include any cargo whether solid or liquid which is obnoxious,
corrosive, inflammable or poses danger to life or property.
g.) Firearms and Explosives: (1) Notice shall be given to PPA at least 24 hours before
arrival of vessel carrying firearms, explosives or ammunitions which should be properly
marked. (2) Code of Safe Handling, Storage and Transport of Dangerous Cargoes in
Ports shall apply for safety purposes.

11. Broken goods: to be removed from PPA premises at least within 14 days from the date
of landing after due notice to their owners, if the same is not removed to disposed of by
PPA and in coordination with BOC in case of import or export cargo.

12. Animal or livestock cargoes: (1) no animals shall be landed or brought into the port
except for direct delivery or shipment and the owners shall be entirely responsible for the
animals and their actions. (2) if any stray animal is found the same shall be dealt with at
PPA discretion.

13. Safe Use of Port Facilities:

(1) Containers (a) the port shall not be used as empty container depot. (b) the entry of
containers inside the ports for loading shall be done 48 hours prior to actual loading.
(c) all containers shall immediately be brought out of the pier premises after

63
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

discharge from the carrying vessel. (d) the working apron shall be limited to
temporary marshalling. Stacking of containers (empty or full) shall be allowed only
during loading and unloading operations and shall be limited to the apron’s design
and load capacity (e) containers may be stacked at back-up areas, one or two high
depending on the load limits of the open storage area and the container load. (f) in
cases containers or cargoes are left in the port or terminal beyond 30 days from
discharge, the shipping line shall notify shipper or consignee and the latter is given 7
days to confirm and pull out cargoes or containers. If after the 7 day period, there is
no confirmation or action the cargo or container shall now be under the administrative
control of proper authorities for this position.
(2) Heavy equipment: Quay operations shall not utilize large and heavy container cargo
lifters for transferring cargo or containers from ship or containers from ships to back-
up areas or vice-versa. If the pier structure capacity allows chassis operation may be
undertaken.
(3) Cargo location system: All piers or terminals shall have a lay-out plan for cargoes to
show (a) stacking areas per cargoes classification. (b) container yard system
segregating outbound from inbound containers. (c) marshalling yard (d) stripping and
stuffing area (e) non-containerized cargo stacking area

14. Maneuvering of trailers and cranes/winches: (1) only one authorize and competent
signalman shall be assigned and allowed to give signals to the driver or operator. (2) the
signalman shall be stationed at the safe position where he can best follow the work. (3)
the signal man shall wear gloves of distinctive color, preferably fluorescent yellow. (4) in
no case shall the driver or operator move or reverse the equipment unless the assigned
signalman so directs.

15. Responsibility in case of fire: PPA shall not be responsible for (1) any loss or damage to
goods while in its direct custody, cause by fire, water or other agent used in extinguishing
fire or by vermin. (2) any loss or damage to iron work or goods in an unprotected or
uncovered state, while in its direct custody, which is not due to PPA’s fault or negligence.
(3) for any deficiencies of merchandise produced by natural or unavoidable causes.

16. Liability for storage space: After notification to owners of goods or agents of vessels
that storage space is not available PPA shall not be responsible to find storage nor be
liable for any loss or damage to such goods that PPA or CHO directly received. PPA
shall have the option to remove such cargo after payment of lawful charges in order to
decongest the pier or wharf.

64
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

17. Container Handling Operations:

a. For work performed on board vessel (stevedoring)
1.) Discharging and loading of containers, loaded or empty from vessel to dock or
apron and vice-versa.
2.) Opening or closing of hatch cover, lids and supporting beams.
b. For work performed at the quay or apron (arrastre)
1.) Receiving of containers loaded or empty from vessels unto chassis or trailers
provided by shipping lines.
2.) Moving such container on chassis or trailers from alongside carrying vessel to the
storage area within the port zone designated for storing containers or CY.
3.) Handling, stowing and shifting containers within the port zone.
4.) Loading of containers from place of storage within the port zone unto chassis or
trailers either for delivery or transfer.
5.) Receiving, handling and stowing of container that are either loaded or empty
coming from CY outside the port zone.
6.) Moving containers either loaded or empty from storage areas within the port zone
and loading them unto vessels alongside the pier.
7.) Providing checking services to determine container marks and numbers and
whether they are loaded, unloaded or unmanifested.
c. Mode of transport
1.) Containerized cargoes shall be transported only with the use of chassis or trailers
with safety features for all containers.
d. Conditions for loading
1.) Chassis equipped with operable twist locks of 20 tons capacity each shall be used
in transporting all sizes of containers.
2.) Overhanging containers shall not be allowed anytime.
e. Inbound Coasting Manifest:
1.) PPA Terminal Office must receive the Inbound Coasting Manifest (ICM)
preferably 24 hours but not less than 8 hours before vessel’s arrival, for encoding
into the PPA Computer System.
2.) For vessels with less than 8 hours sailing time to the port, the inbound CM must
be submitted immediately to the PPA Terminal Office upon vessel’s arrival.

18. Domestic Roll-On/Roll-Off (Ro-Ro) Transport Operations

a. Modes of handling

65
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. Ro-Ro – is the loading and discharging of self-powered vehicles, such as cars and
trucks, on their own wheels by their owners or drivers between vessel and shore
via a ramp. The operation must meet both the following requisites:
a.) RORO cargo must be self-propelled
b.) RORO cargo must be self-driven by its owner or driver without control over
the RORO vehicle being surrendered to any other party.
2. CHA-RO – chassis or trailers, empty or loaded with cargo, whether break-bulk,
unitized, palletized or containerized are towed or wheeled into or out of the RO-
RO vessel by means of a prime mover, tractor or tow-motor, without cargo
rehandling, shifting or grounding on vessel and where no other CH is rendered
except lashing or unlashing.
3. STO-RO – conventional, unitized, palletized cargoes or containers which are
carried from the apron and stowed in RO-RO vessel or out of the RO-RO vessel
to apron or waiting truck by means of a forklift or similar wheeled equipment.
The forklift provides the temporary mobile system for such cargo.
4. OTHERS – all other cargoes loaded/discharged from RO-RO vessel not in
accordance with the above-described services and which required rehandling on
the wharf or dock shall be considered conventional.
b. 3 Major areas of operations:
1. Delineate the Marshalling Area
2. Segregate Ro-Ro traffic
3. Clarify Loading Sequence

19. Weighing Operations: Any weighing operations are the responsibility of CHO but may
be bid out by PPA in case the CHO is unable to provide and operate the same.
a. Weighing of trucks/chassis:
1. All haulers with Permit to Operate (PTO) shall be required to submit their trucks
for weighing to determine the actual tare weight including their chassis/trailers to
avoid subsequent weighing of said trucks upon each entrance or exit from the port
and thereby facilitate the determination of its cargo weight.
2. The tare weight of trucks shall be verified at least annually.
3. A Weighing Ticket (WT) shall be issued by the Weighbridge Office for each
truck.
b. Weighing of Inbound or Outbound Containers and Cargoes
1. As a rule, all outbound containers or containerized cargoes shall be weighed prior
to loading. This should assist the vessel and the CHO to have an official weight

66
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

record of cargoes and containers for a credible vessel stowage plan and safe
equipment utilization.
2. Inbound containers and containerized cargoes shall also pass through
Weighbridges as may be required by the BOC or other road and transport
government agencies.
3. In cases of suspicious cargo delivery documents the preparation of Weighing
Order may be waived.
4. In cases of under declaration of cargo weight, the Weighbridge Office shall
submit a Discrepancy Report to the Finance Division within 3 days from the date
of last weighing.
c. Hours of Operation: the Weighbridge Office shall operate 24 hours, 7 days a week
in 3 shifts.
d. Weighbridge fees: payment of Weighbridge Fee shall be compulsory and without
exception as to truck owner, broker or requesting party.

20. Porterage Services:

a. Criteria in determining porterage rate
1. The weight of package or baggage not to exceed 30 kilograms and/or size not to
exceed a total of 0.4 CBM with no side/dimensions exceeding 1 meter.
2. The actual distance covered by the porter in travelling to/from the point of
passenger’s embarkation/disembarkation so/from entrance or exit gates.
b. The Port Manager shall recommend the porterage rates
c. Permit and regulatory fees:
1. When porterage is not included in the services rendered by the CHO, the Port
Manager is authorized to issue permit to operate porterage services not exceeding
1 year.
2. 1 year renewals shall be done with clearance from the Port District Manager.
3. Permits or contracts exceeding 1 year shall be subject to the approval of AGM for
Operations.
4. A regulatory fee of P1, 500 per annum shall be charged the Operator.
d. Operational/administrative requirements:
1. Porterage service shall be voluntary.
2. Porters shall fall in line about 10 meters away from the quay/wharf where the
vessel is directed to berth at least 10 minutes before the vessel is fully secured.

21. Guidelines in the Conduct of Public Bidding

a. When to conduct public bidding

67
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. It shall be done 6 months before the expiration of the existing CH contract.

2. For CH in ports without any authorized CHO or for new facilities, the bidding of
such services shall be conducted immediately.
3. CH Services under existing Special Takeover Units (STU’s) shall be bid out
within 6 months from effectivity of PPA AO 3-2009. CH services that may after
which be taken over by PPA shall be bid out within 6 months from the date of the
take-over.
b. Bids and Awards Committee (BAC)
1. Constitution of BAC
a. Regular members:
Chairperson – District Manager
Vice-Chairperson – Port Manager
Member: (1) Manager, Legal Affairs Division, PDO
(2) Manager, Port Services Division, PMO
(3) Manager, Resource Management Div. PMO
b. Observers
1. Shipping Industry
2. Philippine Chamber of Arrastre and Stevedoring Operators (PCASO)
3. BOCI
4. Catholic Bishop Conference of the Phils. (CBCP)
5. Volunteer Against Crime and Corruption (VACC)
6. COA
c. BAC shall have at least 5 members but not more than 7 members
d. Tenure of BAC members
1. BAC members shall be cc-terminus with the bidding process but not to
exceed 1 year from the date of appointment renewable at the discretion of the
GM.
2. In case of vacancy the replacement shall serve only for the unexpired term.
Provided that in case of leave or suspension which caused the vacancy the
replacement shall serve only the duration of the leave or suspension.
3. For justifiable cause the GM may suspend or remove a member, the GM
may also extend the term of office of members.
2. The chairperson or in his absence, the Vice Chairperson, shall only vote in case of
a tie.
3. Procedure in bidding
3.1 Preparation of Bidding Documents
3.2 Invitation to Apply for Eligibility and to Bid (IAEB)
a. Pre-procurement conference

68
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

a.1 Prior to the advertisement or issuance of the IAEB, the BAC shall
call through the Secretariat for a pre-procurement conference. It
shall be attended by the BAC, the Secretariat, the unit or officials
who prepared the Terms of Reference (TOR).
b. Advertising, posting and contents of the IAEB
b.1 IAEB shall be advertised at least once in 1 newspaper of general
circulation which has been regularly published for at least 2 years
before the date of issue of the advertisement.
b.2 IAEB shall be posted continuously in the PPA website and the
Government Electronic Procurement System(G-EPS) for 7
calendar days starting on date of advertisement
b.3 IAEB shall be posted at any conspicuous place/s in the premises of
PPA Head Office, PDO and PMO and in the port subject of
bidding for 7 days.
c. Submission of Letter of Intent (LOI)
c.1 Interested parties shall submit the LOI and application for
eligibility to the BAC not later than 7 calendar days from the last
posting of the IAEB.
D. Pre-Bid Conference
D.1 The pre-bid conference shall be held at least 12 calendar days
before the deadline for the submission and receipt of bids.
D.2 Only eligible bidders may attend. Attendance is not mandatory.
D.3 Discuss technical and financial aspects of the bid and other
relevant bidding matters.
D.4 Minutes of the conference shall be recorded and made
available to all participants not later than 3 calendar
days after.

E. Supplemental Bulletin
E.1 May be issued upon BAC’s initiative not later than 7 calendar
days before the deadline for the submission and receipt of
bids.
E.2 Requests for certification on any part of the bidding documents
or for an interpretation must be in writing and submitted to
BAC at least 10 calendar days before the
deadline set for the submission of bids.

69
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

*The BAC shall respond to the request by issuing a Supplemental / Bid Bulletin signed
by BAC Chairperson to be made available to those secured bidding documents at least 7
calendar.

F. Eligible participants.
F.1 Single proprietors, partnerships and corporations and
Cooperatives Development Authority (CDA)
registered cooperatives.
F.2 Maximum 40% ownership by foreigners.
F.3 Shipping companies are not eligible to participate in bidding.
However, individual stockholders of shipping lines are
allowed provided the individual share does not exceed 5% or the aggregate shares of
such individuals to do not exceed 10%.

H. Submission, receipt and opening of eligibility requirements.

H.1 Must be submitted on or before the deadline specified in the IAEB and to be
opened before the date of the pre-bid conference.
H.2 Prospective bidders who submitted eligibility requirements shall be determined
as having “failed” or “eligible”.
H.3 Those ineligible shall have 3 calendar days upon written notice, or if present at
the time of opening eligibility requirements, upon verbal notification, within
which to request for reconsideration. BAC shall decide on the request for
reconsideration within 7 days from receipt.
H.4 Only eligible bidders may purchase bid documents.

J. Submission and receipt of technical and financial bids.

J.1 Eligible bidders shall submit bids on or before the specified deadline in 2 separate
sealed envelopes. The first envelope shall contain the Technical Bid and the second
envelope shall contain the Financial Bid.

K. Modification and withdrawal of bids.

70
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

K.1 A bidder may modify it’s bids provided this is done before the
deadline for the submission of the bids.
K.2 A bid may be withdrawn through a letter but must be made
before the deadline for the submission of bids. Withdrawal of the bids after the
deadline shall subject the bidder to sanctions. A bidder who withdraws its bid shall not be
permitted to submit another bid for the same bidding.

L. Bid security
L.1 Bids must be accompanies by a bid security payable to PPA as a
guarantee that the successful bidder within 10 calendar days from receipt of Notice of
Award (NOA) enter into CH contract with PPA.
L.2 Minimum amount of bid security:
A. If in cash, certified check, cashiers or manager’s check,
bank draft or irrevocable L/C: 1% of total gross income
from CH operations of the port for the preceding year.
B. If in bank guarantee: 1.5%
C. If in security bond: 2.5%

M. Bid validity and opening

M.1 Bids and bid securities shall be valid for 12o calendar days from
the date of bid opening.
M.2 All BAC members present in the bid opening shall sign every
original page of bids received and opened. The “minutes” of the bid opening shall be
made available to the concerned parties upon written request and payment of a specified fee.

N. Preliminary examination of bids

N.1 BAC shall open first the Technical Bid. If it fails to confirm with the
requirements it will be marked “failed”, the Financial Bid will not be opened anymore.
N.2 A bidder with failed Technical Bid has 3 calendar days upon written
notice or if present at the time of bid opening, within which to request for reconsideration.
BAC shall decide within 7 calendar days from receipt of request for reconsideration.

71
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

N.3 If the Technical Bid “passed”, the Financial Bid shall be opened.

P. Detailed evaluation and comparison of bids

P.1 On ports with Manual CH operations, the financial bids shall be
ranked in ascending order based on the Lowest Calculated Bids. (LCB)
P.2 For ports with Mechanized CH operations, the BAC shall rank the
complying financial bids in descending order based on Highest Calculated Bid (HCB).
Q. Post-Qualification
Q.1 Within 7 calendar days from determination of LCB and HCB, BAC
shall validate and ascertain statements made and submitted. If the validation is positive
the LCB shall be declared as the Lowest Calculated and Responsive Bid (LCRB) and (HCB)
as the Highest Calculated and Responsive Bid (HCRB).
Q.2 If LCB or HCB fails validation it shall be informed and shall be given 3
calendar days to request for reconsideration. BAC shall have 7 calendar days to determine
merit of request for
reconsideration.
Q.3 Immediately after BAC has notified the first-ranked bidder (LCB or
HCB) and pending request for reconsideration, it shall complete the post qualification of the
second-ranked bidder.
Q.4 If the second-ranked bidder passed and first-ranked bidder’s request for
reconsideration is denied, it shall be declared as the LCRB or HCRB.
Q.5 If the second-ranked bidder fails, the post qualification process
shall be repeated for the bidder with the next-ranked bidder and so on until the LCRB and
HCRB the tie-breaking scheme shall be
adopted.
Q.6 In the event two or more bidders have been post qualified as LCRB and
HCRB the tie-breaking scheme shall be adopted.

S. Failure of bidding
S.1 In case of failure of bidding BAC shall re-advertise with terms, conditions,
specifications of the first bidding modified when necessary.

72
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

T. Negotiated procurement
T.1 Should there occur a second failure of bidding, PPA may adopt the alternative
method of negotiated procurement.
U. Single calculated and responsive bid-submission
U.1 A single calculated and responsive bid (SCRB) shall be considered for award. If
the process fails under any of the following:
A. If after advertisement only 1 prospective bidder submits an LOI,
pre-qualified and submits a responsive bid.
B. If after advertisement more than 1 prospective bidder submits an
LOI but only 1 bidder pre-qualifies and submits a
responsive bid.
C. More than 1 bidder pre-qualifies but only 1 submits a responsive
bid.
V. Notice and Execution of Award
V.1 The AGM for Operations, the GM or the PPA Board shall within 15 days from
the determination of LCRB, HCRB,SCRB issue the Notice of Award (NOA).
V.2 The concerned LCRB, HCRB or SCRB shall submit performance security within
30 days from the effectivity of the contract.
V.3 Contract signing shall be done within 10 calendar days from receipt of NOA.
V.4 If approval of the CH contract requires approval of the PPA Board, it shall
on the same within 25 calendar days from receipt from
BAC.
V.5 Notice to proceed (NTP) shall be given to the winner within 3 calendar days
from contract approval.
V.6 Performance security shall be posed within 30 calendar days from
effectivity of the CH contract at the following rate:
1. If in the form of cash, certified check, manager’s check, bank draft
or irrevocable L/C --- 5% total gross income from CH
operations for the preceding year.
2. If in bank guarantee-- 10%
3. If in security bond-- 30%
V.7 Failure to enter into contract and post-performance security.
1. If a bidder with LCRB, HCRB or SCRB fails to enter into contract
or post performance security the bid security shall be forfeited.

73
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

2. A rebidding shall be conducted and if t fails, PPA shall adopt

negotiated procurement.
X. Reservation clause
X.1 PPA has the right to reject any and all bids, declare a failure of bidding, or not
award the contract.
Y. Protest mechanism
Y.1 Decisions of BAC may be protested addressed to PPA, provided that motion
reconsideration has been filed. The protest must be filed within 7 calendar days
from receipt of denial of motion for reconsideration.
Y.2 Protest fee shall be equal to 1% of the total gross income from CH operations for
the preceding year in the port subject of bidding.
Y.3 Protest shall be resolved within 7 calendar days from receipt.
Y.4 No awards shall be made without first resolving a protest.
Y.5 Resort to courts shall only be resorted to after protest has been decided with
finality by PPA.
PPA AO 02-2010: GUIDELINES ON THE OPERATIONS OF WEIGHBRIDGE
FACILITIES AND SERVICES AT PPA PORTS.
A. Cargoes subject to mandatory weighing
A.1 All loaded outbound containers: and
A.2 All RO-RO vehicles registered for commercial purposes and loaded with
commercial cargo.
B. Exemptions from weighing
B.1 All RO-RO vehicles which have registered fixed weight and have no commercial
cargo on board: and
B.2 Empty containers which should be opened for inspection.
C. Prescribed gross weight
C.1 The rating (maximum gross weight for loaded containers shall be the load limits
specified by ISO 668-1995 Series 1 as below:
TYPE RATING (MAXIMUM GROSS WEIGHT)
40 footer 30,480 kilograms

74
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

30 footer 25,400 kilograms

20 footer 24,000 kilograms
10 footer 10,160 kilograms
C.2 For RO-RO vehicles, the manufacturer’s prescribed registered gross vehicles
weight shall be used as basis.
PPA A0 3-2011: GUIDELINES IN THE EXTENSION OF FREE STORAGE PERIOD
A. Grounds for the extension of Free Storage Period (EFSP) of the prescribed Free
Storage Period (FSP) may be granted only under the
following instances:
1. When the delivery of cargoes or it’s loading to the carrying vessel cannot be
affected within the FSP due to congestion in the pier/port: break-down or non-
availability of cargo handling equipment, strike, lockout for civil strike, typhoon,
flood, earthquake, fire or other similar occurrence any of which causes or
prevented cargo handling operations;
2. When the entry exit or covering documents of the cargoes involved have not been
completely processed by the BOC within the FSP due to any of the applicable
causes;
3. When the delivery of the cargoes or it’s loading to the carrying vessel cannot be
effected within the FSP due to health and safety regulations, whereby the
same are subject to some treatment commencing within the FSP to ensure it’s safe
consumption or use;
5. When the delivery of the cargoes cannot be due to its declaration, as abandoned
and/or forfeited cargoes and its disposition thru condemnation proceedings
has been approved by the BOC.

PPA AO 4-2011: TREATMENT IN THE PPA BOOKS ON ELECTRICAL CHARGES

ON REEFER CONTAINERS WHICH CONTENTS ARE
APPROVED FOR CONDEMNATION BY THE BOC.
A. For non-privatized ports, the fess on electrical charges for condemned reefer containers
shall be treated in the PPA books as port expense.
B. For the privatized terminals, as there are no revenues collected, government share shall
not take into account such non-collection of revenue due from electrical charges on the

75
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

overstaying abandoned and/or forfeited containers, with cargoes approved by BOC for
destruction.
PPA MC 01-2011: 50%-50% SHARING ON ARRASTRE FEES REVOKED
 50%-50% sharing on the arrastre fees in instances where the CH operator utilizes
equipment of the shipping lines in rendering services to vessels and cargo owns is
revoked.
 In the event where the shipping company is willing to allow the CH Operator to use it’s
equipment, any arrangement as means to implement the payment shall be internal
between the operator and shipping company.
 The payment of arrastre service shall be 100%.

PPA 01-2012: ONE PERIOD TO CONSTRUCTION OF A PRIVATE PORT

 The consignee/owner, shipper, transporter or trader of the petroleum products shall
likewise execute a written commitment to construct to it’s own private port handling
facility within one year from Jan. 11, 2012

PPA MC 11-2011: GUIDELINES FOR THE PPA TRAINING CENTER (PPATC)

PORTWORKERS’ COMPETENCY CERTIFICATION PROGRAM (PCCP)
A. Occupational skills and standards shall be prescribed by the Technical Education Skills
Development Authority (TESDA).
B. Levels of Training:
1. Level I - Basic Competencies ( Instructional Training for
Portworkers );
2. Level II - Common Competencies ( Training Cargo Handling
Equipment Maintenance and Operators )
3. Level III - Core Competencies ( Productive Maintenance and
Operation for Cargo Handling Equipment )

INTERNATIONAL FREIGHT FORWARDING

1. Philipine Shippers Bureau ( PSB ) shall have the responsibility of accrediting sea freight
forwarders while the Civil Aeronautics Board ( CAB ) shall have the
responsibility of accrediting air freight forwarders.
2. PSB Revised Rules on Freight Forwarding under PSB AO 6 s. 2005
A. Definition of terms
A.1 Non-Vessel Operating Common Carrier ( NVOCC )

76
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

 An entity, without owning or operating a vessel providing a point to point

service which may include several modes of transport and/or undertakes
groupage of Less Container Load ( LCL ) shipments and issuing a
corresponding transport documents.
A.2 International Freight Forwarder ( IFF )
 A local entity that acts as a cargo intermediary and facilitates transport of
goods on behalf of it’s client without assuming the role of a carrier. It can
also perform other forwarding services, such as booking cargo space,
negotiating freight rates, preparing documents, advancing freight payments,
providing packing/crating, trucking and warehousing, engaging as an
agent/representative of a foreign NVOCC/cargo consolidator named
in a Master B/L as consignee of a consolidated shipment and other related
undertakings.
A.3 Domestic Freight Forwarding ( DFF )
 An entity that facilitates and provides the transport of cargo and distribution of
goods within the Philippines on behalf of it’s client.
A.4 Shipper
 The person whose name appears oi the B/L or other transport documents as
the party contracting with the carrier for the carriage of goods by sea, such as
the exporter, importer, cargo owner, freight forwarder and cargo consolidator.
3. Five (5) categories for PSB accreditation under the old rules namely: (1) NVOCC, (2)
cargo consolidator (CC) (3) IFF (4) Break-bulk Agent (BBA) and (5) DFF have been
simplified into:
3.1 NVOCC
3.2 IFF
3.3 DFF
4. Required minimum paid-up capitalization
CATEGORY MINIMUM PAID-UP
NVOCC P 4.0 million
IFF P 2.0 million
DFF P 250,000
5. Types of cargo insurance required for accreditation: Either a Merchandise in Transit Floater
Insurance or any standard global comprehensive cargo liability insurance for freight
forwarders and transport operators.

77
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

CATEGORY MINIMUM AMOUNT OF INSURANCE

COVERAGE
NVOCC P 1.0 million
IFF P 500,000
DFF P 250,000
6. Accreditation procedures
6.1 An application shall be considered as automatically approved if processing has
not been finished completed within 21 working days from receipt of application.
The 21-day period shall be deemed suspended when PSB raises questions on an
application and such questions must be answered within 5 days from receipt thereof.
7. Certificate of accreditation shall have validity of 2 years from issuance unless revoked
earlier by PSB.

INTERNATIONAL SHIP AND PORT FACILITY SECURITY (ISPS)

1. The Maritime Transportation Security Bureau (MTSB) is one of the six (6) bureaus under
the Office for Transportation Security (OTS). Pursuant to paragraph (b) Section 1 0f
Executive Order 311 dated 26 April 2004 issued by the President of the Republic of
the Philippines, MSTB is specifically mandated to insure that the international
Maritime Organization (IMO), International Ship and Port Facility Security (ISPS)
Code is implemented and that a National Maritime Security Program is formulated,
developed and implemented.
2. MTSB has been implementing ISPS Code since July 2004. All Philippine registered
vessels engaged in International trade have been required to conduct ship security
assessment and correspondingly adopt ships security plans. As of 31 August 2009, all
Philippine registered ships engaged in International trade, with a total number of 165 are
compliant to the required International Ship Security Certificate (ISSC).

REFERENCES:
-Philippine Port Operation Issuances

78
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

-PPA AO 02-2010
-PPA AO 03-2011
-PPA AO 04-2011
-PPA AO 01-2012
-PPA MC 11-2011

ACTIVITY FOR MODULE 3

1. How cargoes may be treated as unclaimed or undelivered?

2. Explain Dangerous and obnoxious cargoes be treated when within the port

3. Enumerate the duties and responsibilities of the Container Handling Operators

4. Differentiate the Modes of Handling from each other.

5. Discuss porterage services.

79
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Title: Customs Operations and Cargo Handling

Module No. 4

I. Introduction
This module will let students understand the basic underlying principles about the
common carriers and will be able to discuss and let the students master the articles which
defines who are common carriers and any related sub-topics related to it.

II. Learning Objectives

 To understand the basic information about the common carriers.

 To master the articles which explain the different topics clearly related to the common
carriers.

III. Topics and Key Concepts

CIVIL CODE
SECTION 4 Common Carriers
SUBSECTION 1. General Provisions
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.

Article 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and 1756.

SUBSECTION 2. Vigilance Over Goods

Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:

80
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as required in article 1733.

Article 1736. The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without prejudice to the provisions
of article 1738.

Article 1737. The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit,
unless the shipper or owner has made use of the right of stoppage in transitu.

Article 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them.

Article 1739. In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss. However, the common carrier
must exercise due diligence to prevent or minimize loss before, during and after the occurrence
of flood, storm or other natural disaster in order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon
the common carrier in case of an act of the public enemy referred to in article 1734, No. 2.

81
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.

Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the latter
shall be liable in damages, which however, shall be equitably reduced.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by
the character of the goods, or the faulty nature of the packing or of the containers, the
common carrier must exercise due diligence to forestall or lessen the loss.

Article 1743. If through the order of public authority the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue the
order.

Article 1744. A stipulation between the common carrier and the shipper or owner limiting
the liability of the former for the loss, destruction, or deterioration of the goods to a degree
less than extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the
common carrier; and

(4) Reasonable, just and not contrary to public policy.

Article 1745. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or
deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the
goods;

82
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

(4) That the common carrier shall exercise a degree of diligence less than that of
a good father of a family, or of a man of ordinary prudence in the vigilance over the
movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of
his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violence or force, is dispensed
with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or
deterioration of goods on account of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract of carriage.

Article 1746. An agreement limiting the common carrier's liability may be annulled by the
shipper or owner if the common carrier refused to carry the goods unless the former agreed to
such stipulation.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods
or changes the stipulated or usual route, the contract limiting the common carrier's liability
cannot be availed of in case of the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carrier's liability for delay on account of
strikes or riots is valid.

Article 1749. A stipulation that the common carrier's liability is limited to the value of the
goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is
binding.
Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the
loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a
part thereof, to which the contract refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier's liability is reasonable, just and in
consonance with public policy.

83
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Article 1752. Even when there is an agreement limiting the liability of the common carrier
in the vigilance over the goods, the common carrier is disputably presumed to have been
negligent in case of their loss, destruction or deterioration.

Article 1753. 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.

Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of his employee. As to other baggage, the rules in
articles 1998 and 2000 to 2003 concerning the responsibility of hotelkeepers shall be applicable.

SUBSECTION 3. Safety of Passengers

Article 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.

Article 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.

Article 1757. The responsibility of a common carrier for the safety of passengers as required in
articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.

Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common
carrier's liability for negligence is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.

84
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the former's employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.

Article 1760. The common carrier's responsibility prescribed in the preceding article cannot be
eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or
otherwise.

85
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Article 1761. The passenger must observe the diligence of a good father of a family to avoid
injury to himself.

Article 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be equitably reduced.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account
of the wilful acts or negligence of other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.

SUBSECTION 4. Common Provisions

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with
Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier.

Article 1765. The Public Service Commission may, on its own motion or on petition of any
interested party, after due hearing, cancel the certificate of public convenience granted to any
common carrier that repeatedly fails to comply with his or its duty to observe extraordinary
diligence as prescribed in this Section.

Article 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.

REFERENCE:
-Civil Code Articles 1732-1766

86
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ACTIVITY FOR MODULE 4

1. What is the law governing the Common Carriers

2. Who are Common Carriers

3. Explain the term “Extraordinary Diligence”

4. When Common carrier may not be responsible for loss, destruction or deterioration?

5. When extraordinary diligence remains in full force and effect?

6. What are the stipulations contrary to law?

7. Explain further Article 1755.

8. Define “ diligence of a good father of a family” used in article 1761.

CASE STUDY 1

Passenger “A” boarded M/V Talo in seeming sane condition though he had just taken shabu.
However while the vessel is already at sea the effect of shabu to “A” started to set in and while
the crew were sleeping made his way to starboard and jumped to his death. Is the vessel liable to
the death of “A”?

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

CASE STUDY 2

Captain “A” while the vessel under his command S/S Steamship was docked at the Port of
Kepweng decided to make a repair of the ship’s engine. Since their company does not have any
shipping agent in the port he decided to borrow money from the supplier of the spare parts
against his signature only. He instructed the supplier to bill shipowner who refuses to pay. The
shipowner told the supplier that the captain made the wrong decision and that instead the
supplier should demand payment from the Captain. Do you think the ship owner is correct in his
instance?

87
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Title: Customs Operations and Cargo Handling

Module No. 5

I. Introduction
This module define the Code of Commerce specially the Overland Transport and will also
discuss the maritime commerce which is the law governing the vessels within the Philippine
territory.

II. Learning Objectives

 To understand the articles 349-379 of the overland transport of code of commerce.

 To learn and be able to explain the maritime commerce tackling the articles 573-736

III. Topics and Key Concepts

Code of Commerce-Commercial Contracts for Transportation
TITLE VII – COMMERCIAL CONTRACTS FOR TRANSPORTATION

ARTICLE 349. A contract of transportation by land or water ways of any kind shall be
considered commercial:
1. When it has for its object merchandise or any article of commerce.
2. When, whatever its object may be, the carrier is a merchant or is habitually
engaged in transportation for the public.
ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually
demand that a bill of lading be made, stating:

88
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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.

89
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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.

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
purpose 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

90
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 deterioration
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. 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

91
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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.
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.

92
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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.

93
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 be 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.

94
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

BOOK III Maritime Commerce

TITLE I 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 be included in a written
instrument, which shall not produce any effect with regard to third persons if not recorded in the
mercantile registry.

The ownership of a vessel shall also be acquired by the possession thereof in good faith for three
years, with a good title duly recorded.

In the absence of any of these requisites, uninterrupted possession for ten years shall be
necessary in order to acquire ownership.

A captain can not acquire by prescription the ship of which he is in command.

ARTICLE 574. The builders of vessels may employ the material and with regard to their
construction and rigging may follow the system which is most convenient to their interests. Ship
agents and seamen shall be subject to the provisions of the laws and regulations of the public
administration on navigation, customs, health, safety of the vessels, and other similar provisions.

ARTICLE 575. Part owners of vessels shall enjoy the right of option of purchase and
withdrawal in the sales made to strangers; but they can only exercise it within the nine days
following the record of the sale in the registry and by delivering the price at once.

ARTICLE 576. The rigging, tackle, stores, and engine of a vessel, if it is a steamer, shall always
be understood as included in the sale thereof if they are owned by the vendor at the time of the
sale.

95
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 certificate of the record of
the vessel in the registry up to the date of the sale.

ARTICLE 577. If the alienation of the vessel should take place while said vessel is on a voyage,
the purchaser shall receive all the freights it earns from the time it received its last cargo, and the
payment of the crew and other persons which go to make up its complement shall be paid by the
purchaser for the said voyage.

If the sale takes place after the arrival of the vessel at the port of its destination, the freights shall
belong to the vendors and he shall pay the crew and other persons which go to make up its
complement, unless there is an agreement to the contrary in either case.

ARTICLE 578. If, the steamer being on a voyage or in a foreign port, her owner or owners
should voluntarily alienate her either to Spaniards * 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 Spain * of the
port where she terminates her voyage, and said instrument shall have no effect with regard to
third persons if it is not recorded in the registry of the consulate. The consul shall immediately
forward a true copy of the bill of purchase of the vessel to the [commercial registry] of the port
where said vessel is recorded and registered.

In every case the alienation of the vessel must be stated, indicating whether the vendor receives
the full price or part thereof, or whether he retains any interest in said vessel in full or in part. In
case the sale is made to a Spaniard, * this fact shall be stated in the certificate of navigation.

When, the ship being on a voyage, it should be rendered useless for navigation, the captain shall
apply to the judge or court of competent jurisdiction of the port of arrival, should it be a foreign
port, to the consul of Spain, * should there be one or to the judge, or court, or local authority in
the absence of the former; and the consul, or the judge, or court, or in their absence, the local
authority, shall order an examination of the vessel to be made.

If the consignee or the underwriter should reside at said port, or should have representatives
there, they must be cited in order to take part in the proceedings for the account of whom it may
concern.

96
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 579. After the damage to the vessel has been proven as well as the impossibility of
her being repaired, to continue the voyage, her sale at public auction shall be ordered, subject to
the following rules:

1. The hull of the vessel, her rigging, engines, stores, and other articles shall be appraised
by means of an inventory, said proceedings being brought to the notice of the persons who may
wish to take part in the auction.

2. The order or decree ordering the public auction shall be posted in the usual places, and
shall be advertised in the newspapers of the port where the auction is to be held, should there be
any, and in the other newspapers which the court may determine.

The period which may be fixed for the auction can not be less than twenty days.

3. These advertisements shall be repeated every ten days, and their publication shall be
stated in the proceedings.

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 when the vessel is in a foreign country, the special
provisions governing such cases shall be observed.

ARTICLE 580. In all judicial sales of vessels for the payment of creditors, the said creditors
shall have preference in the order stated:

1. The credits in favor of the public treasury proven by means of an official certificate of
the 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.

4. The salaries of the caretakers and watchmen of the vessel and any other expense
connected with the preservation of said vessel, from the time of arrival until her sale, which
appear to have been paid or are due by virtue of a true account approved by the judge or court.

5. The rent of the warehouse where the rigging and stores of the vessel have been taken
care of, according to contract.

97
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

6. The salaries due the captain and crew during their last voyage, which shall be verified
by virtue of the liquidation made from the rolls of the crew and account books 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 parts of the freight the captain may have sold in order to
repair the vessel, provided the sale has been ordered by a judicial instrument executed with the
formalities required in such cases, and recorded in the certificate of the registry of the vessel.

8. The part of the price which has not been paid the last vendor, the credits pending for
the payment of material and work in the construction of the vessel, when it has not navigated,
and those arising from the repair and equipment of the vessel and its provisioning with victuals
and fuel during its last voyage.

In order that the credits provided for in this subdivision may enjoy the preference they must
appear by contracts recorded in the commercial registry, or if they were contracted for the vessel
while on a voyage and said vessel has not returned to the port of her registry, they must be made
under the authority required for such cases and entered in the certificate of registry of the said
vessel.

9. The amounts borrowed on bottomry bonds before the departure of the vessel, proven
by means of the contracts executed according to law and recorded in the commercial registry; the
amounts borrowed during the voyage with the authority mentioned in the foregoing subdivision,
filling the same requisites, and the insurance premium, proven by the policy of the contract or
certificate taken from the books of the broker.

10. The indemnity due the shippers 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
either appear in a judicial or arbitration decision.

ARTICLE 581. If the proceeds of the sale are not sufficient to pay all the creditors included in
one number or grade, the amount shall be divided among them pro rata.

ARTICLE 582. After the bill of the judicial sale at auction has been executed and recorded in
the commercial registry, all the other liabilities of the vessel in favor of the creditors shall be
considered canceled.

But if the sale should have been voluntary, and took place while the vessel was on a voyage, the
creditors shall retain their rights against the vessel until her return to the port of her registry, and
three months after the record of sale in the commercial registry, or after her arrival.

98
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one
or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge
or court if he is in Spanish * territory, and otherwise to the consul of Spain, * should there be
one, and, in his absence to the judge or court or to the proper local authority, presenting the
certificate of the registry of the vessel 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 in the certificate of their result,
in order that it may be recorded in the registry when the vessel returns to the port of her registry,
or so that it can be admitted as a legal and preferred obligation in case of sale before the return,
by reason of the sale of the vessel by virtue of a declaration of unseaworthiness.

The lack of this formality shall make the captain personally liable to the creditors who may be
prejudiced through his fault.

ARTICLE 584. The vessels subject to the 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
are, at the instance of any of the creditors; but if they should be freighted and ready to sail the
attachment can not take place except for debts contracted for the preparation and provisioning of
the vessel for the same voyage, and even then the attachment shall be dissolved if any person
interested in her sailing should give bond for the return of the vessel within the period fixed in
the certificate of navigation, and binding himself to pay the debt in so far as it may be legal,
should the vessel be delayed in her return even if it were caused by some fortuitous event.

For debts of any other kind whatsoever not included in the said Article 580, the vessel can only
be attached 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 II Persons Who May Take Part in Maritime Commerce

SECTION I Owners of Vessels and Ship Agents

99
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 586. The owner of a vessel and the 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 therein.

By agent is understood the person intrusted with the provisioning of a vessel, or who represents
her in the port in which she happens to be.

ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons
which arise from the conduct of the captain in the care of the goods which the vessel carried; but
he may exempt himself therefrom by abandoning the vessel with all her equipments and the
freight he may have earned during the voyage.

ARTICLE 588. Neither the owner of the vessel nor the agent shall be liable for the obligations
contracted by the captain if the latter exceeds his powers and privileges which are his by reason
of his position or have been conferred upon him by the former.

However, if the amounts claimed were made use of for the benefit of the vessel, the owner or
agent shall be liable.

ARTICLE 589. If two or more persons should be part owners of a merchant vessel, an
association shall be presumed as established by the part owners.

This association shall be governed by the resolutions of a majority of the members.

A majority shall be the relative majority of the voting members.

If there should be only two part owners, in case of disagreement the vote of the member having
the largest interest shall be decisive. If the interests are equal, it shall be decided by lot.

The representation of the smallest part 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.

A vessel can not be detained, attached or levied upon execution in her entirety for the private
debts of a part owner, but the proceedings shall be limited to the interest the debtor may have in
the vessel, without interfering with her navigation.

100
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 590. The owners of a vessel shall be civilly liable in the proportion of their
contribution to the common fund, for the results of the acts of the captain, referred to in Article
587.

Each part 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 of repairs to 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 of maintenance, equipment,
and provisioning of the vessel, necessary for navigation.

ARTICLE 592. The resolutions of the majority with regard to the repair, equipment, and
provisioning of the vessel in the port of departure shall bind the majority unless the partners in
the minority renounce their participation therein, which must be acquired by the other part
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 association and sale of the vessel
shall also be binding on the minority.

The sale of the vessel must take place at a public auction, subject to the provisions of the law of
civil procedure unless the part owners unanimously agree otherwise, the right of option to
purchase and to withdraw mentioned in Article 575 being always reserved in favor of said part
owners.

ARTICLE 593. The owners of a vessel shall have preference in her charter to other persons,
offering equal conditions and price. If two or more of the former should claim said right the one
having greater interest shall be preferred, and should they have an equal interest it shall be
decided by lot.

ARTICLE 594. The part owners shall elect the manager who is to represent them in the capacity
of agent.

The appointment of director or agent shall be revocable at the will of the members.

101
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 595. The agent, be he at the same time an owner of a vessel or a manager for an
owner or for an association of co-owners, must be qualified to trade and must be recorded in the
merchant's registry of the province.

The agent shall represent the ownership of the vessel, and may in his own name and in such
capacity take judicial and extrajudicial steps in all that relates to commerce.

ARTICLE 596. The agent may discharge the duties of captain of the vessel, subject, in every
case, to the provisions contained in Article 609.

If two or more co-owners request the position of captain, the disagreement shall be decided by a
vote of the members; and if the vote should result in a tie, the position shall be given to the part
owner having the larger interest in the vessel.

If the interest of the petitioners should be the same, and there should be a tie, the matter shall be
decided by lot.

ARTICLE 597. The agent shall select and come to an agreement with the captain, and shall
contract in the name of the owners, who shall be bound in all that refers to repairs, details of
equipment, armament, provisions, fuel, and freight of the vessel, and, in general, in all that
relates to the requirements of navigation.

ARTICLE 598. The agent can not order a new voyage, nor make contracts for a new charter,
nor insure the vessel, without the authority of her owner or by virtue of a resolution of the
majority of the co-owners, unless these privileges were granted him in the certificate of his
appointment.

If he should insure the vessel without authority therefor he shall be secondarily liable for the
solvency of the underwriter.

ARTICLE 599. The managing agent of an association, shall give his co-owners 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 the disposal of the same.

102
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 600. After the account of the managing agent has been approved by a relative
majority, the co-owners shall satisfy 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 have a right of action to secure
execution, 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 the resolution.

ARTICLE 601. Should there be any profits, the co-owners may demand of the managing agent
the amount due them, by means of an executory action without further requisites than the
acknowledgment of the signatures of the instrument approving the account.

ARTICLE 602. The agent shall indemnify the captain for all the expenses he may have incurred
from his own funds or from those of other persons, for the benefit of the vessel.

ARTICLE 603. Before a vessel goes out to sea the agent shall have at his discretion, a right to
discharge the captain and members of the crew whose contract did not state a definite period nor
a definite voyage, paying them the salaries earned according to their contracts, and without any
indemnity whatsoever, unless there is a special 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 the return to the place where the contract was made,
unless there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this
Code.

ARTICLE 605. If the contracts of the captain and members of the crew with the agent should be
for a definite period or voyage, they can not be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness,
and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

ARTICLE 606. If the captain should be a part owner in the vessel, he can not be discharged
without the agent returning him the amount of his interest therein, which, in the absence of an
agreement between the parties, shall be appraised by experts appointed in the manner established
in the law of civil procedure.

103
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 607. If the captain who is a part owner should have obtained the command of the
vessel by virtue of a special agreement contained in the articles of co-partnership, he can not be
deprived thereof except for the reasons mentioned in Article 605.

ARTICLE 608. In case of the voluntary sale of the vessel, all contracts between the agent and
captain shall terminate, the right to proper indemnity being reserved in favor of the captain,
according to the agreements made with the 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 should be insolvent.

SECTION II Captains and Masters of Vessels

ARTICLE 609. Captains and masters of vessels must be Spaniards * having legal capacity to
bind themselves in accordance with this Code, and must prove that they have the skill, capacity,
and qualifications required to command and direct the vessel, as established by marine laws,
ordinances, or regulations, or by those of navigation, and that they are not disqualified according
to the same for the discharge of the duties of that position. t

If the owner of a vessel desires to be the captain thereof and does not have the legal
qualifications therefor, he shall limit himself to the financial administration of the vessel, and
shall intrust her navigation to a person possessing the qualifications required by said ordinances
and regulations.

ARTICLE 610. The following powers are inherent in the position of captain or master of a
vessel:

1. To appoint or make contracts with the crew in the absence of the agent and propose
said crew, should said agent be present; but the agent shall not be permitted to 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 agent.

3. To impose, in accordance with the agreements and the laws and regulations of the
merchants marine, on board the vessel, correctional punishment upon those who do not comply
with his orders or who conduct themselves against discipline, holding a preliminary investigation

104
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

on the crimes committed on board the vessel on the high seas, which shall be turned over to the
authorities, who are to take cognizance thereof, at the first port touched.

4. To make contracts for the charter of the vessel in the absence of the agent or of her
consignee, acting in accordance with the instructions received and protecting the interests of the
owner most carefully.

5. To adopt all the measures which may be necessary to keep the vessel well supplied and
equipped, purchasing for the purpose all that may be necessary, provided there is no time to
request instructions of the agent.

6. To make, in similar urgent cases and on a voyage, the repairs to the hull and engines of
the vessel and to her rigging and equipment which are absolutely necessary in order for her to be
able to continue and conclude her voyage; but if she 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 foregoing article, the
captain, when he has no funds and does not expect to receive any from the agent, shall procure
the same in the successive order stated below:

1. By requesting said funds of the consignees or correspondents of a vessel.

2. By applying to the consignees of the cargo or to the persons interested therein.

3. By drawing on the agent.

4. By borrowing the amount required by means of a bottomry bond.

5. By selling a sufficient amount of the cargo to cover the amount absolutely necessary to
repair the vessel, and to equip her to pursue the voyage.

In the two latter cases he must apply to the judicial authority of the port, if in Spain * and to the
Spanish * consul, if in a foreign country; and where there should be none, to the local authority,
proceeding in accordance with the prescriptions of Article 583, and with the provisions of the
law of civil procedure.

ARTICLE 612. The following obligations are inherent in the office of captain:

1. To have on board before starting on a voyage a detailed inventory of the hull, engines,
rigging, tackle, stores, and other equipments of the vessel; the navigation certificate; the roll of
the persons who make up the crew of the vessel, and the contracts entered into with the crew; the
105
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

list of passengers; the health certificate; the certificate of the registry proving the ownership of
the vessel, and all the obligations which encumber the same up to that date; the charters or
authenticated copies thereof; the invoices or manifest of the cargo, and the instrument of the
expert visit or inspection, 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 note
of the number of folios it contains, signed by the maritime official, and in his absence by the
competent authority.

In the first book, which shall be called "log book," he shall enter every day the condition of the
atmosphere, the prevailing winds, the course sailed, the rigging carried, the horsepower of the
engines, the distance 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 is its cause, as well as the imperfections and averages of the cargo, and the effects
and consequence of the jettison, should there be any; and in cases of grave resolutions which
require the advice or a meeting of the officers of the vessel, or even of the passengers and crew,
he shall record the decision adopted. For the informations indicated he shall make use of the
binnacle book, and of the steam or engine book kept by the engineer.

In the second book, called the "accounting book," he shall enter all the amounts collected and
paid for the account of the vessel, entering specifically article by article, the sources of the
collection, and the amounts invested in provisions, repairs, acquisition of rigging or goods, fuel,
outfits, wages, and all other expenses. 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, either directly or by delivery to their families.

In the third book, called "freight book," he shall record the entry and exit of all the goods, stating
their marks and packages, names of the shippers and of the consignees, ports of loading and
unloading, and the freight earned. In the same book he shall record the names and places of
sailing of the passengers and the number of packages of which their baggage consists, and the
price of the passage.

4. To make, before receiving the freight, with the officers of the crew, and the two
experts, if required by the shippers and passengers, an examination of the vessel, in order to
ascertain whether she is watertight, and whether the rigging and engines are in good condition;
and if she has the equipment required for good navigation, preserving a certificate of the
memorandum of this inspection, signed by all the persons who may have taken part therein,
under their liability.

106
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

The experts shall be appointed one by the captain of the vessel and the other one by the persons
who request the examination, and in case of disagreement a third shall be appointed by the
marine authority of the port.

5. To remain constantly on board the vessel with the crew during the time the freight is
taken on board and carefully watch the stowage thereof; not to consent to any merchandise or
goods of a dangerous character to be taken on, such as inflammable or explosive substances,
without the precautions which are recommended for their packing, management and isolation;
not to permit that any freight be carried on deck which by reason of its disposition, 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 it takes place, he allows merchandise to 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 agent.

6. To demand a pilot at the expense of the vessel whenever required by navigation, and
principally when a port, canal, or river, or a roadstead or anchoring place is to be entered with
which neither he, the officers nor the crew are acquainted.

7. To be on deck at the time of sighting 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.

8. To present himself, when making a port in distress, to the maritime authority if in

Spain * and to the Spanish * consul if in a foreign country, before twenty-four hours have
elapsed, and make a statement of the name, registry, and port of departure of the vessel, of its
cargo, and reason of arrival, which declaration shall be vised by the authority or by the consul if
after examining the same it is found to be acceptable, giving the captain the proper certificate in
order to show his arrival under stress and the reasons therefor. In the absence of marine officials
or of the consul, the declaration must be made before the local authority.

9. To take the steps necessary before the competent authority in order to enter in the
certificate of the Commercial Registry of the vessel the obligations which he may contract in
accordance with Article 583.

10. To put in a safe place and keep 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
as witnesses, and, in their absence, of members of the crew.

11. To conduct himself according to the rules and precepts contained in the instructions
of the agent, being liable for all that he may do in violation thereof.

107
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

12. To give an account to the agent from the port where the vessel arrives, of the reason
thereof, taking advantage of the semaphore, telegraph, mail, etc., according to the cases; notify
him the freight he may have received, stating the name and domicile of the shippers, freight
earned, and amounts borrowed on bottomry bond, advise him of his departure, and give him any
information and data which may be of interest.

13. To observe the rules on the situation of lights and evolutions to prevent collisions.

14. To remain on board in case of danger to the vessel, until all hope to save her is lost,
and before abandoning her to hear the officers of the crew, abiding by the decision of the
majority; and if he should have to take a boat 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 he shall make the proper protest in due form at the first port reached,
before the competent authority or the Spanish * consul, within twenty-four hours, stating therein
all the incidents of the wreck, in accordance with case 8 of this article.

16. To comply with the obligations imposed by the laws and rules of navigation, customs,
health, and others.

ARTICLE 613. A captain who navigates for freight in common or on shares can not make any
transaction for his exclusive account, and should he do so the profit shall belong to the other
persons in interest, and the losses shall be for his own exclusive account.

ARTICLE 614. A captain who, having made an agreement to make a voyage, should not fulfill
his obligation, without being prevented by an accident case or by force majeure, shall pay for all
the losses his action may cause, without prejudice to criminal penalties which may be proper.

ARTICLE 615. Without the consent of the agent, the captain can not 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 article, the substitute as well as the captain
may be discharged by the agent.

ARTICLE 616. If the provisions and fuel of the vessel are consumed before arriving at the port
of destination, the captain shall decide, with the consent of the officers of the same, to make the

108
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 turn said provisions over for the common consumption of all
persons on board, paying the price thereof immediately, or at the latest, at the first port reached.

ARTICLE 617. The captain can not contract loans on respondentia, and should he do so the
contracts shall be void.

Neither can 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
provided there does not exist any other kind of lien or obligation thereon. When he is permitted
to do so, he must necessarily state what interest he has in the vessel.

In case of violation of this article the principal, interest, and costs shall be charged to the private
account of the captain, and the agent may furthermore have the right to discharge him.

ARTICLE 618. The captain shall be civilly liable to the 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 his 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.

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 the laws and
regulations of customs, police, health, and navigation.

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 full use of his authority to prevent or avoid them.

5. For those arising by reason of an undue use of powers and non-fulfillment of the
obligations which are his 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 exception whatsoever shall exempt him from this obligation.

109
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

7. For those arising by reason of his voluntarily entering a port other than his destination,
with the exception of the cases or without the formalities referred to in Article 612.

8. For those arising by reason of the non-observance of the provisions contained in the
regulations for lights and evolutions for the purpose of preventing collisions.

ARTICLE 619. The captain shall be liable for the cargo from the time it is turned over to him at
the dock, or afloat alongside the ship, at the port of loading until he delivers it on the shores or on
the discharging wharf, of 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 reason of force majeure; but he shall always be so — no agreement to the
contrary being valid — for those arising through his own fault.

Neither shall he be personally liable for the obligations he may have contracted for the repair,
equipment, and provisioning of the vessel, which shall be incurred by the agent, unless the
former has expressly bound himself personally or signed a draft or promissory note in his name.

ARTICLE 621. A captain who borrows money on bottomry, or who pledges or sells
merchandise or provisions in other cases and without the formalities prescribed in this Code,
shall be liable for the principle, interest, and costs, and shall indemnify for the damages he may
cause.

The captain who commits fraud in his accounts shall reimburse the amount defrauded, and shall
be subject to the provisions contained in the Penal Code.

ARTICLE 622. If when on a voyage the captain should receive news 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 to receive final orders from the agent or shippers.

ARTICLE 623. If he should find himself being attacked by a privateer and after having done all
that was possible to avoid the encounter and have resisted the delivery of the equipment of the
vessel or of its cargo, they should be forcibly taken away from him, or he should be obliged to

110
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

deliver them, he shall make an entry in his freight book and shall prove the fact before the
competent authority at the first port he touches.

After the force majeure has been proven, 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 the twenty-four hours following his arrival, and shall
ratify it within the same period when he arrives at the place of his destination, immediately
preceding with the proof of the facts, it not being permitted to open the hatches until 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 the facts.

The authority or the consul abroad shall verify the said facts, receiving a sworn statement of the
members of the crew and passengers who may have been saved, and taking the other steps which
may assist in arriving at the facts, drafting a certificate of the result of the proceedings in the log
book and in that of the sailing mate, and shall deliver the original records of the proceedings to
the captain, stamped and folioed, with a memorandum of the folios, which he must rubricate, for
their presentation to the judge or court of the port of destination.

The statement of the captain shall be believed if it is in accordance with those of the crew and
passengers; if they disagree, the latter shall be accepted, unless there is proof to the contrary.

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 service of the former. Should this
not be the case, it shall be paid by the captain personally.

After the vessel has sailed, and during the voyage and until the conclusion thereof, the captain
can not abandon any member of his crew on land or on the sea, unless, by reason of being guilty
of some crime, his imprisonment and delivery to the competent authority is proper in the first
port touched, which will be obligatory on the captain.

ARTICLE 638. If, the crew having been engaged, the voyage is revoked by the will of the agent
or of the charterers before or after the vessel has put to sea or if the vessel is in the same manner
given a different destination than that fixed in the agreement with the crew, the latter shall be
indemnified because of the rescission of the contract according to the case, viz:

111
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. If the revocation of the voyage should be decided 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, there shall
be graduated what may be due for said month and days, calculating the same in proportion to the
estimated duration of the voyage, 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 one month more or less, 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 sailors engaged
for a fixed amount for the voyage shall receive the salary which may have been offered them in
full 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 said sailors the
passage to the said port or to the port of sailing of the vessel, as may be convenient for them.

4. If the agent or the charterers of the vessel should give said vessel a destination other
than 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 for other reasons,
should give rise to an increase of wages, the latter shall be privately regulated, or through
amicable arbitrators in case of disagreement. Even though the voyage may be 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 originate from the shippers or charterers, the
agent shall have a right to demand of them the indemnity which is justly due.

ARTICLE 639. If the revocation of the voyage should arise from a just cause independent of the
will of the agent or charterers, and the vessel should not have left the port, the members of the
crew shall not have any other right than to receive 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:

112
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 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 agent.

5. The inability of the vessel to navigate.

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 the captain may deem it
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 the 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 engagement shall be
rescinded and the crew shall be paid what they should have earned, according to the contract, if
the voyage had been made. And if the agreement had been made for a fixed sum for the voyage,
the contract must be complied within the terms agreed upon.

In the fifth case, the crew shall not have any other right than be entitled to recover 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 loss suffered,
always reserving the criminal liability which may be proper.

ARTICLE 642. If the crew has been engaged to work 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 paid into the common funds of the vessel by the persons
liable for said occurrences.

113
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 643. If the vessel and her freight should be totally lost, by reason of capture or
wreck, all rights of the crew to demand any wages whatsoever shall be extinguished, as well as
that of the agent for the recovery of the advances made.

If a portion of the vessel or freight should be saved, or part of either, 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 value of the freightage or the cargo saved; but sailors who are engaged on
shares shall not have any right whatsoever to the salvage of the hull, but only on the portion of
the freightage saved. If they should have worked to collect the remainder of the ship-wrecked
vessel, they shall be given an award in proportion to the efforts made and to the risks
encountered in order to accomplish the salvage.

ARTICLE 644. A sailor 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 be caused by an injury received in the service or defense of the vessel the
sailor shall be attended and cured from the common funds, there being deducted before anything
else from the proceeds of the freight, the cost of the attendance and cure.

ARTICLE 645. If a sailor should die during the voyage his heir shall be given the wages
earned and not received, according to his engagement and the reason for his death, namely
—

If he should have died a natural death and should have been engaged on wages there shall be
paid what may have been earned up to the date of his death.

If the engagement had been made for a fixed sum for the whole voyage there shall be paid half
the amount earned if the sailor died on the voyage out, and the whole amount if he died on the
return voyage.

And if the engagement had been made on shares and the death should have occurred after the
voyage was begun, the heirs shall be paid the entire portion due the sailor; but should the latter
have died before the departure of the vessel from the port, the heirs shall not be entitled to claim
anything.

If the death should have occurred in the defense of the vessel, the sailor shall be considered as
living, and his heirs shall be paid, at the end of the voyage, the full amount of wages or the full
part of the profits due him as to the others of his grade.

114
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

The sailor shall likewise be considered as present in the event of his capture when defending the
vessel, in order 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 freights shall be liable for
the wages earned by the crew engaged per month or for the trip, the liquidation and payment
ought to take place between one voyage and the other.

After a new voyage has been undertaken, credits such as the former shall lose their right of
preference.

ARTICLE 647. The officers and the crew of the vessel shall be exempted from all obligations
contracted, if they deem it proper, in the following cases:

1. If, before the beginning of the voyage, the captain attempts to change it, or there occurs
a naval war with the power to which the vessel was destined.

2. If a disease should break out and be officially declared 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 embarked,
from the captain to the cabin boy, necessary for the management, evolutions, and service, and
there shall, therefore, be understood as included in the complement the crew, sailing mates,
engineers, stokers, and other persons not having a specific name; but there shall not be included
the passengers nor the persons the vessel is only transporting.

SECTION IV Supercargoes

ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties
which the agent or shippers may have assigned 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 shall respect the latter in his duties as chief of the vessel.

115
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

The powers and liabilities 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 qualifications, manner of making contracts, and liabilities of factors shall be applicable
to supercargoes.

ARTICLE 651. Supercargoes can 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 a special authorization thereto from the principals.

TITLE III Special Contracts of Maritime Commerce

SECTION I Charter Parties

1. 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 can not do so, by two witnesses at their request.

The charter party shall include, besides the conditions unrestrictedly stipulated, the following
statements:

1. The kind, name, and tonnage of the vessel.

2. Her flag and port of registry.

3. The name, surname, and domicile of the captain.

4. The name, surname, and domicile of the 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.

116
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

7. The capacity, number of tons or weight, or measure which they respectively bind
themselves to load and transport, or whether it is the total cargo.

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 rate of demurrage.

ARTICLE 653. If the freight 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, which shall be the only instrument with regard to the freight to determine the rights and
obligations of the owner, of the captain, and of the charterer. t

ARTICLE 654. The charter parties executed with the intervention of a broker, who certifies to
the authenticity of the signatures of the contracting parties made in his presence, shall be full
evidence in court; and if said signatures should not agree the ones identical with the signatures
the broker must keep in his registry, if kept in accordance to law, shall be final.

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.

Should no broker have taken part in the charter party and should the signatures not have been
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 agent shall be valid
and efficient, even though in executing them he should have acted in violation of the orders and
instructions of the agent or shipowner; but the latter shall have a right of action against the
captain to recover damages.

ARTICLE 656. If in the charter party the time in which the loading and unloading is to take
place is not stated, the customs of the port where these acts take place shall be observed. After
the period stipulated or the customary one has passed, and should there not be in the freight

117
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

contract an express clause fixing the indemnification for the delay, the captain shall be entitled to
demand demurrage for the usual 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 another one at his expense, in good condition, to take the cargo to its
destination, for which purpose he shall be obliged to look for a vessel not only at the port of
arrival but in the other ports within a distance of 150 kilometers.

If the captain should not furnish a vessel to take the cargo to its destination, either through
indolence or malice, the freighters, after a demand of the captain to charter a vessel within an
unextendible period, may charter one and apply to the judicial authority requesting that the
charter party which may have been made be immediately approved.

The same authority shall judicially compel the captain to confirm the charter made by the
shippers for his account and under his responsibility.

If the captain, notwithstanding his efforts, should not find a vessel to charter, he shall deposit the
cargo at the disposal of the freighters, to whom he shall communicate the facts on the first
opportunity presenting itself, the charter being regulated in such cases by the distance covered by
the vessel, there being no right to any indemnification whatsoever.

ARTICLE 658. The freight shall be paid according to the conditions stipulated in the contract,
and should they not be specific, or should they be ambiguous, the following rules shall be
observed:

1. If the vessel has been chartered by months or by days, the freight shall begin to run
from the day the loading of the vessel is begun.

2. In charters made for a fixed period, the freight shall begin from that very day.

3. If the freight is charged according to weight, the payment shall be made according to
gross weight, including the containers, such as barrels or any other objects containing the cargo.

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 requirements, shall pay freight. t

The price of this merchandise shall be fixed according to the success of the voyage, namely:

118
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 said merchandise would have
brought in the sale.

The same rule shall be observed in the payment of the freight which shall be in full if the vessel
arrives at her destination, and in proportion to the distance covered if she should be lost
beforehand.

ARTICLE 660. Merchandise jettisoned for the common safety shall not pay freight; but its
value shall be considered as general average, and shall be computed in proportion to the distance
covered when it was jettisoned.

ARTICLE 661. Neither shall merchandise which was lost by reason of shipwreck or stranding
pay freight, nor that seized by pirates or enemies.

If the freight should have been paid in advance, it shall be returned, unless there was an
agreement to the contrary.

ARTICLE 662. If the vessel or the merchandise should be recovered, or should the goods of the
shipwreck be picked up, the freight corresponding to the distance covered by the vessel
transporting the cargo shall be paid; and should the vessel be repaired and transport said
merchandise to the port of destination, the full freight shall be paid, without prejudice to what
may be due by reason of the average.

ARTICLE 663. Merchandise which is damaged or reduced on account of its own defects or bad
quality and condition of the packing, or by reason of an accidental case, shall pay full freight,
and as was 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 freight fixed in the contract for
the same.

119
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 665. The cargo shall be specially liable for the payment of the freight expenses, and
duties arising therefrom, which must be reimbursed by the shippers, as well as for the part of the
general average which may be due, but it shall not be legal for the captain to delay unloading on
account of delay in complying with this obligation.

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
freight, expenses, and averages due him, reserving the right to demand the balance due him
therefor if the proceeds of the sale should not have sufficed to cover his credit.

ARTICLE 667. The goods loaded shall be liable in the first place for their freight and expenses
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 case of
bankruptcy of the freighter or consignee should occur.

This right can not be 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.

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 the
merchandise in so far as necessary to pay the freight and other expenses on the same.

The sale shall likewise take place when the goods deposited run the risk of deteriorating or by
reason of their condition or for other reasons the expenses of preservation and custody should be
disproportionate to the value thereof.

2. Rights and Obligations of Owners

ARTICLE 669. The owners or the captain shall observe in charter parties the capacity of the
vessel or that expressly designated in the registry of the same, a difference greater than 2 per cent
between that stated and her true capacity not being permissible.

If the owners or the captain should contract to carry a greater amount of cargo than the vessel can
hold, in view of her tonnage, they shall indemnify the freighters whose contracts they do not

120
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

fulfill for the losses they may have caused them by reason of their default, according to the cases,
viz:

If the vessel has been chartered by one freighter 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 charter should be reduced in proportion to the cargo 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.

If, on the contrary, there should be several charter parties, and by reason of the want of space all
the cargo contracted for can not be received, 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 place corresponding to them in the order of the dates of
their contracts.

Should there be no priority, the charterers may load, if they wish, pro rata of the amounts of
weight or space they may have engaged, and the person from whom the vessel was chartered
shall be obliged to indemnify them for the loss and damage.

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
can 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 being defrayed by
him, as well as the increase, should there be any, in the price of the charter. Should he not be able
to make this change, the voyage shall be undertaken at the time agreed upon; and should no time
have been fixed, within fifteen days from the time of beginning to load, should nothing to the
contrary have been 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 freighter shall have a right to demand that the vessel put to sea
with the cargo she may have on board.

ARTICLE 671. After three-fifths of the vessel is loaded, the person from whom she is chartered
can not, without the consent of the charterers or freighters 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 the person who did not consent to the
change.

121
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 672. If the vessel has been chartered in whole, the captain can not, without the
consent of the person chartering her, accept freight from any other person; and should he do so,
said charterer may oblige him to unload it and require him to indemnify him for the losses
suffered thereby.

ARTICLE 673. The person from whom the vessel is chartered shall be liable for all the losses
caused 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 to put to sea at the proper time through a
notary or judicially.

ARTICLE 674. If the charterer should carry to the vessel more freight 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 freighters, but if in order to stow said freight it should be
necessary to stow it in such manner as to throw the vessel out of trim the captain must refuse it or
unload it at the expense of its owner.

The captain may likewise, before leaving the port, unload the merchandise placed on board
clandestinely, or transport it, if he can do so and keep 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 await his instructions, and in the
meantime the lay days agreed upon shall begin to run, or those allowed by custom in the port,
unless there is a special 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 for her return.

122
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 676. The captain shall lose the freightage and shall indemnify the charterers if the
latter should prove, even against the certificate of inspection, should one have taken place 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 be enforced if the captain should not have any
instructions from the charterer, and a declaration of war or a blockade should take place during
the voyage.

In such case the captain shall be obliged to make the nearest safe and neutral port, and request
and await orders from the freighter; and the expenses incurred and salaries earned during the
detention shall be paid as general average.

If, by orders of the freighter, the cargo should be discharged at the port of arrival, the freight for
the voyage out shall be paid in full.

ARTICLE 678. If the time necessary, in the opinion of the judge or court, in which to receive
orders from the freighters should have elapsed without the captain having received any
instructions, the cargo shall be deposited, and it shall be liable for the payment of the freight and
expenses incurred by reason of the delay which shall be paid from the proceeds of the part first
sold.

3. Obligations of Charterers

ARTICLE 679. The charterer of an entire vessel may subcharter the whole or part thereof for
the amounts he may consider most convenient, without the captain being allowed to refuse to
receive on board the freight delivered by the second charterers, provided the conditions of the
first charter are not changed, and that the person from whom the vessel is chartered be paid the
full price agreed upon even though the full cargo is not embarked, with the limitation established
in the next article.

ARTICLE 680. A charterer who does not make up the full cargo he bound himself to ship shall
pay the freightage of the amount he fails to ship, if the captain did not take other freight to make
up the cargo of the vessel, in which case he shall pay the first charterer the difference should
there be any.

123
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 681. If the charterer should ship goods different from those indicated 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 shipped should have been for the purpose of illicit
commerce, and was 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 agreed, they
can not demand any indemnity whatsoever of the charterer for the damage caused the vessel.

ARTICLE 683. In case of making a port to repair the hull, machinery, or equipment of the
vessel, the freighters must wait until the vessel is repaired, being permitted to unload her at their
own expense should they deem it advisable.

If, for the benefit of the cargo subject to deterioration, the freighters or the court, or the consul, or
the competent authority in a foreign land should order the merchandise to be unloaded, the
expenses of loading and unloading 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 freight, the expenses of the stop made at
his request, and the losses and damages caused the other freighters, should there be any.

ARTICLE 685. In charters for transportation of general freight any of the freighters may unload
the merchandise before the beginning of the voyage, by paying one-half the freight, the expense
of stowing and restowing the cargo, and any other damage which may be caused the other
shippers.

124
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 freight due and the other expenses to
which he may be liable for said cargo.

The primage must be paid in the same proportion and at the same time as the freight, all the
changes and modifications to which the latter should be subject also governing the former.

ARTICLE 687. The charters and freighters can not abandon merchandise damaged on account
of the inherent vice of the goods or by reason of an accidental case, for the payment of the freight
and other expenses.

The abandonment shall be proper, however, if the cargo should consist of liquids and should they
have leaked out, there not remaining in the containers more than one-quarter of their contents.

4. Total or Partial Rescissions of Charter Parties

ARTICLE 688. A charter party may be annulled at the request of the charterer:

1. If before loading the vessel he should abandon the charter, paying half of the
freightage agreed upon.

2. If the capacity of the vessel should not agree with that stated in the certificate of the
tonnage, or if there is an error in the statement of the flag under which she sails.

3. If the vessel should not be placed at the disposal of the charterer within the period and
in the manner agreed upon.

4. If, after the vessel has put to sea, she should return to the port of departure, on account
of risk of pirates, enemies, or bad weather, and the freighters 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 losses he may suffer.

In the fourth case the person from whom the vessel was chartered shall have a right to the
freightage in full for the voyage out.

If the charter should have been made by the months, the charterers shall pay the full freightage
for one month, if the voyage were to a port in the same waters, and two months, if the voyage
were to a port in different waters.

125
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

From one port to another of the Peninsula and adjacent islands, the freightage for one month only
shall be paid.

5. If a vessel should make a port during the voyage in order to make urgent repairs and
the freighters should prefer to dispose of the merchandise.

When the delay does not exceed thirty days, the freighters shall pay the full freight for the
voyage out.

Should the delay exceed thirty days, they shall only pay the freight 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 for the lay
days and extra lay days elapsed.

2. If the person from whom the vessel was chartered should sell her before the charterer
has begun to load her and the purchaser should load her 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 her 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 action 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 going to sail.

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 the merchandise of the vessel at the said port.

126
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 agent.

5. The impossibility of the vessel to navigate, without fault of the captain or agent.

The unloading shall be made for the account of the charterer.

ARTICLE 691. If the vessel can not put to sea on account of the closing of the port of departure,
or any other temporary cause, the charter shall be in force without any 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 the reloading should continue after the reason 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 freight 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.

5. Passengers on Sea Voyages

ARTICLE 693. Should the passage price not have been agreed upon, the judge or court shall
summarily fix it, after a statement 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.

127
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 695. The right to passage, if issued to a specified person, can 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 passage agreed upon.

If there should be understood in the price stipulated the expenses of subsistence, the judge, or
court, hearing experts if he considers it necessary, shall fix the amount to be paid the vessel.

Should another passenger be received in the place of the deceased, nothing shall be paid by said
heirs.

ARTICLE 697. If before beginning the voyage it should be suspended through the sole fault of
the captain or agent, the passengers shall be entitled to have their passage refunded and to
recover for losses and damages; but if the suspension was due to an accidental cause, or to force
majeure, or to any other cause beyond the control of the captain or agent, the passengers shall
only be entitled to the return of the passage money.

ARTICLE 698. In case a voyage already begun should be interrupted the passengers shall be
obliged only to pay the passage in proportion to the distance covered, and shall not be entitled to
recover for losses and damages if the interruption is due to an accidental cause or to force
majeure, but have a right to indemnity if the interruption should have been caused by the captain
exclusively. If the interruption should be by reason of the disability of the vessel, and the
passenger should agree to await her repair, he can not be required to pay any increased price of
passage, but his living expenses during the delay shall be for his own account.

In case the departure of the vessel is delayed the passengers have a right to remain on board and
to be furnished with food for the account of the vessel, unless the delay is due to an accidental
cause or to force majeure. If the delay should exceed ten days, the passengers who request it
shall be entitled to the return of the passage; and if it were due exclusively to the captain or agent
they may furthermore demand indemnity for losses and damages.

A vessel which is exclusively destined 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 her itinerary.

128
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 699. After the contract has been rescinded, before or after the commencement of the
voyage, the captain shall have a right to claim payment for what he may have furnished the
passengers.

ARTICLE 700. In all that relates to the preservation of order and police on board the vessel the
passengers shall conform to the orders given by the captain, without any distinction whatsoever.

ARTICLE 701. The convenience or the interest of the passengers shall not obligate nor
empower the captain to stand in shore or enter places which may take the vessel out of her
course, nor to remain in the ports he must or is under the necessity of touching for a period
longer than that required for the business of the navigation.

ARTICLE 702. In the absence of an agreement to the contrary, it shall be understood that the
maintenance of the passengers during the voyage is included in the price of the passage; but
should said maintenance be for the account of the latter, the captain shall be under the obligation,
in case of necessity, to furnish them the victuals at a reasonable price necessary for their
maintenance.

ARTICLE 703. A passenger shall be looked upon as a shipper in so far as the goods he carries
on board are concerned, and the captain shall not be liable for what said passenger may preserve
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 price of the passage and expenses of
maintenance, may retain the goods belonging to the passenger, and in case of the sale of the
same he shall be given preference over the other creditors, acting in the same way as in the
collection of freight.

ARTICLE 705. In case of the death of a passenger during the voyage the captain is authorized,
with regard to the body, to take the steps required by the circumstances, and shall carefully take

129
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

care of the papers and goods there 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.

6. Bills of Lading

ARTICLE 706. The captain and the freighter of the vessel are obliged to draft the bill of lading,
in which there 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 to order.

6. The quantity, quality, number of packages, and marks of the merchandise.

7. The freight and the primage stipulated.

The bill of lading may be issued to bearer, to order, or in the name of a specific person, and must
be signed within twenty-four hours after the cargo has been received on board, the freighter
being able to request the unloading thereof at the expense of the captain should he not sign it,
and in every case indemnity for the losses and damages suffered thereby.

ARTICLE 707. Four true copies of the original bill of lading shall be made, all of which shall be
signed by the captain and by the freighter. Of these copies the freighter shall keep one and send
another to the consignee; the captain shall take two, one for himself and another for the agent.

There may, furthermore, be made as many copies of the bill of lading as may be considered
necessary by the persons interested; but when they are issued to order or to the bearer there shall
be stated in all the copies, be they either of the first four or of the subsequent ones, the
destination of each one, stating whether it is for the agent, for the captain, for the freighter, or for
the consignee. If the copy sent to the latter should be duplicated there must be stated in said
duplicate this fact, and that it is not valid except in case of the loss of the first one.

130
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 708. The bills of lading issued to the bearer sent to the consignee shall be
transferable by the actual delivery of the instrument; and by virtue of an indorsement, those
issued to order.

In either case, the person to whom the bill of lading is transferred shall acquire all the rights and
actions of the assignor 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 underwriters,
proof to the contrary being reserved by the latter.

ARTICLE 710. Should the bills of lading not agree, and there should not be observed any
correction or erasure in any of them, those possessed by the freighter or consignee signed by the
captain shall be proof against the captain or agent in favor of the consignee or freighter; and
those possessed by the captain or agent signed by the freighter shall be proof against the freighter
or consignee in favor of the captain or agent.

ARTICLE 711. The legitimate holder of a bill of lading who does not present it to the captain of
the vessel before her unloading, obliging the latter thereby to unload it and place it in deposit,
shall be liable for the cost of warehousing and other expenses arising therefrom.

ARTICLE 712. The captain can not himself change the destination of merchandise. In admitting
this change at the instance of the freighter, he must first take up the bills of lading he may have
issued, under the penalty of being liable for the cargo to the legitimate holder of the same.

ARTICLE 713. If before delivering the cargo a new bill of lading should be demanded of the
captain, it being alleged that the previous ones are not presented on account of their loss or for
any other sufficient cause, he shall be obliged to issue it, provided 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, when the bills of lading referred to
therein are in question, under the penalty otherwise to be liable for said cargo if not properly
delivered through his fault.

131
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 714. If before the vessel puts to sea the captain should die or should discontinue in
his position through any accident, the freighters shall have a right to demand of the new captain
the ratification of the first bills of lading, and the latter must do so, provided all the copies
previously issued be presented or returned to him, and it should appear from an examination of
the cargo that they are correct.

The expenses arising from the examination of the cargo shall be defrayed by the 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, according to the case, for the delivery of the cargo and the payment of the freightage
and proper expenses.

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 delivering
the same, the person presenting the copy first issued, with the exception of the case when the
latter one was issued on account of the loss of the first one, and if they are held by different
persons.

In such case, as well as when only second or 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 that through him it may be delivered 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 subalterns for partial deliveries of
the cargo which may have been made.

ARTICLE 718. After the cargo has been delivered, the bills of lading which the captain signed
shall be returned to him, or at least the copy by reason of which the delivery is made, with the
receipt for the merchandise mentioned therein.

The delay on the part of the consignee shall make him liable for the damages which may be
caused the captain thereby.

132
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

SECTION II Loans on Bottomry and Respondentia

ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the
repayment of the sum loaned and the premium stipulated, under any condition whatsoever,
depends on the safe arrival in port of the goods on which it is made, or of their value in case of
accident.

ARTICLE 720. Loans on bottomry or respondentia may be executed:

1. By means of a public instrument.

2. By means of a bond signed by the contracting parties and the broker who took part
therein. t

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 commercial registry, without which
requisites the credits originating from the same 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 commercial registry of the port of registry of the vessel before eight days have
elapsed from the date of her arrival. If said eight days should elapse without the record having
been made in the commercial registry, the contracts made during the voyage of a vessel shall not
have any effect with regard to third persons, except from the day and date of their entry.

In order that the bonds of the contracts celebrated in accordance with No. 2 may have legal force,
they must conform to the registry of the broker who took part therein. In those celebrated in
accordance with No. 3 the acknowledgment of the signature must precede.

Contracts which are not reduced to writing shall not be the basis for a judicial action.

ARTICLE 721. In a bottomry or respondentia bond there 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 domicile of the person giving and of the person receiving
the loan.
133
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 for which the risk is run.

ARTICLE 722. The bonds may be issued to order, in which case they shall be transferable by
indorsement, and the assignee shall acquire all the rights and run all the risks corresponding to
the indorser.

ARTICLE 723. Loans may be made in goods and in merchandise, their value being fixed in
order to determine the amount 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 cargo.

If the loan is constituted on the hull of the vessel, there shall be understood as also subject to the
liability of the loan, the rigging, equipment and other goods, provisions, fuel, steam engines, and
the freight earned during the voyage subject to the loan.

If the loan is made on the cargo, all that constitutes the same shall be subject to the repayment;
and if on a particular object of the vessel or of the cargo, the object exclusively and specifically
mentioned only shall be liable.

ARTICLE 725. No loans can be made on the salaries of the crew, nor on the profits which it is
expected to earn.

134
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 726. If the lender should prove that he loaned a larger amount than the value of the
article liable for the bottomry loan, by reason of fraudulent measures employed by the borrower
the loan shall only be valid for the amount at which said object is appraised by experts.

The surplus principal shall be returned with legal interest for the whole period of the duration of
the disbursement.

ARTICLE 727. If the full amount of the loan contracted to load the vessel should not be made
use of for the cargo, the surplus shall be returned before clearing.

The same procedure shall be observed with regard to the goods taken as a loan if they could not
all have been 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 of the latter which belongs to the captain, if the other owners or
their agents should not have given their express authorization thereto 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 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 any risk, the
contract shall be considered an ordinary loan, the borrower being under the obligation to return
the principal and interest at the legal rate, if the interest stipulated should not have been 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 by the inverse order to that of their dates.

The loans for the last voyage shall have preference over prior ones.

Should several loans have been made at a port made under stress and for the same purpose, all of
them shall be paid pro rata.

135
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 731. The actions which may be brought by the lender shall be extinguished by the
absolute loss of the goods on which the loan was made, if said loss arose from an accident of the
sea at the time and during the voyage designated in the contract, and should it be proven that the
cargo was on board; but this shall not take place if the loss were caused by the inherent defect of
the thing or through the fault or malice of the borrower, or through barratry on the part of the
captain, or if it were caused by damages suffered by the vessel as a consequence of being
engaged in contraband, or if it arose through loading the merchandise on a vessel other than that
designated in the contract, unless this change should have been made by reason of force majeure.

The proof of the loss is incumbent upon the person who received the loan, as well as the proof of
the existence in the vessel of the goods declared to the lender as the object thereof.

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 was
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 it not have been stated in the contract for what period the lender runs the
risk, the said risk 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 it is loaded on the shore or wharf of the port of shipment until
unloaded in the port of consignment.

ARTICLE 734. In case of shipwreck the amount liable for the return of the loan shall be
reduced to the proceeds of the goods saved, after the costs of the salvage have been deducted.

If the loan were on the vessel or any of her parts, the freightage earned during the voyage for
which said loan was contracted shall also be liable for its payment, as far as it is available.

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 shall be divided, in case

136
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

of shipwreck, between the lender and the underwriter, in proportion to the legitimate interest of
each one, taking into consideration, for this purpose only, the principal with relation 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 the repayment of the principal or premiums of the
loan, the former only shall bear legal interest.

TITLE IV Risks, Damages and Accidents of Maritime Commerce

SECTION I 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 navigation for the
preservation of the vessel or cargo, or both.

2. All damages or deterioration the vessel may suffer from the time she puts to sea from the port
of departure until she casts anchor in the port of destination, and those suffered by the
merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of
consignment.

ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and
ports, lighterage and towage, anchorage dues, 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 expenses common to navigation shall be considered ordinary expenses to
be defrayed by the shipowner, unless there is a special agreement to the contrary.

ARTICLE 808. Averages shall be:

1. Simple or particular.

2. General or gross.

ARTICLE 809. Simple or particular averages shall be, as a general rule, all the expenses and
damages caused to the vessel or to her cargo which have not redounded to the benefit and
common profit of all the persons interested in the vessel and her cargo, and especially the
following:

137
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. The damages suffered by the cargo from the time of its embarkation until it is
unloaded, either on account of the nature of the goods or by reason of an accident at sea or force
majeure, and the expenses incurred to avoid and repair the same.

2. The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the
same causes and reasons, from the time she puts to sea from the port of departure until she
anchored in the port of destination.

3. The damages 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 should be detained or embargoed
by a legitimate order or force majeure, if the charter should have been 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 cover any other requirement of the
vessel against which the proper amount shall be charged.

7. The victuals and wages of the crew during the time the vessel is in quarantine.

8. The damage suffered by the vessel or cargo by reason of an impact or collision with
another, if it were accidental and unavoidable. If the accident should occur through the fault or
negligence of the captain, the latter shall be liable for all the damage caused.

9. Any damage suffered by the cargo through the faults, 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 freight.

ARTICLE 810. The owner of the goods which gave rise to the expense or suffered the damage
shall bear the simple or particular averages.

ARTICLE 811. General or gross averages shall be, as a general rule, all the damages and
expenses which are deliberately caused in order to save the vessel, her cargo, or both at the same
time, from a real and known risk, and particularly the following:

138
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. The goods or cash invested in the redemption of the vessel or cargo captured by
enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained
during the time the arrangement or redemption is taking place.

2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the
cargo, or to the crew, and the damage suffered through said act by the goods kept.

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 her 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 through the opening made in the vessel
in order to drain her and prevent her sinking.

6. The expenses caused through floating a vessel intentionally stranded for the purpose of
saving her.

7. The damage caused to the vessel which it is necessary to break open, scuttle, or smash
in order to save the cargo.

8. The expenses of curing and maintaining the members of the crew who may have been
wounded or crippled in defending or saving the vessel.

9. The wages of any member of the crew detained 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
it should be embargoed or detained by force majeure or by order of the Government, or in order
to repair the damage caused for the common good.

11. The loss suffered in the value of the goods sold at arrivals under stress in order to
repair the vessel because 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.

139
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross
average, a previous resolution of the captain, adopted after deliberation with the sailing mate and
other officers of the vessel, and with a hearing of the persons interested in the cargo who may be
present, shall be required.

If the latter shall object, and the captain and officers, or a majority, or the captain, if opposed to
the majority, should consider certain measures necessary, they may be executed under his
liability, without prejudice to the freighters exercising their rights against the captain before the
judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of skill,
or negligence.

If the persons interested in the cargo, being on the vessel, should not be heard, they shall not
contribute to the gross average, which contribution shall be paid by the captain, unless the
urgency of the case should be such that the time necessary for previous deliberation was lacking.

ARTICLE 814. The resolution adopted to cause the damages which constitute a general average
must necessarily be entered in the log book, stating the motives and reasons therefor, the votes
against it, and the reasons for the disagreement should there be any, and the irresistible and
urgent causes which moved 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 by the captain and
by the officers of the vessel.

In the minutes and after the resolution there shall be stated in detail all the goods cast away, 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 twenty-four hours after his arrival, and to ratify it immediately by an oath.

ARTICLE 815. The captain shall supervise 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 handling of the vessel or
damage her, preferring, if possible, the heaviest ones and those of least utility and value.

2. Those in the hold, always beginning with those of the greatest weight and smallest value, to
the amount and number absolutely indispensable.

140
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 in so far 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 made up before the departure, in accordance
with the first paragraph of Article 612.

ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate her entry
into a port or roadstead, part of her 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 has originated from a gross
average, the amount thereof being distributed between the entire vessel and cargo which caused
the same.

If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no
liability can 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 II Arrivals Under Stress

ARTICLE 819. If the captain during the navigation should believe that the vessel can not
continue the voyage 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 her to
navigate, he shall assemble the officers and shall call 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 reasons should be considered well founded, it shall
be decided to make the nearest and most convenient port drafting and entering in the log book
the proper minutes, which shall be signed by all.

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. The arrival under stress shall not be considered legal in the following cases:

141
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

1. If the lack of provisions should arise from the failure to take the necessary provisions
for the voyage, according to usage and custom, 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 justifiable facts.

3. If the injury to the vessel should have been caused by reason of her not being repaired,
rigged, equipped, and arranged in a convenient manner for the voyage, or by reason of some
erroneous order of the captain.

4. Whenever malice, negligence, want of foresight, or lack of skill on the part of the
captain is the reason for the act causing the damage.

ARTICLE 821. The expenses caused by the arrival under stress shall always be for the account
of the shipowner or agent, but the latter shall not be liable for the damage which may be caused
the shippers by reason of the arrival under stress, provided the latter is legitimate.

Otherwise, the shipowner or agent and the captain shall be jointly liable.

ARTICLE 822. If in order to make repairs to the vessel or because there should be danger of the
cargo suffering damage it should be necessary to unload, the captain must request authorization
of the judge or court of competent jurisdiction to lighten the vessel, and do so with the
knowledge of the person interested or representative of the cargo, should there be one.

In a foreign port, it shall be the duty of the Spanish * consul, where there is one, to give the
authorization.

In the first case, the expenses shall be defrayed by the ship agent or owner, and in the second,
they shall be for the account of the owners of the merchandise, for whose benefit the act took
place.

If the unloading should take place for both reasons, the expenses shall be defrayed in proportion
to the value of the vessel and that of the cargo.

ARTICLE 823. The care and preservation of the cargo which has been unloaded shall be in
charge of the captain, who shall be responsible for the same, except in cases of force majeure.

142
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 judge or court of
competent jurisdiction or 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 the procedure, under the penalty of
answering to the shipper for the price the merchandise would have brought if it should have
arrived at the port of its destination in good condition.

ARTICLE 825. The captain shall answer for the damages caused by his delay, if the reason for
the arrival under stress having ceased, he should not continue the voyage.

If the reason for said arrival should have been the fear of enemies, privateers, or pirates, before
sailing, a discussion and resolution of a meeting of the officers of the vessel and persons
interested in the cargo who may be present shall take place, in accordance with the provisions
contained in Article 819.

SECTION III Collisions

ARTICLE 826. If a vessel should collide with another through 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.

ARTICLE 827. If both vessels may be blamed for the collision, each one shall be liable for his
own damages, and both shall be jointly responsible for the losses and damages suffered by their
cargoes.

ARTICLE 828. The provisions of the foregoing article are applicable to the case in which it can
not be decided which of the two vessels was the cause of the collision.

ARTICLE 829. In the cases above mentioned the civil action of the owner against the person
liable for the damage is reserved, as well as the criminal liabilities which may be proper.

143
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 830. If a vessel should collide with another by reason of an accident or through force
majeure, each vessel and her cargo shall be liable for their own damage.

ARTICLE 831. If a vessel should be forced to collide with another one by a third vessel, the
owner of the third vessel shall indemnify for 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 in her immediate vicinity, causing them
damage, the injury occasioned shall be looked upon as particular average to the vessel run into.

ARTICLE 833. A vessel shall be presumed as lost thru a collision which, upon being run into,
sinks immediately, and also any vessel which is obliged to make a port to repair the damages
caused by the collision should be lost during the voyage, or should be obliged to be stranded in
order to be saved.

ARTICLE 834. If the vessels colliding 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 can
not be admitted if a protest or declaration is not presented within twenty-four hours to the
competent authority of the point where the collision took place, or that of the first port of arrival
of the vessel, if in Spain, * and to the consul of Spain * if it should have occurred in a foreign
country.

ARTICLE 836. In so far as the damages caused to persons or to the cargo are concerned, the
absence of a protest can not prejudice the persons interested who were not on board or were not
in a condition to make known their wishes.

144
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 837. The civil liability contracted by the shipowners in the cases prescribed in this
section, shall be understood as limited to the value of the vessel with all her appurtenances and
all the freight 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 occur between Spanish * vessels in foreign waters, or if it
should take place in open waters, and the vessels should make a foreign port, the
Spanish * consul in said port shall hold a summary investigation of the accident, forwarding the
proceedings to the captain-general of the nearest department * for continuation and conclusion.

SECTION IV 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 of the wreck
which may be saved belonging to them in the same proportion.

ARTICLE 841. If the wreck or stranding should arise through the malice, negligence, or lack of
skill of the captain, or because the vessel put to sea insufficiently repaired and prepared, the
owner or the freighters may demand indemnity of the captain for the damages caused to the
vessel or 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 liable 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 to any other obligation, if the
merchandise should be sold.

145
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 843. If several vessels navigate under convoy, and any of them should be wrecked,
the cargo saved shall be distributed among the rest in the proportion to the amount each one can
receive.

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 complaint 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.

Should it not be possible to transfer to the other vessels the entire cargo of the one wrecked, the
goods of the highest value and smallest volume shall be saved first, the designation thereof being
made by the captain, in concurrence with 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
intervention, at the disposal of their legitimate owners.

In case of changing his course, should he be able to unload them at the port to which they were
consigned, the captain may make said port if the shippers or supercargoes present consent
thereto, as well as the officers and passengers of the vessel; but he can not do so, even with said
consent, in time of war or when the port is difficult to make and dangerous.

All the expenses of this arrival shall be defrayed by the owners of the cargo, as well as the
payment of the freight, which, taking into consideration the circumstances of the case, are fixed
by agreement or by a judicial decision.

ARTICLE 845. If there should not be on the vessel any person interested in the cargo to pay the
expenses and freight corresponding to the salvage, the judge or court of competent jurisdiction
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 the period of one year it should not have been possible to
ascertain who are its legitimate owners.

In both cases the proceedings regarding publicity and formalities prescribed in Article 579 shall
be observed, and the net proceeds of the sale shall be deposited in a safe place, in the judgment
of the judge or court, in order to be turned over to the legitimate owners thereof.

146
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

TITLE V Proof and Liquidation of Averages

SECTION I Provisions Common to All Kinds of Averages

ARTICLE 846. The persons 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.

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 take place in the port of unloading should it be a Spanish * port.

3. Should the average have occurred outside of the waters under the jurisdiction of the
Philippines or the cargo should have been sold in a foreign port by reason of an arrival under
stress, the liquidations shall be made in the port of arrival.

4. If the average should have occurred near the port of destination, so that said port can
be made, the proceedings treated of in Rules 1 and 2 shall be held there.

ARTICLE 847. In case of making the liquidation of the averages privately by virtue of
agreement, as well as when a judicial authority takes part therein 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 not have a legitimate representative, the liquidation shall be made
by the consul in a foreign port, and where there is none, by the judge or court of competent
jurisdiction, according to the laws of the country, and for the account of the proper person.

When the representative is a person well known in the place where the liquidation takes place,
his intervention shall be admitted and produce legal effects, even though he be authorized only
by a letter of the shipowner, freighter, or underwriter.

ARTICLE 848. Claims for averages shall not be admitted if they do not exceed 5 percent of the
interest which the claimant may have in the vessel or cargo if it is gross average, and 1 percent of
the goods damaged if particular average, deducting in both cases the expenses of appraisal,
unless there is an agreement to the contrary.

147
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

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 the period of
three-days has elapsed, 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 or the cargo, or of both, should take place on the same voyage, the expenses and
damages corresponding to each one shall be determined separately in the port where the repairs
are made or where the cargo is discharged, or sold, or the merchandise is benefited.

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 the benefiting of the merchandise, that they separate and detail exactly in their
appraisements or estimates and accounts all the expenses and damages belonging to each
average, and in those of each average those corresponding to the vessel and to the cargo, stating
also separately whether there are or not any damages proceeding from the nature of the goods,
and not by reason of a sea accident; and in case there should be expenses common to the
different averages and to the vessel and her cargo, there must be calculated the amount
corresponding to each and stated distinctly.

SECTION II 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 call all the persons 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 this shall be done should the persons interested agree.

Should an agreement not be possible, the captain shall apply to the judge or court of competent
jurisdiction, who shall be the one of the port where these proceedings are to be held in
accordance with the provisions of this Code, or to the consul of Spain, * should there be one, and
otherwise to the local authority when they are to be held in a foreign port.

148
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 852. If the captain should not comply with the provisions contained in the foregoing
article, the shipowner or agent or the freighters 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 judge
or court, before the acceptance, an examination of the vessel and of the repairs required shall be
made, as well as an estimate of their cost, separating these losses and damages from those arising
from the natural vice of the thing.

The experts shall also declare whether the repairs can be made immediately, or whether it is
necessary to unload the vessel to examine and repair her.

With regard to the merchandise, if the average should be visible at a mere glance, the
examination thereof must be made before it is delivered. Should it not be visible at the time of
unloading, said examination may be held after the delivery provided it is done within forty-eight
hours from the unloading and without prejudice to the other proofs which the experts may deem
necessary.

ARTICLE 854. The appraisement of the goods which are to contribute to the gross average, and
that of those which constitute the average, shall conform to the following rules:

1. The merchandise saved which is to contribute to the payment of the gross average shall
be valued at the current price thereof at the port of unloading, deducting the freights, customs
duties, and charges for unloading, as may appear from a material inspection of the same, not
taking into consideration the bills of lading, unless there is an agreement to the contrary.

2. If the liquidation is to take place in the port of sailing, the value of the merchandise
loaded shall be fixed by the purchase price, including the expenses until they are put on board,
excluding the insurance premium.

3. If the merchandise should be damaged, it shall be appraised at its true value.

4. If the voyage should be interrupted, the merchandise having been sold in a foreign port
and the average can not be estimated, there shall be taken as the contributing capital the value of
the merchandise in the port of arrival, or the net proceeds obtained at the sale thereof.

5. Merchandise lost, which should constitute the gross average, shall be appraised at the
value merchandise of its kind may have in the port of unloading, provided its kind and quality
appears in the bill of lading; and should this not be the case, the invoices of the purchase issued
in the port of shipment shall be taken as a basis, adding to its value the expenses and freights
subsequently arising.

149
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

6. The masts cut down, the sails, cables, and other equipment of the vessel rendered
useless for the purpose of saving her, 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 in regard to anchors and chains.

7. The vessel shall be appraised at her real value in her condition at the time.

8. The freights 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 it be saved; but there shall be no right to indemnity if it should be lost by
reason of being jettisoned for general safety, except when the marine ordinances allow its
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 freighters for the loss of the jettison,
if the storage on the upper deck took place without the consent of the latter.

ARTICLE 856. Provisions and munitions of war which the vessel may have on board shall not
contribute to the gross average, nor the clothing used by the captain, officers, and crew.

There shall also be excepted the clothing used by the freighters, supercargoes, and passengers
who may be on board at the time of the jettison.

Neither shall the goods jettisoned contribute to the payment of the gross averages which may
occur to those saved in a different and subsequent risk.

ARTICLE 857. After the appraisement of the goods saved has been concluded by the experts, as
well as that of the goods lost which constitute the gross average, and after the repairs have been
made to the vessel, should any have to be made, and in such case after the approval of the
accounts of the same by the persons interested or by the judge or court, the entire record shall be
turned over to the liquidator appointed, in order that he may proceed with the distribution of the
average.

150
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 858. In order to effect the liquidation the liquidator shall examine the sworn
statement of the captain, comparing it, if necessary, with the log book and all the contracts which
may have been made between 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 this procedure which might injure the rights of the persons interested or affect the
liability of the captain, he shall call attention thereto in order that it be corrected, if possible, and
otherwise he shall include it in the preliminaries 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 a statement of experts.

3. The 50 per cent of the amount of the freight, 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.

ARTICLE 859. The underwriters of the vessel, of the freight, and of the cargo shall be obliged
to pay for the indemnity of the gross average in so far as is required of each one of these objects
respectively.

ARTICLE 860. If, notwithstanding the jettison of the merchandise, breakage of masts, ropes,
and equipment, the vessel should be lost running said risk, no contribution whatsoever by reason
of gross average shall be proper.

The owners of the goods saved shall not be liable for the indemnity of those jettisoned, lost, or
damaged.

ARTICLE 861. If, after the vessel having been saved from the risk which gave rise to the
jettison, she 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 their condition at the time, deducting the expenses incurred in
saving them.

151
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 862. If, notwithstanding the saving of the vessel and of her 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 indemnity for the average unless the loss
should occur by an act of the owner or consignee.

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 other persons
interested in the cargo the amount he may have received, deducting the damage caused by the
jettison and the expenses incurred in their recovery.

In the latter case, the amount returned shall be distributed between 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 distribution, and he shall be liable to the owners of the goods averaged
for the losses they suffer through his delay or negligence.

ARTICLE 867. If the contributors should not pay the amount of the assessment within the third
day after having been requested to do so, the goods saved shall be attached, at the request of the
captain, and shall be sold to cover the payment.

152
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ARTICLE 868. If the persons 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.

SECTION III Liquidation of Ordinary Averages

ARTICLE 869. The experts which the judge or court or the persons interested may appoint,
according to the cases, shall proceed with the appraisement and examination of the averages in
the manner prescribed in Article 853 and in Article 854, Rules 2 to 7, in so far as they are
applicable.

REFERENCE:
-Code of Commerce
-Articles 349-379 Overland Transport
-Articles 573-736 Maritime Commerce

153
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ACTIVITY FOR MODULE 5

1. What is the responsibilities of the buyers and sellers of a vessel?

2. What are the liabilities of the owner and the ship agent?

3. Explain the limited liability rule

4. What is the exception to the limited liability rule?

5. Identify and differentiate the charter parties

6. Discuss the Loan on Bottomry

7. Explain loan on Respondantia

8. Create a table and differentiate two types of average

9. Give atleast 5 examples of each type of average

10. Make a flowchart explaining the procedures in incurring general average

11. What do you mean by the term “Jettison”

12. Enlist the procedures for valid Jettison

13. When arrival in distress not considered as legal?

14. Who shall bear the liability for expenses if arrived under distress? Provide legal basis.

15. What are the types of collision? Explain

154
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Title: Customs Operations and Cargo Handling

Module No. 6

I. Introduction
This module will dig in the risk, responsibilities and liabilities, rights and immunities,
surrender of rights and immunities and increase of responsibilities and liabilities and lastly
the special conditions available for the carrier.

II. Learning Objectives

After studying this module, you should be able to:

III. Topics and Key Concepts

COMMONWEALTH ACT No. 65
IN ACT TO DECLARE THAT PUBLIC ACT NUMBERED FIVE HUNDRED AND
TWENTY-ONE, KNOWN AS "CARRIAGE OF GOODS BY SEA ACT," ENACTED BY
THE SEVENTY-FOURTH CONGRESS OF THE UNITED STATES, BE ACCEPTED,
AS IT IS HEREBY ACCEPTED BY THE NATIONAL ASSEMBLY
WHEREAS, the Seventy-fourth Congress of the United States enacted Public Act Numbered
Five hundred and twenty-one, entitled: "Carriage of Goods by Sea Act";
WHEREAS, the primordial purpose of the said Acts is to bring about uniformity in ocean bills of
lading and to give effect to the Brussels Treaty, signed by the United States with other powers;
WHEREAS, the Government of the United States has left it to the Philippine Government to
decide whether or not the said Act shall apply to carriage of goods by sea in foreign trade to and
from Philippine ports;
WHEREAS, 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;
WHEREAS, 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; therefore,

155
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Be it enacted by the National Assembly of the Philippines:

Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the
Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred and
thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for the
carriage of goods by sea to and from Philippine ports in foreign trade: Provided, That nothing in
the Act shall be construed as repealing any existing provision of the Code of Commerce which is
now in force, or as limiting its application.

Section 2. This Act shall take effect upon its approval.

Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled, That every bill of landing or similar document of title which is evidence of
a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade,
shall have effect subject to the provisions of the Act.
TITLE I
Section 1. When used in this Act —
(a) The term "carrier" includes the owner or the charterer who enters into a contract of carriage
with a shipper.

(b) The term "contract of carriage" applies only to contracts of carriage covered by a bill of
lading or any similar document of title, insofar as such document relates to the carriage of goods
by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant
to a charter party from the moment at which such bill of lading or similar document of title
regulates the relations between a carrier and a holder of the same.
(c) The term "goods" includes goods, wares, merchandise, and articles of every kind
whatsoever, except live animals and cargo which by the contract of carriage is stated as being
carried on deck and is so carried.

(d) The term "ship" means any vessel used for the carriage of goods by sea.

(e) The term "carriage of goods" covers the period from the time when the goods are loaded on
to the time when they are discharged from the ship.

156
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

RISKS
Section 2. Subject to the provisions of section 6, under every contract of carriage of goods by
sea, the carrier in relation to the loading handling, stowage, carriage, custody, care, and discharge
of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and
immunities hereinafter set forth.

RESPONSIBILITIES AND LIABILITIES

Section 3.
(1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due
diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in
which goods are carried, fit and safe for their reception carriage and preservation.
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.
(3) After receiving the goods into his charge the carrier, or the master or agent of the carrier,
shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things
—
(a) The leading 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, or on the cases or coverings in
which such goods are contained, in such a manner as should ordinarily remain legible until the
end of the voyage.
(b) Either the number of packages or pieces, or the quantity or weight, as the case may
be, as furnished in writing by the shipper.
(c) The apparent order and condition 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
goods actually received, or which he has had no reasonable means of checking.

157
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

(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: Provided,
That nothing in this Act shall be construed as repealing or limiting the application of any part of
the Act, as amended, entitled "An Act relating to bills of lading in interstate and foreign
commerce," approved August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the
"Pomerene Bills of Lading Act."
(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 or to any person other than the
shipper.
(6) Unless notice of 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 before or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as
described in the bill of lading. If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person
taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after delivery of the goods or the date when the
goods should have been delivered: Provided, That if a notice of loss or damage, either apparent
or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after the delivery of the goods or the date when
the goods should have been delivered
In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and tallying the goods.
(7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of the
carrier to the shipper shall, if the shipper so demands, be a "shipped" bill of lading Provided,
That if the shipper shall have previously taken up any document of title to such goods, he shall
surrender the same as against the issue of the "shipped" bill of lading, but at the option of the
carrier such document of title may be noted at the port of shipment by the carrier, master, or
agent with name or name the names of the ship or ships upon which the goods have been shipped

158
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

and the date or dates of shipment, and when so noted the same shall for the purpose of this
section be deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or 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.

RIGHTS AND IMMUNITIES

Section 4.
(1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from
unseaworthiness unless caused by want of due diligence on the part of the carrier to make the
ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to
make to the holds, refrigerating and cool chambers, and all other parts of the ship in which goods
are carried fit and safe for their reception, carriage, and preservation in accordance with the
provisions of paragraph (1) of section 3. Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or
other persons claiming exemption under the section.
(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting
from —
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in
the navigation or in the management of the ship;
(b) Fire, unless caused by the actual fault or privity of the carrier;
(c) Perils, dangers, and accidents of the sea or other navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizure under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the goods, his agent or representative;

159
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

(j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether
partial or general; Provided, That nothing herein contained shall be construed to relieve a carrier
from responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
(m) Wastage in bulk or weight or any other loss or damage arising from inherent defect,
quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence; and
(q) Any other cause arising without the actual fault and privity of the carrier and without
the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the
person claiming the benefit of this exception to show that neither the actual fault or privity of the
carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or
damage.
(3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship
arising from any cause without the act, fault, or neglect of the shipper, his agents, or servants.
(4) Any deviation in saving or attempting to save life or property at sea, or any reasonable
deviation shall not be deemed to be an infringement or breach of this Act or of the contract of
carriage, and the carrier shall not be liable for any loss or damage resulting therefrom: Provided,
however, That if the deviation is for the purpose of loading cargo or unloading cargo or
passengers it shall, prima facie, be regarded as unreasonable.
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage
to or in connection with the transportation of goods in an amount exceeding $600 per package
lawful money of the United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
By agreement between the carrier, master, or agent of the carrier, and the shipper another
maximum amount than that mentioned in this paragraph may be fixed: Provided, That such
maximum shall not be less than the figure above named. In no event shall the carrier be liable for
more than the amount of damage actually sustained.

160
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in
connection with the transportation of the goods if the nature or value thereof has been knowingly
and fraudulently misstated by the shipper in the bill of lading.
(6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the carrier,
master or agent of the carrier, has not consented with knowledge of their nature and character,
may at any time before discharge be landed at any place or destroyed or rendered innocuous by
the carrier without compensation, and the shipper of such goods shall be liable for all damages
and expenses directly or indirectly arising out of or resulting from such shipment. If any such
goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they
may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier
without liability on the part of the carrier except to general average, if any.

SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF

RESPONSIBILITIES AND LIABILITIES
Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his rights and
immunities or to increase any of his responsibilities and liabilities under this Act, provided such
surrender or increase shall be embodied in the bill of lading issued to the shipper.
The provisions of this Act shall not be applicable to charter parties; but if bills of lading are
issued in the case of a ship under 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
provision regarding general average.

SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the preceding sections, a carrier, master or agent of
the carrier, and a shipper shall, in regard to any particular goods be at liberty to enter into any
agreement in any terms as to the responsibility and liability of the carrier for such goods, and as
to the rights and immunities of the carrier in respect of such goods, or his obligation as to
seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy),
or the care or diligence of his servants or agents in regard to the loading, handling stowage,
carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case no
bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt
which shall be a non-negotiable document and shall be marked as such.
Any agreement so entered into shall have full legal effect: Provided, That this section shall not
apply to ordinary commercial shipments made in the ordinary course of trade but only to other
shipments where the character or condition of the property to be carried or the circumstances,

161
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

terms, and conditions under which the carriage is to be performed are such as reasonably to
justify a special agreement.

Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from entering into
any agreement, stipulation, condition, reservation, or exemption as to the responsibility and
liability of the carrier or the ship for the loss or damage to or in connection with the custody and
care and handling of goods prior to the loading on and subsequent to the discharge from the ship
on which the goods are carried by sea.

Section 8. The provisions of this Act shall not affect the rights and obligations of the carrier
under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289,
inclusive, of the Revised Statutes of the United States, or of any amendments thereto; or under
the provisions of any other enactment for the time being in force relating to the limitation of the
liability of the owners of seagoing vessels.

TITLE II
Section 9. Nothing contained in this Act shall be construed as permitting a common carrier by
water to discriminate between competing shippers similarly place in time and circumstances,
either (a) with respect to the right to demand and receive bills of lading subject to the provisions
of this Act; or (b) when issuing such bills of lading, either in the surrender of any of the carrier's
rights and immunities or in the increase of any of the carrier's responsibilities and liabilities
pursuant to section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act,
1916, s amended.

Section 10. Section 25 of the Interstate Commerce Act is hereby amended by adding the
following proviso at the end of paragraph 4 thereof: "Provided, however, That insofar as any bill
of lading authorized hereunder relates to the carriage of goods by sea, such bill of lading shall be
subject to the provisions of the Carriage of Goods by Sea Act."
Section 11. Where under the customs of any trade the weight of any bulk cargo inserted in the
bill of lading is a weight ascertained or accepted by a third party other than the carrier or the
shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading,
then, notwithstanding any thing in this Act, the bill of lading shall not be deemed to be prima
facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of
lading, and the accuracy thereof at the time of shipment shall not be deemed to have been
guaranteed by the shipper.
162
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Section 12. Nothing in this Act shall be construed as superseding any part of the Act entitled
"An act relating to navigation of vessels, bills of lading, and to certain obligations, duties, and
rights in connection with the carriage of property," approved February 13,1893, or of any other
law which would be applicable in the absence of this Act, insofar as they relate to the duties,
responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded
on or after the time they are discharged from the ship.

Section 13. This Act shall apply to all contracts for carriage of goods by sea to or from ports of
the United States in foreign trade. As used in this Act the term "United States" includes its
districts, territories, and possessions: Provided, however, That the Philippine legislature may by
law exclude its application to transportation to or from ports of the Philippine Islands. The term
"foreign trade" means the transportation of goods between the ports of the United States and
ports of foreign countries. Nothing in this Act shall be held to apply to contracts for carriage of
goods by sea between any port of the United States or its possessions, and any other port of the
United States or its possession: Provided, however, That any bill of lading or similar document
of title which is evidence of a contract for the carriage of goods by sea between such ports,
containing an express statement that it shall be subject to the provisions of this Act, shall be
subjected hereto as fully as if subject hereto as fully as if subject hereto by the express provisions
of this Act: Provided, further, That every bill of lading or similar document of title which is
evidence of a contract for the carriage of goods by sea from ports of the United States, in foreign
trade, shall contain a statement that it shall have effect subject to the provisions of this Act.

Section 14. Upon the certification of the Secretary of Commerce that the foreign commerce of
the United States in its competition with that of foreign nations is prejudiced the provisions, or
any of them, of Title I of this Act, or by the laws of any foreign country or countries relating to
the carriage of goods by sea, the President of the United States, may, from time to time, by
proclamation, suspend any or all provisions of Title I of this Act for such periods of time or
indefinitely as may be designated in the proclamation. The President may at any time rescind
such suspension of Title I hereof, and any provisions thereof which may have been suspended
shall thereby be reinstated and again apply to contracts thereafter made for the carriage of goods
by sea. Any proclamation of suspension or rescission of any such suspension shall take effect on
a date named therein, which date shall be not less than ten days from the issue of the
proclamation.
Any contract for the carriage of goods by sea, subject to the provisions of this Act, effective
during any period when title I hereof, or any part thereof, is suspended, shall be subject to all

163
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

provisions of law now or hereafter applicable to that part of Title I which may have thus been
suspended.

Section 15. This Act shall take effect ninety days after the date of its approval; but nothing in
this Act shall apply during a period not to exceed one year following its approval to any contract
for the carriage of goods by sea, made before the date on which this Act is approved, nor to any
bill of lading or similar document of title issued, whether before or after such date of approval in
pursuance of any such contract as aforesaid.

Section 16. This Act may be cited as the "Carriage of Goods by Sea Act."
Approved, April 16, 1936.

164
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ACTIVITY FOR MODULE 6

1. Explain the rights of carriers under the COGSA.

2. Enumerate the responsibilities and liabilities of carriers under COGSA with legal basis.

3. Enlist the rights and immunities of a carrier available under the COGSA.

4. Discuss the how the procedures for the surrender of rights and immunities and how the

increase of responsibilities and liabilities happens.

5. Explain EACH special conditions mentioned under COGSA.

165
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Title: Customs Operations and Cargo Handling

Module No. 7

I. Introduction
This module will talk about the Warehousing Port Operations, this shall include
Philippine Port Authority, dues and rates, pre-arrival and arrival formalities, berthing
regulations, storage fees, disposition of overstaying and/or abandoned goods, auction
methodology, and various port operations.

II. Learning Objectives

After studying this module, you should be able to:
 To be able to explain the procedures under the Salvage law.
 To identify what are the goods subject of the law
 To make an understanding for the purpose of the law.

III. Topics and Key Concepts

ACT NO. 2616

ACT NO. 2616 - THE SALVAGE LAW

Section 1. 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.

Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from

166
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

shipwreck, shall be entitled to a like reward.

Sec. 2. If the captain of the vessel, or the person acting in his stead, is present, no one shall take from
the sea, or from the shores or coast merchandise or effects proceeding from a shipwreck or proceed
to the salvage of the vessel, without the consent of such captain or person acting in his stead.

Sec. 3. He who shall save or pick up a vessel or merchandise at sea, in the absence of the captain of
the vessel, owner, or a representative of either of them, they being unknown, shall convey and
deliver such vessel or merchandise, as soon as possible, to the Collector of Customs, if the port has a
collector, and otherwise to the provincial treasurer or municipal mayor.

Sec. 4. After the salvage is accomplished, the owner or his representative shall have a right to the
delivery of the vessel or things saved, provided that he pays, or gives a bond to secure, the expenses
and the proper reward.

The amount and sufficiency of the bond, in the absence of agreement, shall be determined by the
Collector of Customs or by the Judge of the Court of First Instance of the province in which the
things saved may be found.

Sec. 5. The Collector of Customs, provincial treasurer, or municipal mayor, to whom a salvage is
reported, shall order:

a. That the things saved be safeguard and inventoried.

b. The sale at public auction of the things saved which may be in danger of immediate loss or of
those whose conservation is evidently prejudicial to the interests of the owner, when no objection is
made to such sale.

c. The advertisement within the thirty days subsequent to the salvage, in one of the local
newspapers or in the nearest newspaper published, of all the details of the disaster, with a statement
of the mark and number of the effects requesting all interested persons to make their claims.

Sec. 6. If, while the vessel or things saved are at the disposition of the authorities, the owner or his
representative shall claim them, such authorities shall order their delivery to such owner or his
representative, provided that there is no controversy over their value, and a bond is given by the

167
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

owner or his representative to secure the payment of the expenses and the proper reward. Otherwise,
the delivery shall nor be made until the matter is decided by the Court of First Instance of the
province.

Sec. 7. No claim being presented in the three months subsequent to the publication of the
advertisement prescribed in sub-section (c) of Section five, the things save shall be sold at public
auction, and their proceeds, after deducting the expenses and the proper reward shall be deposited in
the insular treasury. If three years shall pass without anyone claiming it, one-half of the deposit shall
be adjudged to him who saved the things, and the other half to the insular government.

Sec. 8. The following shall have no right to a reward for salvage or assistance:

a. The crew of the vessel shipwrecked or which was is danger of shipwreck;

b. He who shall have commenced the salvage in spite of opposition of the captain or his
representative; and

c. He who shall have failed to comply with the provisions of Section three.

Sec. 9. If, during the danger, an agreement is entered into concerning the amount of the reward for
salvage or assistance, its validity may be impugned because it is excessive, and it may be required to
be reduced to an amount proportionate to the circumstances.

Sec. 10. In a case coming under the last preceding section, as well as in the absence of an agreement,
the reward for salvage or assistance shall be fixed by the Court of First Instance of the province
where the things salvaged are found, taking into account 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.

168
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

Sec. 11. From the proceeds of the sale of the things saved shall be deducted, first, the expenses of
their custody, conservation, advertisement, and auction, as well as whatever taxes or duties they
should pay for their entrance; then there shall be deducted the expenses of salvage; and from the net
amount remaining shall be taken the reward for the salvage or assistance which shall not exceed fifty
per cent of such amount remaining.

Sec. 12. If in the salvage or in the rendering of assistance different persons shall have intervened the
reward shall be divided between them in proportion to the services which each one may have
rendered, and, in case of doubt, in equal parts.

Those who, in order to save persons, shall have been exposed to the same dangers shall also have a
right to participation in the reward.

Sec. 13. If a vessel or its cargo shall have been assisted or saved, entirely or partially, by another
vessel, the reward for salvage or for assistance shall be divided between the owner, the captain, and
the remainder of the crew of the latter vessel, so as to give the owner a half, the captain a fourth, and
all the remainder of the crew the other fourth of the reward, in proportion to their respective salaries,
in the absence of an agreement to the contrary. The express of salvage, as well as the reward for
salvage or assistance, shall be a charge on the things salvaged on their value.

Sec. 14. This Act shall take effect on its passage.

Enacted: February 4, 1916

REFERENCE:
-Salvage Law

169
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089 loc. 314

ACTIVITY FOR MODULE 7

1. Define salvage law, based on Act no. 2616 of 1916.

2. What is the purpose of salvage law? Explain further.

3. What are the goods that may be subjected of salvage law.

4. Create a flowchart of procedures in applying the salvage law.

5. Make atleast 5 examples of scenarios in which salvage law may be applied.

170