FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
7 JUL -3 fJ3 :5(j 
First Regular Session 
1 
S E N A T E  
s. NO. 
842 
Introduced by Senator Biazon 
EXPLANATORY NOTE 
The archipelagic configuration of the Philippines justifies our heavy reliance on water 
transport as a major, convenient and, oftentimes, affordable means of transporting passengers 
and goods to and from the major islands. Because of geographic location and strategic position, 
Philippine ports are also considered useful and vital in international commerce and trade. 
Unfortunately, the laws governing the relations between and among parties and interests 
in maritime commerce and trade to and from the Philippines are dispersed in various codes, laws, 
decrees, executive orders and treaties. Moreover, not only are these laws scattered, all of these 
laws are more than two decades. There is therefore a compelling need to codify and upgrade 
Philippine Admiralty Law in order to keep in tune to current situations, circumstances and 
business practice of the maritime industry. 
In other countries, Admiralty or Maritime Law has become one of the most dynamic, 
complex and rapidly changing areas of law as both the courts and the legislature have sought to 
fashion new laws to meet social, economic and human needs resulting from the ever expanding 
maritime industry. In the case of the Philippines, the development and growth of admiralty and 
maritime law is almost static if not eroded and its future at this moment .is difficult to predict. 
There is now a need for all stakeholders, particularly admiralty lawyers, shipowners and those 
who are involved in the shipping industry to help reform and update the country’s shipping laws. 
Precisely, this bill seeks to update and reform the shipping laws of the Philippines and 
codify the same into one code - “The Maritime Code of the Philippines.” It upgrades the laws 
dealing with registration of ships, maritime liens and ship mortgages, maritime fraud, accidents 
at sea and shipowner’s liability. The bill provides for a separate common cwrier provision to 
apply specifically to ships or vessels transporting passengers and/or goods, domestically or 
internationally. Likewise, it updates the marine insurance provisions found in the Insurance Code 
of 1978 and conveniently juxtaposes such provisions alongside other provisions of admiralty and 
maritime laws. 
Finally, the bill provides for an alternative dispute settlement in the form of arbitration. 
Because of advances in the means of communication and transportation, the greater interaction 
among people, especially in business, has made more compIex business transactions, whether 
domestic or international. Inevitably, disputes or conflicts arise. Stakeholders in the maritime 
industry are inclined to a more expeditious, effective and less expensive way of resolving these 
disputes rather than going through the court of justice with the concomitant delays and expenses 
incident to judicial proceedings. With the reasons mentioned above, the passage of this bill is 
urgently requested. 
RODOLFO GYBIAZON 
Senator 


r WRTEENTH CONGRESS OF THE REPUBLIC ) 
1 
7 
JUL. -3 P3 :2() 
OF THE PHILIPPINES 
First Regular Session 
1 
s . N ~ .  842 
Introduced by Senator Riazon 
AN ACT 
TO ORDAIN AND INSTITUTE THE MARITIME CODE OF THE PHILIPPINES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
Preliminary Title 
ARTICLE 1. Title. - This Act shall be known as the “Maritime Code of the Philippines.” 
ART. 2. Coverage. - This Code shall apply to all ships or vessels plying within the 
territorial waters of the Philippines, whether domestic or foreign-owned, and to all Philippine 
flag vessels, except those owned and/or operated by the Philippine government or by foreign 
governments for military or non-commercial purposes, and unmotorized bancas, sailboats, and 
other water-borne contrivances less than three (3) gross tons capacity. 
ART. 3. Dejkitions. - Unless otherwise provided, the following terms when used in this 
Code shall have the following meaning: 
(a) “Citizen of the Philippines” refers to an individual citizen of the Philippines; or a 
domestic partnership or association wholly owned by citizens of the Philippines; or a corporation 
organized under the laws of the Philippines of which at least sixty percent (60%) of the capital 
stock outstanding and entitled to vote is owned and held by citizens of the Philippines; or a 
corporation organized abroad and registered as doing business in the Philippines under the 
Corporation Code of which one hundred percent (100%) of the capital stock outstanding and 
entitled to vote is wholly owned by Filipinos; or a trustee of funds for pension or other employee 
retirement or separation benefits, where the trustee is a Philippine national and at least sixty 
percent (60%) of the fund will accrue to the benefit of Philippine nationals: Provided, That 
where a corporation and its non-Filipino stockholders own stocks in a Securities and Exchange 


Coniniission (SEC) registered enterprise, at least sixty percent (60%) of tlie capital stock 
outstanding and entitled to vote of each corporation must be owned and held by citizens of the 
Philippines and a[ least sixty percent (60%) of the members or the Board of Directors must be 
citizens of the Philippines, in order hiat the corporatioil shall be considered a Philippine national. 
(b) “CImsificniiot~ societies” means an accredited organization established for the 
purpose of setting standards on construction, propulsion, equipment, seaworthiness and sarety o f  
ships or vessels and otliex marine ships or vessels and platform, conducting surveys and 
inspections and rnaintaiiiiiig standards as a requisite Tor legal purposes such as marine insurance 
and official documentation. 
(c) “MARINA” refers to the Maritime Industry Authority or its successor. 
(d) “nrlnritiiiie lien” means an encumbrance 011 a vessel adhering to it wherever it may go, 
vesting in the person whose claim i s  thereby secured to cause its sale in a proceeding directly 
against it, to obtain satisfaction of his claim. 
(e) ‘‘Pliilippine flag vesser’ refers to a ship registered in the Philippines in accordance 
with this Code. 
(0 
‘‘P/iil&piize sli@ping comipnnies” refer to sliipping companies registered and licensed 
in tlie Philippines and authorized to engage in the business of overseas and/or domestic 
transportation. 
TITLE I - REGISTRATION OF SHIPS AND RIGHTS TO SHIPS 
ART. 4. Vessels to be registered. - Every vessel owned by citizens of the Philippines and 
more than three gross tons shall be registered with tlie appropriate maritime authority. 
Registration may be pemianent, provisional or temporary in nature. 
ART. 5. Requireinent for a Permanent CerliJcate. - No vessel sliall be issued a 
Permanent Certificate of Pliilippine Registry unless it has been classed by a classification society 
or by the MARINA as seaworthy, and that it be lnalmed by Filipino crew except highly technical 
positions in the case of specialized vessels 01’ where there are no available qualified Filipino 
officers or crew as determined by the appropriate govcriinieiit agency. 
n L 


AR?'. 6. Temporuy Ce~tijbte 
of PJiil&iiw Regisfry. - The following vessels may be 
issued Temporary Certificates of Philippine Registry: 
(a) Vessels owned and/or operated by an enterprise duly registered with the Board of 
Investnien~s (BOI) uiider pertinen ~ncentive laws whether or not such enteiprise is entirely 
owned by foreign nationals, if such vessels are to be used exclusivcly to trailsport its own raw 
materials and finished products within Philippine waters as an incident to its manufacturing, 
processing or business activity registered with the BO1 and certified to by it as an essential 
element in tlie operation of the registered project. 
1. 
(b) Foreign-owned vessels under charter or lease for not less than one year to citizens of 
the Philippines subject to tlie i"o1lowing conditions: (i) that said charter or lease has the prior 
written approval of the MARINA, and (ii) that the niaiiniiig and operation of the vessel shall be 
entirely in the hands of citizens of the Philippines, except highly technical positions in the case of 
specialized vessels or where there are no available qualified Filipino officers or crew as 
determined by the appropriate government agency. 
ART. 7. Provisional Cerlijkate of Philippiiie Registry. - Vessels constructed andlor 
acquired abroad shall, before being brought to the Philippines, have il Provisional Certificate of 
Philippine Registry. Application therefor shall be filed with the MARINA together with 
supporting documents. 
If the application is found lo be in order, the MARINA shall endorse the same to the 
Department of Foreign Affairs for transmittal to the Philippine consulate in the country where the 
vessel is located and to advise said office to issue a Provisional Certificate of Philippine Registry 
upou submission of the required documents. 
ART. S. Stpporling Docuiizents for Regislratioil of Locally Constizicred Vessels. - To 
secure registration of a vessel constructed in the Philippines, the owner, inaster or agent shall file, 
together with the application, with the MARINA Regional or District Orlice at or nearest the 
home port or intended home port of such vessel, among others, the following documents: 
(a) 
(b) 
Approval of the construction plans of the vessel by MARINA; 
Builder's Certificate or any docunient signifying owiiersliip; 
3 


(c) 
(d) 
(e) 
Certificate of inspection; 
ART. 9. Szippor.tiizg DoCUnIc?iZlS for Registmtioiz of Iilzporlecl/Clzartered Vessel. - (1) 
Within fifteen (15) days upon arrival or upon accepting delivery of the vessel in the I'hilippines, 
the owner, master or agent shall apply with the MARINA Regional or District Orfice of the 
intended home port for a perinanent Certificate of Philippine Registry with the submission of the 
following documents: 
Affidavit of Citizenship, in case of individual owner; 
Affidavit of Corporate Ownership in case ofa corporation; and 
! 
(a) 
(b) 
(c) 
(d) 
Builder's Certificate; 
(e) 
(0 
(g) 
Certificate of Admeasurement, including Calculation sheets Cor tonnage 
measurement, as performed by the official admeasurer of the country where the ship is built or 
acquired; 
MARINA approval ofthe acquisition or charter; 
Provisional Certificate of Philippine Registry, if any; 
Deed of Sale/Cliarter Agreement, as the case may be; 
Protocol of Delivery and Acceptance; 
Protocol. of Inventory of the Vesscl; 
(11) 
Provisional Loadline Certificate issued by authorized classification society under 
whose rules the vcssel is constructed or acquired; 
(i) 
Certificate of Inspection or an equivalent Certificate pursuant to the SOLAS 1960 
Convention issued by the goveriinient of the country where the vessel is built or acquired; 
(i) 
Iiicliiiing experiment with calculations and trim and stability calculation for all 
service loading conditions in case of newly built ships; 
(1) 
(1) 
Ship Safety Radio-Telegraphy Certificate; 
(m) Consular Invoice; and 
(n) 
Ship Safety Radio-Telephony Certificate (iI'applicable); 
Permit to deliver imported goods (Customs formal entry) 


(2) 
The Philippine Consulate shall duly authenticate all documents from sub- 
paragraphs (b) through (e], and sub-paragraph (i). 
ART. 10. Porr ofReyislry. - The registralion of a vessel shall be effccted at its home porl, 
where a MARINA Regional or District Ofiice is in said lionie port or at the nearest MANNA 
Regional or District Office when the home port does not have one. 
i .  
ART. 1 1. Register of Vessels. - A Register of Vessels shall be kept at every MARINA 
Regional or District Office in which shall be entered the following facts coiicerning each vessel 
registered in such form and detail as may be prescribed: 
Nanie of Vessel; 
Rig of Vessel; 
Material or I-Iull; 
Principal dimensions; 
Gross tonnage; 
Net toimage; 
Where constructed, including nanie of shipyard and its address; 
Year constructed; 
Name, citizenship, nationality and residence of owner; 
Date of issuance of Certificate of Philippine Registry; 
Mode by which the vessel was acquired and registered; 
Any material change of conditions with respect to any of the preceding items; and 
Other data as may be required by MARINA or such other agency as may be 
authorizcd by law. 
It shall be the duty of the owner, master or agent of every registered vessel to inlorin the 
MARINA of any cliange in the information entered in the Register pertaining to the vessel. 
ART. 12. Issuance of CertiJicate. - Upon registration of a vessel, a Certificate or 
Philippine Registry shall be issued therefor by the IvIVIARINA. 
If the vessel to be registered is more than tlme (3) tons gross but not more than fifteen 
(15) tons gross, the taking of a Certificate of Philippine Registty shall be optional with the owner 
5 


and in lieu thereof a Certificate of Otviiership shall lie issued, excepL wlieii tlie vessel will be 
engaged in towing, commercial fisliiiig or carrying of articles and passengers for hire from port to 
port in the l’hilippines. 
ART. 13. Eflects of Regishalion. - Registration of a vessel in accordance with the 
provisions of this Code coders upon it the status of a Philippine flag vessel aid entitles it to tlie 
protection of the Philippine flag. Correspondingly, it imposes 011 the vessel tlie duty to fly the 
Philippine flag and the obligation to abide by all applicable laws, orders, rules and regulations of 
the Philippines. 
ART. 14. Ma~kings, Naine nnd Ifoiiieporf. - A11 vessels duly registered in accordance 
with the provisions hereof sliall have their respective names aid homeports plainly marked upon 
each side of the bow. 
ART. 15. Correctioii of Errors in the Recordiiig of Doctinieizts Aflecting Tille and in the 
Register’ of Vessels, - Errors made in recording shall be corrected in the followiiig manner: 
(a) Slight or clerical errors riot affecting the sense and intent of the documents such as 
misspelled words, shall be corrected by writing the correction above tlie errors and initialing the 
correction. 
(b) Any mistake or error that might affect the meaning and substance of the documents 
may be corrected by order oTMARINA, after notice and hearing of the interested parties. 
ART. 16. Change of0wnership of Vessels. - An executed bill of sale or other certificate 
iiiclicatiiig the transfer of ownership of a Pliilippine flag vessel shall be presented by the 
transferee within fifteen (15) days after execution of tlie sale to tlie District Office at or nearest 
tlie homeport of the vessel for appropriate recording. 
ART. 17. Xeconsliluiiorz of Lost Cert6cnte. - When the Certificate of Pliilippiiie Registiy 
ol’ a vessel is lost or damaged, the owner, master or agent Iliere,of m y  file a1 a1)propriate 
applicatioii with the MARINA Regional or District Office of the homeport for issuance of a 
replacement cerlificate, which shall indicate that the original shall henceforth be considered 
cancelled and revoked. If after the issuance of the replacement certificate, the lost original 
certificates shall have been found, it sliall bc the duty of the owner, master, agent or any person 
6 


having possession of the same lo surrender the smie to the MANNA Rcgioiial and District 
Office of the homeport. 
ART. 18. Grozir~dsj~r 
Cnrzcellatiorz of Registry. - (1) In m y  of the following cases, the 
registration of a Philippine vessel shall be caiicellcd from the Register of Vessels and the 
Certificate of Philippine Registry or of Ownership revolted: 
i 
(a) 
(b) 
When tlie Cextific.ate was illegally or fi'aurlulently oblained; 
When tlie vessel is sold, transferred and/or assigned to a foreign citizen, 
corporation or association not qualified to register a vesscl under Philippiue flag; 
(c) 
When the vessel is sold, transferred or assigned to a Filipino citizen, corporation 
or associatioii' and appropriate application lias been made for change of ownership; 
(d) 
(e) 
When the vessel is sold at public auction; 
When a vessel is sold for scrapping or lias exceeded its economic life aiid 
deteriniiied to be unsafe and unserviceable; 
(9 
When the charter or lease o f  a vessel registered d e r  Article 6 (b) has expired or 
has been cancelled or terniinatcd for any reason, in wliich case the caiicellalioii hoin the Register 
of Vessels and revocation of the Certificate of Philippine Itegistry shall autoniatically tale place; 
and 
(g) 
(2) It shall be the duty of the ma~iaging owner, master or agent of a vessel, having reasons 
to believe that it has been lost, to proniptly send a written notice, ulidey oath, to the M A M A  
Regional or District Office at her homeport giving advise of such loss and the probable occasiou, 
therefor stating tlie iiame of the vessel aiid tlie name of all persons on board, as far as tlie same 
can be ascertained, and shall furiiisli upon request of the District Officer such additional 
inforiliation as shall be required. Such notice of loss shall be duly noted in tlie Register of 
Vessels and the Record of Transfers and Eiicunibrances atid all persons having any claim or 
iuterest of record in said vessel shall be duly notified. 
When a vessel has been declared lost or missing. 
ART. 19. Recod of Doczments AJecling Tifle. - A Recosd of Traiiskrs and 
Eiicuinhraiices of Vessels shall be kept at the MARINA Regional or District Office in which 
7 


shall bc recorded at Ieiigtli all traiisfeas, bills of salc, mortgages, liens or other documents directly 
or indirectly affecting the title of Philippine flag vessels, and likewise therein shall be recorded 
all receipts, certificates or aclmoivledgmeiits canccliiig or satisfyiiig, in whole or in part, any such 
obligations. 
/ 
111 order to be enforceable against the ship and third persons, all entries in the Record of 
Traiisfers aiid Encumbrances of Vessels shall be annotated at the back of tlie Certificate of 
Pliilippine Registry or of Ownership, stating the date of entry aiid the nature or subject matter of 
the docuineiit. 
ART. 20. Conleiils of Morlgage Applicaiioiz. - Every application to register a mortgage 
shall be accoinpaiiied by an authenticated copy of the mortgage contract or other similar 
iiistrunient and shall set forth tlie following: 
(a) 
(b) 
(c) 
(d) 
the iiarne or description of the ship being mortgaged; 
the name, nationality, aiid place of residence of tlie owner of the ship; 
the name of each mortgagor and mortgagee; 
the interest of tlie mortgagor in the ship being mortgaged; and in the case of a sliii! 
under coiistiuction, the application shall state, aiiioiig otlier things: 
(d) 
(e) 
(0 
the yard number; aiid 
(d) 
ART. 21. Endorseiizerzt ofMorfgages. - (1) The appropriate maritime agency shall, at the 
request of tlie mortgagee or his authorized agent, cause llie endorseiiieiit upon the Certificate or 
Philippine liegistiy of the ship subject to the 11iOrtg;tge those matters set forth in the preceding 
Article. 
tlie iiaine and location of tlie coiistructioii yard; 
tlie intended port of registration; 
the diiiie~isio~is 
and approximate deadweight of tlie ship on co~iipletion. 
(2) If the ship in respect of which a mortgage has been made holds only a Provisioiial 
Certificate of Pliilippilie Registly aiid is abroad at the t h e  of the registration of the mortgage, the 
eiidorseiiieiit shall be made by such consular officer of the Pliilippines as the apyropriate 
iiiaritime agency shall direct. 
8 


(3) If a new Certificate ofP11ilippine Registry is issued, any endorsenlent upon tlic old or 
provisional certificate of a mortgage, which remaius undischarged at the time of the issuance of 
the new certificate shall be transferred to and re-endorsed upon such new certificate. 
ART. 22. Inspecliar2 of and 6opiesji.on2 the Register. - (1) The register shall be open to 
public inspection during ordinary business hours and subject to such reasonable regulations as 
may be prescribed by the MANNA. 
(2) At tlie request of any person aid on the payment of reasonable fees, extracts from the 
Register of entries setting out the details inentioiicd in the preceding Articles aidor authenticated 
copies of any docuineiit or instrument, which is required to be filed under this Title, shall be 
furnished such person. 
ART. 23. De-Registration ofthe Ship Subject 10 a A4ortgage. - (1) Except in case of 
forced sales, a Philippine flag vessel shall not be de-registered without the written coiiseiit of all 
holders of registered mortgages. 
(2) A ship, which is or has been registered in another state, shall not be eligible for 
permanent registration in the Philippines, unless: 
(a) a certificate has been issued by tlic foriner state to the effect that the ship has been de- 
registered; or 
(b) a certificate has been issued by tlie foriiier state to the effect that the vessel will be de- 
registered on the day wheii such new registration is effccted. 
TITLE II - MARITIAfE LIENSAND SHIP MQRTGAGES' 
Chapter 1 -Maritime Lieiis 
ART. 24. Clairiis secured by ritaritinte liem - (1) The following claims in relation to a 
ship shall be secured by niasitiiiie liens on the ship, except those which arose out of or which 
resulted from tlie radioactive properties or a coinbination of radioactive propelties with toxic, 
explosive or other hazardous properties of nuclew fuel or of radioactive produce or waste: 
(a) Port, canal and other waterway dues, tonnage dues, light dues, pilotage dues and other 
public taxes, dues and charges ofthe same character; 


(b) Wages aid otlier sums dtrc to the masler, officer and other ~neinbers of ihe ship’s crew 
iii respect of their empioyinent on board the ship; 
(c) Claims against the owner in respcct o f  loss of life or persoiial injury occurring 011 land 
or on water, in direct connection wid tile operation octiie ship; 
(d) Claims against the owner based on tort and not capable or being based 011 contract, in 
respect o f  loss or damage to property occurring whether on land or on water, in direct connection 
with the operation of the ship; and 
(e) Claims for salvage, wreck: reinoval and contribution in general average. 
(2) Subject to the provisioiis or the succeeding Article, the abovementioned iiiaritiiue 
liens shall be paid in the order in which they are enumerated. The maritime liens set out iu each 
of paragraphs (a), (b), (c), and (d) shall rank equally as between themselves. 
ART. 25. Cl~rinis fhr Salvage, IVreclc, Reiizoval, and General Average. - (I) Maritime 
liens, which secure claims for salvage, wreck removal and coiitribution in general average, shall 
be preferred over alI maritime liens which have attached to tlic ship prior to the time when 
operations giving rise to the said liens were performed, other than those maritime liens rererred 
to in paragraph (a) of the preceding Article, and they shall rank in the inverse order of the time 
when the claims secured thereby accrued; 
(2) Claims for contribution in general average shall be deemed to have accrued 011 the 
date on which the general average act was performed. Claims for salvage shall be deemed to have 
accrued 011 the date on which the salvage operation was terminated. 
ART. 26. Nature ofMaritime Liens. - ( 1 )  hlxitime liens shall arise whether the claims 
secured by such liens are against the owner, or against the demise or other charterer, manager or 
operator of the ship. 
(2) Except in,case of forced sale of the ship, the maritime liens sfid1 follow the ship 
iiotwitlistanding any change or ownership or of registration. 
ART. 27. Bssigni?zeizt 01’ subrogation. - The assigmnent of or subrogatioii to a ciaini 
secured by a maritime lien shall entail the simultaneous assignment of or subrogation to such 
maritime lien. 
IO 


ART. 28. Exlinguishnzerzt of ninr-ithze liens. - (1) Maritime liciis shall be extinguished 
after a period of one year from h e  time when Ihe claims secured thereby arose unless, prior to the 
expiration of such period, tlic ship has been arrested, such arrest leading to a forced sale. 
i 
(2) The period of one year shall not be subject to suspension or interruption, provided, 
however, that time shall not run during the period that the person exercising the lien is legally 
prevented from arresting the ship. 
ART. 29. Rights ofretenlion. - (1) The Coollowing persons, when in possessioii of ship or 
ship that is under construction, shall have the right to retain such ship or ship ullder construction: 
(a) a shipbuilder, to secure claims arising out of the construction of, or other work carried 
out in relation to tlie ship; and 
(b) a ship repairer, to secure claims arising out of the repair of, or other work carried out 
in relation to the ship affected during sucli possession. 
(2) Said right of retention shall be extinguished when: 
(a) the claim in respect of which the said right lias been exercised is met or is otherwise 
discharged; 
@) the ship ceases to be in the possession of the shipbuilder or ship repairer as the case 
may be; or 
(c) the court orders that the ship is to be releascd. 
Chapter 2 - &'hip Morfgages 
ART. 30. Application. - The provisions of this Chapter shall apply to every mortgage 
wherever executed in respect ofi 
(a) a ship that is registered in the Philippines, or 
(b) a ship that is under construction in the Philippines. 
ART. 3 1. Subject of the rrzorlgage. - Unless otherwise stipulated: 
(a) a mortgage of a ship shall include all the property of the mortgagor which is 
appropriated to tlie ship and on board at tlie time when the mortgage contract is entered into, or 
which is later substituted for such properly, and 
11 


(b) a mortgage of a ship under construction shall include all inatcrials, machinery and 
equipment owned by the mortgagor which are within the premises or the builder’s yard and 
distiiictly identified as intendcd to be incorporated in the ship nndcr construction. 
i 
ART. 32. Forinn/ validip - A  mortgage shall not be valid unless it is: 
(a) made by or with the consent of tlie owner of the ship or ship under construction; and 
(b) made in writing signed by the mortgagor and mortgagee. 
ART. 33. Registration ufnzortgages. - (1) Every mortgage of a ship, which is registered 
in the Philippines or which is under construction therein, shall be registered in the Register of 
Mortgages and Encuinbrances kept by the MARINA. If such a mortgage is not registered, it shall 
be unenforceable against the ship and third persons. 
(2) On the registration of a mortgage, an authenticated copy of the mortgage contract and 
agreements shall be furnished the Banglco Sentral ng Pilipinas (BSP). 
(3) If the mortgage is transferred or materially amended or if one mortgage is substituted 
loor another, the transfer, ameudmerit or substitution sliall be registered in the same Register. Any 
transfer, ainendnieiit or substitution that is not registered shall be unen€orceable agaiiisl the ship 
and third persons. 
ART. 34. Publication ofinortguges. - (1) The MARINA shall, upon the registration of a 
mortgage, issue two official copies of the relevant entry in tlie Registry to the mortgagor. Each 
official copy of the entiy shall bear the official date or the registration of the mortgage, 
(2) The mortgagor shall exhibit the following documents in a prominent place on board 
the ship subject to the mortgage: 
(a) at least one ofthe official copies issued under subsection (1); and 
(b) an authenticated copy of the ship’s Certificate of Philippine Registry duly endorsed 
with particulars of the mortgage. 
(3) The mortgagor upon requesl by the mortgagee before the execution of tlie mortgage to 
which they are parties, shall give details in writing to the mortgagee of: 
(a) any prior mortgage on the ship which is to be the subject of the mortgage; aud 
(b) any maritime lien to which the said ship is subject, wliich are known to the mortgagor. 
12 


ART. 35. Poiiws of tlze Maritime Iizdustry Autliorify. - The MARNA sball prescribe 
such rules and regulations concerning: 
(a) the form of the transfer of a mortgage; 
(b) the procedure for the re & ’  
istiation of a mortgage or a transfer of a mortgage; 
(c) the recording of a mortgage which relates to a ship under construction in a special 
register for such mortgages; 
(d) the recording of the transfer, dischargs or foreclosure of any mortgage in the 
appropriate register; 
(e) the amendment of any entry in the register in relation to a mortgage; 
(f) the recording of particulars of mortgages on certificates of registiy; 
(E) fees in relation to the registration o€ mortgages, inspection of tlie register and for 
authenticated copies of entries in the register; 
(11) forms to be used in connection with the registration of a mortgage or the transfer, 
discharge or foreclosure of a mortgage or any application for an amendment orthe register; and 
(i) any matters incidental to tlie registration of mortgages and related subjects. 
ART. 36. Priorily beweeti mortgages. - Mortgages shall rank in the order of their being 
recorded in the Register, tlie errrlier before the latter. 
Chapter 3 - Procediwe and E ~ I ~ O K C I W I ~ ~  
ojAfaritime Liens arid nforrgages 
ART. 37. Grounds to erlforce h e  mortgage. - A mortgagee shall be entitled to enforce 
the security represented by the ship niider a inortgage if: 
(a) the mortgagor defaults in the discliarge of tlie indebtedness or other obligations 
secured by the mortgage; or 
(b) the mortgagor or any person in possession of the mortgaged property substantially 
prejudices the security of the mortgagee by any act or omission; or 
(c) the mortgagor coininits ally breach of tlie mortgage contract wliicli, by the terms of the 
contract, entitles the mortgagee to enforce the security. 
13 


ART. 38. Remedies of the morlgugces. - The enforcement of security under the mortgage 
may be effected by: 
(a) Arresting the ship subject to the mortgage and applying to the court for an order [or its 
i 
rorced sale; or 
(b) Foreclosing the niortgage; or 
(c) Any maimer permitted by the mortgage contract. 
ART. 39. Arrest leading lo forced sale. - (1) A mortgagee entitled to enforce his 
mortgage or a person exercising a inaritiine lien may bring proceedings iiz rem against the ship, 
wliich is the subject of tlie iiiorlgage or to which flic ~naritiine lien attaches, as the case may be, 
before the court having jurisdiction over the ship. The petitioner shall be entitled to apply to the 
court ex parle €or an order for the arrest of said ship. 
(2) The petitioner shall file in support of his claim an affidavit deposing to the 
circumstances which entitle hiin to enforce the mortgage or lien. If the affidavit satisfactorily 
establishes his claim, the court shall order the arrest or the ship. 
(3) The court shall rcquire a bond or other security before issuing the order of arrest. The 
bond or security shall not exceed thc mount of the mortgage debt or lien. 
(4) The court, upon the arrest of Uie ship, shall ordcr its forced sale unless the mortgagor, 
the owner of the ship or any person authorized to act oii his behalf o€ any other person interested 
in the ship apply to the court for an order releasing the ship from arrest, by filing a counter-bond 
or security in an ainouut equal to the mortgage debt or lien, or on the ground that the order of 
arrest was improperly or irregularly made. 
ART. 40. Notice o f h e  forced sale of a ship. - Prior to the forced sale of a ship, the court 
shall give, or cause to be given, at least thirty (30) days, written notice of the time aud place of 
such sale to: 
(a) all holders of registered mortgages; 
(b) such holders of maritime lieiis whose claim have been notified to the court; 
(c) all other persons having an interest in the ship whose interest has been notified to the 
court; and to 
14 


(d) (he registrar of the registry in which the vessel is registered. 
ART. 
41. Effect of i l ? e j ? ~ ~ x d  
sale of N x/z@. - (1) In the event of the forced sale of the 
ship, all mortgages, except those assumed by the purchaser with the consent or the holders, atid 
all liens and other eiicumbrances of’whatsoever nature sliall cease to attach to the ship but shall 
attach to the proceeds of sale, provided however that: 
(a) at the time of the sale tlie ship is in the jurisdiction of the Philippines; and 
(b) tlie sale has been effected in accordance with the law ofthe Philippines. 
(2) Any charter party or contract for the use of tlie ship in esisteiice at the tinie of the 
forced sale shall be deemed to be terminated, without prejudice to any claim the charterer may 
have against the owner of the ship at the time of the sale. 
ART. 42. Dislribtitiorz oJthe Proceeds. - (1) The costs awarded by the court and expenses 
arising out of the arrest and sale of the vessel shall be paid first out of the proceeds of such sale. 
(2) The following claims sliall be satisfied out of the balance of the proceeds of the sale in 
the order herein enumerated: 
(a) Maritime liens; 
(b) Registered mortgages; 
(c) Rights of retention, observing also the preference among each category of claims 
established in Articles 24,25 & 36 of this Code. 
ART. 43. Certificate ofReleclse. - (I) When a ship registered in the Philippines has been 
the object of a forced sale iii the Philippines, the coui? having jurisdiction shall, at the request of 
the purchaser, issue a certificate to the efkct that the ship is sold free of all mortgages, maritime 
liens, and other encuinbrances, except those assumed by the purchaser. 
(2) Upon the production of the above-mentioned certificate, the registrar of the Register 
of Vessels shall delete all registered mortgages, except those assumed by the pwchascr or issue a 
certificate of de-registration for the purpose of registration, as the case may be. 
ART. 44. Efsect of the forced sale of CI ship in foreigiz states. - The forced sale in a 
foreign state of a ship which is registered in the Philippiiies shall be recogiiized and effective in 
15 


the I’hilippines, provided that llie procedure for such forced sale in that foreign state substaiitially 
corresponds to the procedure set out in Articles 40,41, arid 42. 
Chapter 4 -Foreign Liens and Foreign Mortgages 
1 
ART. 45. Foreign Mcritime Liens. - (1) A claim against the owner or apiiist the demise 
or other. charterer, manager or operator of a ship being a claim \vhich is goveriied by the law of a 
slate other than the Philippines and which is recognized by that law as giving rise to a maritime 
lien, or right of a similar nature sliall be recognized by and enforceable in the Pliilippiiies 
provided said claim constitutes or correspoiids substantially to a claim set out in Article 24. 
(2) 
The provisions of this Code relating to maritime liens including priority, ranlciiig 
of liens between themselves, aiid enforcement, shall also apply to such claims. 
ART. 46. Foreign mortgages. - (1) For the purposes of this Article, ‘;foreign mortgage” 
shall mean any mortgage or any hypotliic, wliich relates to a ship of foreign registry. 
(2) A foreign mortgage shall be recognized and enforceable in the Philippines provided 
that: 
(a) such mortgage lias been effected and registered or otherwise recorded in accordance 
wilh the law of tlie state where tlie ship is registered; 
(b) such register and any instruments or docuiiients which are required to be deposited are 
open to public iiispection, and that extracts of the register and copies of such instruiiieiits are 
obtainable from the registrar, and 
(c) either the register or the loan agreement specifies: 
(i) the name and address of the person in whose h o r  the mortgage has been effected or 
that it lias been issued to bearer; 
(ii) the amount secured by the mortgage or tlie manner of calculating said amount; 
(iii) date of t d  mortgage; and 
(iv) such other particulars which, according to the law of tlie stale where the ship is 
registered, determine the rank in regard to other registered mortgages. 
16 


ART. 47. Laiv governingfureign morlgages. - (1) Tlie ranltiiig of registered mortgages as 
betwcen Lheinselves and their effect as regard to third parties shall be governed by tlie state where 
tlie sliip is registered. 
(2) All matters relaliiig lo piocedim 
1 
for cnrorcemcni shall be goveriied by this Code. Tlie 
Rulcs OC Court shall have suppletory effect. 
TITLE I11 - TmNSPORTAND OTHER CONTIUCTS 
Cbapter 1 - Donzestic Shfpping 
Section One - Coitllnoil P~ovisions 
ART. 48. Definition. - For purposes of this Chapter, tlie term ‘‘comjizon cnwiers” are 
persons, corporations, firins or associations engaged in the business of canying or transporting 
passengers or goods or both, for compensation, offering their service to the public. 
ART. 49. Diligence Required. - Comiiioii carriers, from tlie nature of their business and 
for reasons of public policy, are bound to obseive extraordinary diligence in the vigilance over 
the goods and for the safely of passengers transported by them, according to all tlie circumstances 
of each case. 
Extraordinary diligence is the degree of care required of the obligor lo take all tlie 
necessary lawful steps and precautions to prevent any loss, damage or irrjury wliich could have 
been reasonably foreseen at tlie time the obligation was constituted or at any t h e  prior to the 
happening of the event giving rise to the loss, damage or injury. 
In case of loss or damage to goods or death or or injury to passengers, comiiioii carriers 
are presumed to have been at fault or to have acted negligently, uuless they prove thal tlicy 
observed cxtraordiiiary diligence. 
ART. SO. Conlribtllory Negligeme. - The contributory negligence of the passenger or of 
tlie shipper of goods does not bar recovery of damages for death or injury of the passenger or for 
damage or loss OF tlie goods, if the proxiiiiate cause thereof is the negligence of the carrier. Tlie 
aiiiouiit of damages recoverable shall, however, be equitably reduced. 
17 


ART. 51. LinOilify ofSuccessive Carriers. - In case oftransportation to be performed by 
various successive carriers, under a single contract, such coinmon carrier shall be deemed to be 
one of tlie contracting parties to the agreement insolar as coiicerns that part of the transportation 
which is performed by each commoii carrier. 
These coninion carriers shall be jointly and scverally liable for loss, damage, destruction 
or delay, except where by express agreement, llie first carrier has assumed liability for the whole 
journey. 
ART. 52. Ulznutliorized Cnwiers. - Without prejudice to any crimiiial liability, persons 
engaging in the traiisportation business williout being authorized to do so, shall incur tlie same 
responsibilities, obligations and liabilities of coliinion carriers as provided for in this Chapter. 
Section Two - Cwpinge of lJassengers 
ART. 53. Obligalioiz of Coimon Cawier. - The coinnion carrier sliall be bound before 
and at the beginning of any trip or voyage to exercise extraordinary diligence to make tlie vessel 
seaworthy and to properly man, equip and supply the vessel. 
ART. 54. Obligation of Caplain or Master. - The niasler of any passenger vessel shall 
keep a list of all tlie passengers, which shall be open to inspection by the Philippine Coast Guard. 
A copy of tlie list shall be forwarded to the shipowner or ship agent. 
ART. 5 5 .  Overloading. -No conunon carrier shall take on board a number of passengers 
greater h n  that stated in the certificate of inspection. 
Evely vessel sliall carry in accessible places one life preserver for eveiy passenger and for 
eveiy meiiiber of the crew, in addition to lifeboats reqnired by regulations. 
ART. 56. Carrying ofExpZosives. - No passenger-carrying vessel shall transport, carry or 
stow on board the vessel any explosives except the vessel’s signal and emergency equipment, 
and others as may be ;erinittec1 by regulations oftlie MARINA. 
ART. 57. Discfpliize. - 111 all matters pertaining to the preservation of order and discipline 
on board the vessel, passengers shall be subject to the orders of the tilaster. 


ART. 58. Dzirrrtion ofRespoivibiliiy. - The extraordinary diligeiicc required of comllioli 
carriers shall begin when a person boards tlie vessel with the inleiition of becoming a passenger 
and is accepted as such by the coinnioii carrier and continue until the trip, exprcssly or iiiipliedly 
contracted for lias been concluded/and the passenger lias left tlie coininon carrier’s vessel in 
safety, unless the passenger sooner terminates or relinquishes his rights as such. 
ART. 59. Right of Carrier lo Refuse Transportaliom - A common carrier may refuse to 
carry as passengers, persons wlio refuse to comply with its reasonable regulations or wlio are 
likely to become obnoxious or dangerous to other passengers or interfere with tlie safe aiid 
convenient conduct of transportation, or who are unable to take cue of theiiiselves, unless 
accompanied by a competent person. 
ART. GO. Duties of Pnssei?ger. - The passenger shall observe the reasonable regulatioiis 
of the coiiiinoii carriers, aid exercise ordinary diligence to avoid injury to himself and loss or 
damage to his property under his custody. 
ART. 61. Void Slipdolion. - A stipulation limiting the liability or the carrier to a fixed 
suin for the death or injury of a passenger is void, as contrary to public policy. 
ART. 62. Nalzire of Responsihilily of’ Carrier. - The responsibility of a coinlnoii carrier 
for tlie safety of passenger cannot be dispensed with or lessened by stipulation, by tlie posting of 
notices, by statements or tickets, or otherwise. 
The reduction of fare does not justify any liiiiilation of the coiniiion carrier’s liability. 
When a passenger is carried gratuitously, a stipulation limiting the common carrier’s 
liability for negligence is valid, but not for willfLi1 acts or gross negligence. 
ART. 63, Liability ofNegligeizce or Acts ofEmployes. - Coilinion carriers are liable for 
thc death of or injuries to passengers though the negligence or willfd acts of the former’s 
employees, although such employees may have acted beyond tlie scope of their authority or in 
violation of the orders of the coiiiinon carrier. 
This liability of cominoii carriers does not cease upoii proof that they exercised all the 
diligence of a good father of a family in the selection and supervision of their employees nor can 
19 


sucll ~esponsibility be eliminated or limited by stipulation, posting of notices, statements on the 
ticket or otherwise. 
ART. 64. Linbiliiyfor Acts of Others. - A co~nn~oii 
carrier is responsible €or iiijnries 
suf€ered by a passenger on accoud of the willful acts or negligence of otlm passengers or of 
strangers, if the coinnion carrier's employees tluough the exercise of the diligence of a good 
father of the family could have prevented the injury. 
ART. 65. Liability for Discourteatis Coizduct. - Coinnion carriers shall protect their 
passengers from insults and indignities on tlie part of their employees aid shall be liable for 
moral damages for indecent, abusive and insulting language or conduct of their emp1oyee.s 
toward tlie passengers. 
ART. 66. LiaBilily lo Personal Baggage. - With respect to personal baggage in tlie 
possession and control of a passenger, tlie coininon carrier is liable for loss or damage resulting 
thereto only ikon1 its negligence or willful act of its employees. Liability of the coinnion carrier 
for its negligence does not extend to large sums of money or other property of exceptional value 
retained by the passenger in his control, without tlie luiowledge of the common carrier. 
Section Three - Ciiwinge of Goods 
ART. 67. DuQ ofConziizoiz Carrier. - The coininon carrier shall be bound before and at 
the beginning of any trip or voyage to exercise extraordinary diligence to nialce the vessel 
seaworthy, and to properly nian, equip aid supply the vessel and make the holds, refrigerating 
and cooling chambers and all other parts of the vessel in which goods are carried, fit and safe for 
their reception, carriage and preservation. 
ART. 68. Dza'alion ofRespoiisibilily. - The extraordinary diligence required by coininon 
carriers shall be exercised from tlie time the goods are unconditionally placed in the possession 
of, and received by tli; coninion carrier for transportation and continues even when the goods are 
temporarily unloaded or stored, in transit and during the time the goods are stored in warehouse 
of the coiiinion carrier at the place of destination until the same are delivered, actually or 
constructively to the consigiiee, or to the pelson who has a right to receive them, or until the 
20 


consignee lias been advised of the arrival of the goods and has had reasonable opportunity 
thereafter to remove them or otherwise dispose of thcni. 
ART. 69. I,ifl/djfjjfor Luss 01' Dnninge. - (1) Convnon carriers are responsible Cor the 
loss, destruction or deterioration of die goods unless they provc that they observed extraordinary 
diligence. 
(2) Any of tlie rollowing, if the sole and proximate cause of the loss or darnage to h e  
goods, shall exempt the carrier froin liability: 
(a) Flood, storin, ealliquake, lightning, or other nalwal disaster or calamity; 
(b) Act of llie public enemy in war, whether international or civil; 
(c) Act or omission oFthe consignor ofthe goods; 
(d) The character of the goods or defects in tlie packing or in the containers; or 
(e) Order or act of competent public authority. 
In any of the foregoing cases, the coiiimon carrier must exercise due diligence to forestall 
or lessen the loss or damage. 
ART. 70. Efect ofDelay mzd Deviation. - I l  the connnon carrier negligently incurs in 
delay in transporting the goods, or deviates from Uie stipulated or usual routes without just cause, 
a natural disaster shall not free such carrier from responsibility. 
ART. 71. Valid Stipulnlions. - (1) A stipulation iiiiposing a duty on the coniii~on carrier 
to observe inerely the diligence of a good father of a family in llie care of lhe goods is valid 
provided that it has been freely agreed upon in writing, signed by the consignor for a 
consideration other tlian tlie usual and ordinary service rendered by the common carrier to the 
public. 
Such stipulation, however, cannot be availed of by the cmier if it delays or clianges the 
stipulated or usual route, without just cause. 
(2) A stipulation exempting the common carrier fkom liability for delay caused by strikes 
or riots is valid. 
(3) A stipulation that the connnon carrier's liability is limited lo tlie value of the goods 
appearing in the bill of lading, unless the consignor declares a greater value, is binding. 
21 


(4) A stipulation fixing the sum that m y  be rccovered by the consignor for the loss, 
destruction, or deterioration of the goods is valid, if it is reasonable and just under tlie 
circumstances, and has been fairly and freely agreed upon, and the loss, destruction or 
deterioration of the goods is not dde to the willful act or conduct of the coininon carrier, or its 
employees. 
The €act that the coininon carrier has no competitor along the line or route, or a par1 
thereof, to which the contract refers shall be taken into consideration on the question of whether 
or not the stipulatioii is reasonable and just. 
ART. 72. Void Sliptilatioris. - Any of the following or similar slipulations shall be 
considered void or coatray to public policy: 
(a) That the goods are transported at the risk of the consignor; 
(b) That the coinmon carrier will not be liable for any loss, destruction, or deterioration or 
the goods; 
(c) That the coniiiio~i carier shall exercise a degree of diligence less than that of a good 
father of a family, or of a man of ordinaiy pmdence in tlie vigilance over tlie goods transported; 
((I) That tlie coniiiioii carrier shall not be respoiisible for the acts or oinissioiis of his or its 
employees; 
(e) That the cominon carrier is not respoiisible for the loss, destruction, or deterioration of 
goods on account of the defective condition of the ship, or other equipment used in coniiectioii 
with the contract of transportation. 
ART. 73. Right to Inspect. - It shall be the duty of tlie person shipping dangerous articles 
to inform the coniiiion carrier of their character. The coinmon carrier has a right to refuse to 
accept for transportation dange~ous objects which might endanger its saiety or that of its 
passengers and other goods carried, as well as those unfit €or transportation. If the coinnioii 
carrier has reasonable grounds to suspect that a package contain contraband goods, explosives or 
highly iuflainmable substances, it may demand inspection to ascertain its contents. 
22 


ARC. 74. Duty of Carrier to Issue Receipt or Bill of Lading. - It shall be the duly of the 
carrier to issue a reccipt or a bill or lading for goods delivered to it for transportation. The bill 
may be negotiable or noli-negotiable in form 
ART. 75. Evidenliary J/hludof Bill of lading. - The bill of lading shall be prima facie 
cvideiice of the contract between the parties and shall bind the sliipper to all its terms and 
conditions, if signed by the latter. 
11 shall also be evidence of tlie weight, dimensions, aiid packing of tlie goods delivered to 
the coininoii carrier for transportation, but not of the description and condition thereof, u~iless 
hey shall have been checked by the coiiimoii carrier and so stated in tlie bill of lading. 
ART. 76. Period to Deliver. - If no period has previously been fixed for the delively of 
the goods, the carrier shall be uiider the obligation lo forward them in the first scheduled trip to 
tlie place of destination. 
ART. 77. Notice of Stuppage. - When a uotice of stoppage in transitu is received by tlie 
coiiinioii carrier, the latter inust not deliver tlie goods to the consignee, but shall hold the goods 
as depositary aid await instructions from the consignor, unless a third person to whoni the bill of 
lading has been negotiated, in good faith aiid for value, demands delivery ofthe goods. 
ART. 78. To Hj’horn DeZivery Made. - The common carrier shall deliver the goods to the 
coiisigiiee designated in tlie bill of lading or if it is liegoliable in €om, to the person to whom it 
appears to have been negotiated. 
The cominon carrier shall in no case be coinpelled to deliver tlie goods until tlie 
negotiable bill of lading is surrendered to it or impoui~ded by the court. 
ART. 79. Inobilily to Deliver. -Where the consignee caimot be found or shall refuse to 
receive the goods, the carrier shall store the goods and notify the consignor of such fact. 
If the goods are perishable in nature, tlie coiniiion carrier iiiay sell the goods at a public or 
private sale aid shall hold the proceeds in trust for the owner of the goods, after deducting the 
costs of storage and sale. 
111 case the consignor or coiisignee fails to claim the goods from the carrier within a 
period of thirty (30) days from notice, the coiiiiiioii carrier shall have the right to sell such goods 
23 


tlirougli a notary public, al a public auction. The proceeds tliereol, after deducting (lie costs of 
storage and sale, shall be deposited in a bank in the name of the coiisignor and/or consignee, who 
sliall be notified thereof by the carrier. 
ART. SO. Lien over Goocis. The coninion carrier shall have a right to witldiold dclivery 
of the goods until the freight and storage fees have been paid ill full. For tlie satisfaction of such 
lien the conmoii carrier may, after thirty (30) days from demand for payment, sell such goods 
through a notary public, at a public auction. The proceeds of the sale shall be applied to the 
amount of his lien and the expenses of the sale, and tlie surplus shall be turned over to the 
consignee. 
ART. 81. Cancellalion of Negotiable Bill oflading. - Except as provided in Arlicles 79 
and SO, where the coininon carrier has delivered tlie goods to the person entitled thereto and fails 
to cancel the bill of lading, it shall be liable to anyone who purchases for value and in good faith 
such document, whether the purchase is made before or after delivery of tlie goods by the 
commoii carrier. 
ART. 82. Claim for Damages. - Where the goods are tendered for delivery Lo the 
consignee, the latter shall have tlie right to inspect the condition of the goods and shall 
inmediately notify the coniinon carrier of any loss or clamage to the goods. \Vhere the damage is 
not apparent, the consignee must notifi the cornn~on carrier of such defect within seven (7) days 
after delivery. Otherwise, receipt of the goods by the person entitled thereto, without complaint, 
sliall be prima facie evidence tlmt the sane liad been delivered in good condition and in 
accordance with the contract. 
ART. 83. Damages Recoverable. - Damages for breach of contract shall be awarded in 
accordance with Title XVIII of Book IV of the New Civil Code ofthe Pliilippines. 
Chapter 2 - Intenintiorid Cawinge 
Section One - Coiirrrtuit Pr.ovisioiis 
ART. 84. DeJinitiorw. - As used in this Chapter, the followiiig terms shall have their 
corresponding meanings: 
24 


(a) “Cabin luggage” iiieans luggage that the i~asscnger has in liis cabin or in possession, 
custody or controI. 
(b) “Carrier” ineaiis a person by or on behair of whom, a contract of carriage has been 
concluded, whether the carriage is adtually performed by him or by a performing or actual carrier. 
(c) “Contract of cnrringe” nieans R contract made by or on behalf of a carrier Tor the 
carriage by sea of a passenger or of a passenger and his luggage or for tlic carriage or goods by 
sea against payment of freight, as the case may be. 
(d) “Goods” includes live animals aid tlie container, pallet or similar article of traiqort 
or pacltagiiig in which goods are consolidated, if supplied by the shipper. 
(e) “Interiiationnl carringe” applies to any carriage in which, according to the contract, 
either the place of departure of tlie passenger or of loading of goods or tlie place of destination of 
the passenger or of discharge of the goods, as the case may be, is located within the Philippines, 
but not to a contract of carriage which takes place solely within Pliilippine waters. 
(0 
“Passenger” means any person carried in a ship under a contract of carriage or who, 
with the consent of the carrier, is accompanying a vehicle or live aninlals covered by a contract of 
carriage of goods. 
(g) “Performing or Actrial Carrier” means a person to whom the performance of the 
whole or a part of the carriage has becn entrusted by the carrier, and includes the owner, charterer 
or operator of the ship. 
(11) “Unit of Accormt” is the Special Drawing Right as defined by the International 
Monetary Fund (IMF), which shall be converted into Pliilippiiie currency on tlie basis of the 
official value of such curreiicy at the date ofjudgment or the date agreed up011 by tlie parks. 
ART. 85. Liability oftlie Carrier and the Pedornzing or Actual Carrier. - (1) Where the 
performance of the carriage or part thereof has been ciiirusted to a performing or actual carrier, 
the carrier shall nevertheless remain liable for the entire carriage, and the performing or actual 
carrier shall be liable for tlie acts and oniissions of liis servants and agents acting within the scope 
of their employmelit. 
25 


(2) Any special agreement under wliich tlie carrier assumes obligalioiis not imposed by 
this Chapter or waives rights conferred by this Chapter shall not affect the performing or actual 
carrier unless expressly agreed by the latter in writing. 
(3) Where and to tlie extent hiat bot11 tlie carrier and the actual or performing carrier are 
liable, their liability shall be joint and several, witliout prejudice to auy right of recourse as 
between the carrier and the performing or actual, carrier. 
(4) The aggregate of tlie amount recoverable fiom the carrier, the pcrforming or actual 
carrier aiid their servants and agents shall not exceed the limits of liability provided for in this 
Chapter. 
ART. 86. Loss ofRight to Limit Linbilily. -The carrier or tlie performing or actual carrier 
or their servant or agent, shall not be entitled to tlie benefits of the limitation of liability provided 
in Articles 92 and 101, if it is proved that lhe damage resulted from ail acl or omission of such 
person done with intent to cause such damage, or recltlessly aiid with lcnowledge that such 
dclniage would probably result. 
Section Two - Cwringe oj’Pnsserrgers arid their Luggage 
ART. 87. Period of Carriage. - (1) With regard to the passenger and his cabin luggage, 
the period of carriage covers the time the passenger midior his cabin luggage are on board the 
ship or in the course of embarkation or disembarltation, and tlie period during which the 
passenger and his cabin luggage are transported by water from land to the ship or vice-versa if 
the cost of such transport is included in the fare or if the vessel used for this auxiliary transport 
has been put at the disposal of tlie passenger by the carrier. 
(2) With regard to cabin luggage or other luggage, the period also covers the period when 
the luggage has been talcen over by tlie carrier or liis servant or agent on sliore or on board until 
the time of its re-deliveiy by the carrier or his servant or agent. 
ART. 88. Liability ofrke Carrier. - (1) The carrier shall be liable for the damage suffered 
as a result of the death or personal iiijuiy to a passenger and the loss of or damage to luggage iT 
the incident which caused the damage occurred in the course of tlie carriage and was due to tlie 
26 


rault or neglect of the carier or of his servants or agents acting within the scope of their 
employnie~it. 
(2) Loss or damage to luggage, other than cabin luggage, includes pecuniary loss resultiiig 
from delay in redelivery lo the pacienger within a reasonable lime after arrival of the ship in 
which such luggage has been or should havc been carried, but does not include delay due to labor 
disputes. 
(3) Tlie burden of proving that the iiicident, which caused the loss or damage, occuned in 
the course of the carriage aiid tlie extent of the loss or damage shall be on the elainiant. 
ART. 89. Piesunzpfioiz ojFault or Negligence. - (1) Unless tlie coiitraiy is proved, fault 
or neglect of the canier OK of his servants or agents acting within the scope of their cinployrneiit 
shall be presumed if the death of or personal injury to the passenger or the loss of or damage to 
cabin luggage arose from or in coiiiiectioii with shipwreck, collision, stranding, explosion or fire, 
or defect in the ship. 
(2) With respect to loss of or damage to luggage, other than cabin luggage such fault or 
neglect 'shall be presumed, irrespective of the nature of the incident that caused the loss or 
damage, unless tlie contrary is proved. 
(3) In all other cases, the burden of proving fault or neglect shall be on tlie claimant. 
ARI'. 90. Contributory Negligence. - The contributory negligence of the passenger shall 
not bar recove17 of damages for death or personal injury or €or the loss of or damage to his 
luggage, if tlie proximate cause thereof is the negligence of the carrier. The amount of damages 
shall, however, be equitably reduced. 
ART. 91, Valuables. - Tlie carrier sliall not be lidble for the loss or damage to iiioiiies, 
negotiable securities, gold, silverware, jewelly, oriiaments, worlts of art, or other valuables, 
except where such valuables have been deposited with Uie carrier for sal-e-keeping, in which case 
the limit of the liability for fault or negligence of tlie carrier shall not exceed 1,200 Units of 
Account per passenger, per carriage. 
ART. 92. Limits of Liabilioi. - (1) Unless expressly agreed upon in writing between the 
carrier aiid tlie passenger, the liability of the carrier shall in no case exceed: 
21 


(a) For death of or pcrsonal iiijuiy to a passenger, 46,666 Units of Account per carriage, 
exclusive of interests and costs; 
(b) For tlie loss of or drunagc to cabin luggagc, S33 Units of Accounl per passenger, per 
carriage, exclusive o€ interests and cbsts; 
(c) For loss of or damage lo vehicles including all luggage carried iii or 011 the vehicle, 
3,333 Units of Account per vehicle, per carriage; 
(d) For loss of or darnage to other luggage, 1,200 Units of Account per passengel, per 
carriage. 
(2) The above-mentioned amount may be reduced by agreement by an amount not 
exceeding 116 Units of Account in case of damage to a vehicle, and by an amount not exceeding 
13 Units of Account per passenger in case of loss of or damage to other luggage. 
ART. 93. Notice ofLoss or Danzage. - (I) The passenger shall give written notice to the 
carrier or his agent: 
(a) In the case of apparent damage to luggage: 
(i) For cabin luggage, before or at tlie time of dise~nbultatioii of tlie passenger; 
(ii) For all other luggage, before or at the h i e  of its redelivery; 
(b) hi case of damage to luggage, which is not apparent, or in case of loss of luggage, 
within fifteen (15) days from the date of disembarkation or redelivery or from the time wlieii 
such redelivery should have talten place. 
(2) If the passenger fails to coinply with this requirement, lie shall be presumed to have 
received the luggage undamagecl. Notice of damage to luggage in writing need not be given Xthe 
condition of the luggage has at the time of receipt beeii the subject ofjoiiit survey or inspection. 
AICT. 94. Statute ofliniitalion. - (1) Uiilcss extended by written declaration of the carrier 
or written agreement of the parties after the cause of action has arisen, any action for damages 
arising out of the death of or personal iiijuiy to a passenger or for tlie loss or damage to luggage 
shall be brought within two (2) years from the time tlie cause of action accrues. 
(2) The cause of action accrues: 
(a) In the case of personal injury, from the date of diseinbarkation o€ the passenger; 
28 


(b) In tlie case of death occurring during carriage, fro111 the date when the passenger 
slio~ild have disembarked; 
(c) In the case of persoiial injury occurring during the carriage and resulting in the death 
of the passenger after disembarl<ati&i, from the date or death, but not later tlmn three (3) years 
from the date of disembarltation; 
(d) In the case of loss or damage to luggage, from the date of disembarkation or from the 
date when disembarkation should have talcen place, whichever is later. 
§ection Three - Cnrringe of Goods 
ART. 95. Scope ofApplicalion. - This Section shall apply to all contracts of carriage or 
goods by sea, whether or not covered by bills of ladiiig, but not to charter parties, unless a bill of 
lading is issued pursuant to the charter party, in which case the provisions of this Section shall 
apply to such bill of lading if it governs the relalion between the carrier and its holder, other than 
the charterer. 
.ART. 96. Period of Carriage. - (1) The resporisibility of the carrier for the goods covers 
the period during which the carrier is in charge of the goods at the poit of loading, during the 
transportation, and at the port o f  discharge. 
(2) The carrier is deemed to be in charge of the goods - 
(a) €rom the time he or his servant or agent has taken over the goods from: 
(i) the shipper, or a person acting on his belialc or 
(ii) an authority or other third party to whom, pursuant to law or regulations 
applicable at tlie port of loading, the goods intist be handed over for shipnient; 
(b) until the time he has delivered tlie goods: 
(i) by handing over the goods to the consignee, his servant or agent; 
(ii) in cases where the consignee does not receive the goods from the carrier, by 
placing them at the disposal of the consignee in accordance with the contract or 
with the law or with the usage of the particular wade applicable at the port or 
discharge; or 
29 


(iii) by handiiig over the goods to an authority or other third party to whom, pursuant 
to law or regnlal.ions applicable at the port of discharge, the goods must be hruided 
over. 
ART. 97. Obligations (fthdCavicr. - (1) The carrier shall be bound before and at the 
beginning of the voyage to exercise due diligence to: 
(a) iiialte the ship seaworthy; 
(b) properly man, equip and supply the ship; and 
(c) male the holds, refrigerating and cool chambers, and all other parts of the ship in 
which goods are carried, fit aid safe for their reception, carriage and preservation. 
(2) The carrier shall properly and carefully load, liandle, stow, carry, keep, care for and 
discharge the goods carried. 
ART. 98. Liability offhe Currier. - (1) The carrier shall be liable for loss of, dainage to 
or delay in delivery of tlie goods while the goods were in his charge, when such loss, damage or 
delay is caused by failure of the carrier, his servants or agents to comply with its obligatiolis 
under the preceding Article. 
(2) Delay in delivery occurs when the goods have not been delivered at the port of 
discharge provided for in the contract of carriage of goods by sea within the time expressly 
agreed upon or, in the absence of such agreement, within a reasoliable time, having regard to the 
circumslances of the case. 
(3) The person entitled lo nialie a claini for tlie loss of goods may treat the goods as lost if 
they have not been delivered within sixty (60) consecutive days following the expiration of the 
time in which goods should have been delivered. 
(4) Whenever loss, damage or delay has resulted from unseaworthiness, the burden of 
proving the exercise of due diligence shall be on the carrier or other person claiming exemption 
under the next Article. 
ART. 99. Exenzption fionz Linbilily. - (1) The carrier shall not be responsible for loss, 
damage or delay arising or resulting from: 
30 


(a) act, neglect or dck~nl[ of ihe niastcr, mariner, pilot, or tlie servants of the carrier in thc 
navigation or in the management of the ship; 
(b) iire, unless caused by the actual fatilt or privity of the carrier; 
(c) perils, dangers and acciddints of the sea or other navigable waters; 
(d) act of God; 
(e) act of war; 
(0 
act of public enemies; 
(e) arrest or restraint of princes, rulers or people, or seizure under legal process; 
(11) quarantine rest.rictions; 
(i) act or omission of the shipper or owner orthe goods, his agent or representative; 
0) strilces or lock-outs or stoppage or restraint of labor from whatever cause, whether 
partial or general; 
(k) riots and civil commotion; 
(I) any deviation in saving or attempting to save life or property at sea; 
(111) wastage in bulk or weight or m y  other loss or damage arising from inherent defect, 
quality or vice o f  the goods; 
(11) insu€ficiency of paclcing; 
(0) insufficiency or inadequacy of marlts; 
(p) latent defects not discoverable by due diligence; or 
(9) any other cause arising without the actual fault or privity of tlie carrier, or without the 
fault or neglect of the agents or servants of the carrier. The burden o-Cproof 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, damage or 
delay. 
(2) In relation to the carriage of live animals by sea, the carrier sldl ti01 be liable for loss, 
damage or delay in delivery resulting from any special risks inherent in carriage of that nature. If 
the carrier proves that he has coinplied with any special instructions given to hiin by the shipper 
respecting the animals, it is presuied that the loss, damage or delay in delivery was caused by 
3 1  


such inherent risk unless there is proof that all or a part of tlie loss, damage or delay in deliveiy 
resulted fioiii fault or neglect on the part of tlie carrier, his servants or agents. 
( 3 )  Neither shall tlie carrier be responsible lor any loss, damage or delay lo, or in 
coiiiicctioii with, goods if tlie naturd or value of those goods lias been laowingly niis-stated by 
the shipper in the bill of lading. 
ART. 100. Deck Cargo. - (1) Notwithstanding tlie provisions of paragraph 1 of tlie 
preceding Article, the carrier shall be liable for loss of or daiiiage to or delay in delivery to tlie 
goods carried on deck resulting solely from such carriage unless carriage ofthe goods on deck is 
in accordance with an agreeiiient with tlie shipper or with the usage of tlie particular trade or 
allowed by statutory rules or regulations. 
(2) If tlie carrier aiid the shipper have agreed that tlie goods shall or may be carried on 
deck, the carrier shall insert in the bill of ladiiig or other document evidencing the contract of 
carriage of goods by sea a statement to that effect. In the absence of such a statement tlie carrier 
has tlie burden or proving that an agreement for carriage on deck lias been entered into: Provided, 
however, tliat such an agreeinelit cannot be involced by tlie carrier against a third party, iiicluding 
a consignee, \.vho Iias in good faith acquired tlie bill of lading or other docunient evidencing this 
contract. 
ART. 101. Limits ofLiabilify. - (1) Where tlie nature and value of Ihe goods have been 
declared by the shipper before loading and inserted in tlie bill of lading or any contract of 
carriage of goods by sea, such declaration shall beprbnnjkcie evidence ofthe value oftlie goods, 
but not binding or coiiclusive on the carrier. 
(2) In tlie absence of such declaration, tlie liability of the carrier €or loss resulting from 
loss of or damage to goods shall be limited to an amount equivalent to 335 Units of Account per 
pacltage or other shipping uiiit or 2.5 units of account per ltilograin of gross weight or the goods 
lost or damaged, whichever is tlie higher. 
(a) Where a container, pallet or similar article of transport is used to consolidate goods, 
the goods in such article of transport are deemed one shipping unit unless each package or other 
shipping units raclted in tlie article oftransport are cnumerated in the bill of lading or in any other 


clocuiiient evidencing the contract of carriage of goods by sea, in which case each shall be 
deemed packages or shipping wits. 
(b) In cases where the article of transport itself has been lost or damaged, that article or 
transport, if iiot owned or otherwise’supplied by the carrier, is considered one separate shipping 
unit. 
(3) Tlie liability of the carrier for delay in delivery is limited to an amount cqiiivaleiit to 
two aiid a half times the freight payable for tlie goods delayed, but iiot exceeding the total freight 
payable uiider the contract of carriage of goods by sea; aiid 
(4) In no case shall the aggregate liability of tlie carrier uiider the preceding paragraphs 
(2) and (3) exceed the liniitatiori which would be esLnblislied uiider the preceding paragraph (2) 
for total loss of the goods with respect to which such liability was incurred. 
ART. 102. Application to non-contrcrcfeial claims. - The defenses and limits of liability 
provided for in this Chapter shall apply in any action against the carrier in respect of loss of or 
damage to the goods covered by tlie contract or carriage of goods by sea, as well as of delay in 
delivery diether the action is founded in contract, in tort or otherwise. 
ART. 103. Through carriage. - Notwithstanding the provisions of Article 65, where the 
contract provides explicitly that a specified part of the carriage is to be perforined by a person 
other tliaii tlie carrier, it may be validly stipulated that tlie carrier shall not be liable for loss, 
damage or delay in deliveiy caused by an occurrelice which talces place while the goods are in the 
charge of tlie actual carrier duriiig such part o€ the carriage. Such stipulation, however, is without 
effect if no judicial proceedings can be iiistituted against the actual carrier iii a court of competent 
jurisdiction. The burden of proving that any loss, damage or delay in delivery has been caused by 
such an occurreiice rests upoii the carrier. 
ART. 104. Liability of tlze Shipper. - The shipper, his servant or agent is not liable for 
loss sustained by tlie carrier or the actual carrier, or for damage sustained by tlie ship, unless such 
loss or damage was caused by the fault or neglect of tlie shipper, his servants or agents. 
ART. 105. Special rules for dangerozrs goods. - (1) Goods of an iiifla~nmable, explosive 
or dangerous nature, tlie shipment of which tlie carrier, his master or agent has conseiited without 
33 


knowledge of their nature and character may, at auy time, before discharge be laiided at any 
place, or destroyed or rendered iimocuous by the carrier without compensation, and the shipper 
of such goods shall be liable for all damages and expenses directly or iiidirectly arising out of or 
resulting fioin sucli s~iipnient. 
j 
(2) If such goods were shipped with knowledge and coilsent of their nature aid cliaracter 
on the part of the carrier, the inaster or agent, and sliall become a danger to the ship or cargo, they 
may, in like manner, be landed at any place, or destroyed or rendered iiiiiocuous by ilie carrier 
without liability on his part, except for general average, if any. 
ART. 106. Issunizce of bill of lading. - (1) When the carricr or the actual carrier takes the 
goods into his charge, the cair.ier shall, issue to the shipper a bill of lading. 
(2) The bill of lading inay be signed by a person having authority from tlie carrier. A bill 
of lading signed by or for the master of the ship carrying the goods is deemed to have been 
signed on behalf of the carrier. 
(3) The signature 011 the bill of lading iiiay be in handwriting, printed in facsimile, 
perforated, sianiped, in syinbols, or made by any other incchanical or electronic ineaiis. 
(4) After the goods have been loaded on board, the carrier shall, if the shipper so 
deiiiands, issue a “shipped” bill of lading which, in addition to the particulars required in the next 
Article, shall state that the goods are on board a nained ship or ships and the date or dates o f  
loading. 
ART. 107. Contents of bill of lading. - The bill of lading sliall show, arnoiig other things, 
the €ollowiiig: 
(a) the leading inarlcs necessary €or identification of the goods as the same are furnished 
in writing by the shipper before the loading of such goods starts, provided such iiiwlcs are 
stamped or otherwise s h o w  clearly upon tlie goods if uncovered, or oil the cases or coverings i!! 
wliich such goods are contained, in such a inanner as should ordinarily reinaiii legible until the 
end o€tlie voyage; 
(b) either tlie iiuiiiber of packages or pieces, or the quantity, or weight, as the case inay be, 
as hriiished in writing by the shipper; and 
34 


(c) the apparent order 2nd condition of the goods. 
ART. 108. Reservations in the Bills of Lading. - (1) If tlie bill of lading contain 
particulars concerning the general nature, leading marlts, iiuiiiber of packages or pieces, weight 
or quantity of the goods which tlie harrier or other persoil issuing the bill of lading on his behalf 
lcnows or has rcasoiiable grounds to suspect do not accurately represent tlie goods actually taken 
over or loaded on board, or if lie had no reasonable means of clieclting such particulars, the 
carrier or such other persoil must insert in the bill of lading a reservation specifying these 
inaccuracies or observations. 
(2) If tlie carrier or other person issuing tlie bill o f  lacling 011 his behalf fails to note on the 
bill of lading the apparent coliclition of tlie goods, he is decined to have noted 011 tlie bill of lading 
that the goods were in apparent good order and condition. 
ART. 109. Evidentiuuy effect of Bills of Luding. - Except for parliculars for which a 
reservation permitted under the preceding Article has been noted in the bill of lading, tlie bill of 
lading is primafacie evidence of the taking over or, where a “sliipped” bill of lading is issued, of 
the loading by the carrier of the goods as described therein. 
Proof to tlie contrary by the carrier is not admissible if tlie bill of lading has been 
transferred for value to a person wlio in good faith has acted in reliance on the description of the 
goods therein. 
ART. 110. Guauuiiteed b j ~  
the shippepc~. - The shipper is deemed to have guaranteed to tlie 
carrier the accuracy of particulars relating to the general nature of the goods, their marlcs, 
number, weight and quantity as furnished by him for insertioii in the bill of lading, and must 
indeinnify the carrier against loss resulting froin iiiaccuracies in such particulars. The shipper 
remains liable even if the bill of lading Ilas been transferred by hiin. 
The riglit or $lie carrier to such indemnity in 110 way frees him Trom liability under tlie 
contract of carriage of goods by sea to any person other than tlie shipper. 
ART. 11 1, Notice of loss or dcmzuge. - (1) Uidess notice of loss or darnage, specifying tlie 
general nature of such loss or damage, is given in writiug by tlie consignee to tlie carrier or to the 
actual carrier not later tlian the working day afier tlie day when tlie goods were handed over to the 
35 


consignee, such handing over is prima facie evidence of the delivery of the goods in good 
condition. 
(2) Where the loss or damage is not apparent, notice in writing must be given within 
i 
fifteen (1 5 )  days after the day wlien the goods were handcd over to the consignee. 
(3) If the state of the goods at the time they were handed over to the coiisigiiee has been 
the subject of a joint survey or inspection by tlie parties, notice in writing need not be given of 
loss or damage ascertained during such sluvey or inspection. 
(4) In the case or an actual or apprehended loss or damage the carrier and the consignee 
must give all reasonable facilities Lo each other for inspecting aid tallying tlie goods. 
ART. 112. Notice ofDelny. - No coinpensation shall be payable for loss resulting from 
delay in delivery unless a notice has been given in writing to the carrier or to the actual carrier, 
within sixty (60) days after the date when the goods were handed over to the consignee. 
ART. 113. Notice to h e  Shipper. - (1) Unless nolice of loss or damage, specifying the 
general nature of the loss or damage, is given in writing by the carrier or actual carrier to the 
shipper not later than ninety (90) days afler the occurrence of such loss or damage or aner the 
delivery of the goods, whichever is later, the failure to give such notice is prinzafncie evidence 
that the carrier or the actual carrier has sustained no loss or damage due to llie fault or neglect of 
the shipper, his servants or agents. 
(2) For the purposes of this Article and the preceding Article, notice given to a person 
acting on the carrier’s or the actual carrier’s behalf, including the niaster or the officer in charge 
of the ship, or to a person acting 011 tlie shipper’s belialf is deemed to have been given to the 
carrier, to the actual carrier or to the shipper, respectively. 
ART, 114. Linzitalion ofactions. - (1) Any action relating to carriage of goods by sea 
under this Section shall be time-barred if judicial or arbitration proceedings have not been 
instituted within a period of one (1) year. 
(2) The limitation period commences 011 the day on which the carrier has delivered the 
goods or part thereof or, in cases wliere no goods have been delivered, on the last day on which 
the goods should have been delivered. 
36 


(3) The person against whom a claim is made may at any time during the running of the 
limitation period extend that period by a declaration in writing to the claimant. This period may 
bc further cxtended by another dcclaiation or declarations. 
i 
ART. 115. Arbilualion. - (I) The parties may provide by agreement in writing that any 
dispute that may arise relating to carriage of goods by sea under this Section shall bc refcrred to 
arbitration. The arbitrator or arbitrators shall apply the provisions of this Section. 
(2) Where a charter party contains a provision that disputes arising thereunder shall be 
referred to arbitration and a bill of lading issued pursuant to the chailer party does not contain a 
special annotation providing that such provision shall be bindiiig upon the holder of the bill of 
lading, the carrier may not invoke such provision as against a holder having acquired the bill of 
lading in good faith. 
ART. 116. Conteaclzral slipulations. - (1) Any clause, covenant, or agreement in a 
contract of carriage of goods by sca relieving the carrier or the ship from liability for loss of or 
damage to, or in connection with, goods arising from negligence, fault or failure in the duties and 
obligations provided for in this Section, or lessening such liability otherwise than as provided in 
this Section, shall be void. A carrier may, however, increase his responsibilities and obligations 
under this Section. 
(2) For the purposes of this Ailicle, a benefit of insurance in favor of the carrier, or a 
similar clause, shall be deemed to be a clause relieving the carrier from liability. 
Chaptcr 3 - Clinrter Parties 
Section One - Geirercil Provisiorts 
ART. 117. Dejnition ofTeu77zs. - The following terms used in this Chapter sliall have the 
following meaning, unless the context or usage of the term indicates olhemise: 
(a) “Clinrter Par@ may be defined as the hiring or letting of part or the whole of a vessel 
or vessels for a particular voyage or voyages andlor for a particular period, far the carriage of 
goods at an agreed freight or hire. 
37 


(b) “Demrrrmgc” is a sum fixed in the charter party to be paid as liquidated damages for 
delay in the loading or unloading o€ cargo beyond the stipulated laytime. 
(c) ‘‘Dispfch” is a rebate or‘ freight allowed to the chartercr for loading or discharging in 
less than the stipulated laytime. 
i 
(d) “Lnytinze” is tlie period of time grantcd in tlie charter paxty for the loading and 
discharging of the cargo. 
(e) “Slripoivrzcr DY oivrze~ of flrc iwsel” shall include not only the owner but also the 
charterer. 
ART. 11 8. Warranty of Seaworthiness. - Tlie shipowner warrants that tlie vessel is 
seawortliy for a particular voyage and €or the particular cargo. 
The charter party shall contain an adequate and accurate description of tlie vessel, listing 
its specifications and capacities. Tlie charterer, if lie so desire, may be provided with copies of 
relcvant plans of tlie vessel. 
ART. 119. Right ofSzrOstilzilioiz of Vessel. - Should the vessel nained or nominated not be 
available to underlalce the carriage, the shipowner shall be pertiiitted to substitute aiiolher vessel, 
provided that the main particulars and position of the substitute vessel shall be subject to the 
charterer’s approval. Such approval shall not be unreasonably withheld. 
ART. 120. Trading liniifs. - The charterer shall employ the vessel in lawful trade for the 
carriage of lawful cargo only between good and safe ports or places where the vessel can always 
lie safely afloat. The shipowner may expressly exclude areas where there are ufarlilce hostilities. 
ART. 121. Cargo. - It is the duty of tlie charterer to furnish a complete cargo in 
accordance with tlie terms of the charter, giving its description and quantity. He shall be entitled 
to receive bills of lading regarding such cargo. 
ART. 122. Hire Period. - The parties shall agree on the duration of the charter, although 
the period of hire runs from deliveiy to redelivery of the vessel. In such case, the parlies sliall 
provide a margin within wliicli deliveiy and redelivery of the vessel can be made without €urtlier 
claiiii against any of the parties. 
In the absence of a stipulation, the margin shall be a rcasouable period. 
38 


The vessel is considered delivered if it reaches the berth or deck at which the vessel is lo 
load or unload if it is berth-charter party. If the cliartcr party names a port for delivery or 
redelively, and the vessel cannot proceed iiiunediately to a berth, it is considcred “arrived“ if it is 
withiri the port where it is at the iiniiiediak and effective disposition of the charterer. 
1 
ART. 123. SubchuTteriizg. - Unless expressly prohibited in the cliarter-partyt tlic charterer 
limy sub-charter the vessel, in which case the duties of the owner shall apply also to a disponeiit 
owner and the duties of a cliaiterer shall also apply to a sub-charterer. 
ART. 124. Lien. - To secure payinelit of fieiglil aid otlicr charges, the shipowner shall 
have a prior possessory lien upon all cargoes and sub-freights belonging to the charterer for all 
claims under the charter party, but not on cargo belonging to the sub-charterer where the latter 
had already paid the €reiglt to the charterer. 
ART. 125. Clnzrse Purnnzotnit. - Except in cases of domestic charter parlics, the contract 
niay provide that the Carriage or Goods by Sea Act, wliether the Hague or I-Iague-Visby rules, 
shall apply to bills of lading issued under the charter party. 
Section Two - Vojmge CImrter Parry 
ART. 126. Voyage Charter Defined. - A “voyage charter party” is a charter party of a 
specific vessel for a paiticular’voyage fioni one port or area to another, the commercial 
nianagenient and navigational coutrol of the vessel rernaining with the owner. 
ART. 127. Implied Underlaking. - Unless otherwise agreed upon in a voyage charter, the 
shipowner impliedly undertakes: (a) that the vessel shall proceed with reasonable dispatch; and 
(b) that it shall proceed without unjustifiable deviation. 
ART. 12s. Efect of Ulzsenic~orthifiess. - (1) If the charterer discovers that the ship is 
unseaworthy before the voyage begins, and the defect canuot be remedied w i t h  a reasonable 
time, he may rescind the contract. 
(2) After the voyage has begun and the charterer is no longer in a position to resciud the 
contract, he can claim daniages for any loss caused by initial unseaworthiness. 
39 


ART. 129. Recrsoimble Dispnlch. - The implied undertalciiig of reasonable dispatch 
means that the vessel shall proceed and complete tlie voyage agreed upon, with all reasonable 
speed. hi the case of a coiisecutive voyage charter party, the obligation to proceed with 
reasonable dispatch applies to everjvoyage made under it. 
ART. 130. Eflect of Ur?reasonable Delay. - (I) If the unreasonable delay is such as to 
fiustrate the comiiiercial object of the charterer in cliartering the vessel, then the charterer may 
rescind tlie coiitract and claim damages. 
(2) If tlie delay is not so serious as to have tlie above result, the charterer can merely claim 
damages for the delay, uiiless the delay is due to excepted perils. 
ART. 13 1. No Unjuslifiabb Deviation. - The implied uiideitalcing that tlie vessel shall 
proceed without unjustifiable deviation means that the vessel shall proceed on the voyage 
without departure from tlie prescribed route, and if there is none, from the usual and reasonable 
route. 
ART. 132. Usual aid Reasonable Route. - Unless the route is fixed in the contract, the 
usual and reasonable route is the direct geographical route between the places specified in the 
contract, or one established by mercantile usage, or tlie most natural, direct, and advantageous 
route. 
ART. 133. When Deviation is Justified. - Deviation is considered justified in the 
following cases: 
(a) Where it is for the purpose of saving liuman life; 
(b) Where it is reasonably necessary for the safety of the vessel or its cargo; or 
(c) Where it is due to circunistaiices beyond the control of tlie master. 
ART. 134. Effeci of UnjzisliJiahle Deviation. - Where there has been unjustifiable 
deviation, the charterer can either cancel the coiiti-act or treat the contract as still subsisting, 
reserving his right to damages. 
In case lie elects to cancel tlie contract, die cliarterer can claiiii the delivery of his goods 
and shall be liable only LIP to tlie proportional amount of tlie freight. The shipowner shall be 
liable lor any loss or damage to tlie cargo unless the loss or damages is due to furce imjeure or 
40 


the inherent vice o f  the cargo or that the loss or damage would have occurred even if there had 
been no deviation. 
In case the charterer elects to treat the contract as still subsisting, the shipowner shall 
have the right to payment of the stipulated freight but he shall be liable for damages resulting 
from the deviation. 
ART. 135. Implied Undertaking by the charterer. -Unless the shipowner knows or ought 
to lcnow the dangerous character of the goods, there is an implied warranty by the charterer- 
shipper that the goods are fit for carriage in the ordinary way and are not dangerous. 
For this purpose, dangerous cargo means not only cargo, which by its very nature may 
endanger the safety of the vessel, but also those, which owing to legal impediments as to their 
carriage or discharge may involve detention of the vessel. 
ART. 136. Effect ofshipping Dangerous Goods. - Subject to the provisions of Article 
105 ofthis Code: 
(1) If the charterer ships goods, without notice to the shipowner of its dangerous 
character, the charterer is liable for any loss or damages it may cause; 
(2) If notice is given to the shipowner or his agent of the dangerous character of the goods 
or when the shipowner or his agent has full opportunities of observing the dangerous character of 
such goods, the charterer is not liable. 
ART. 137. Undertaking to Proceed to Port of Loading. - (1) If there is no agreement that 
the vessel shall arrive at the port of loading at a fixed date, the shipowner undertakes to use 
reasonable diligence to proceed thereto and will be liable for damages if he fails to do so, unless 
the delay in or failure to arrive is due to an excepted peril orforce majeure. 
(2) If a definite date is final for such arrival at the port of loading or if a canceling date is 
fixed and the vessel does not arrive by that date, the charterer may refuse to load and may cancel 
the contract. He shall also have the right to claim damages therefor, unless the delay in arrival or 
failure to arrive is due to an excepted peril orfrce majeure. 
ART. 138. Duties ofShipownev. -The shipowner shall: 
41 


(a) send the vessel to the agreed or usual place of loading or unloading and give notice of 
its readiness to load or unload to the charterer, in which case laytime starts to run from the receipt 
of such notice by the charterer; 
(b) load the cargo provided by the charterer in accordance with the charter party or, in the 
absence of stipulation, in accordance with existing practices of the port; and 
(c) unload the cargo in accordance with the customary practices of the port and deliver it 
to the person entitled to receive it. 
ART. 139. Duties of the Charterer. -The charterer shall: 
(a) designate a safe port or berth for loading and unloading; 
(b) provide complete cargo which the vessel can safely carry and which would not subject 
the vessel to unnecessary restraint by public authorities; 
(c) pay freight and dead freight in accordance with the stipulation of the charter parties. 
ART. 140. Safe Port OY Berth. - A safe port is a port where the vessel can enter, remain, 
and depart Without damaging itself or its equipment. 
The berth designated by the charterer must be safe and reachable on arrival of the vessel. 
Section Three - Time Charter Party 
ART. 141. Time Charter DeJined. - A “time charter” is a charter party for the hiring of a 
specific vessel for a particular period under the commercial management of charterer, but the 
navigational control of the vessel remains with the owner. 
ART. 142. Allocation ofExpenses. - Unless otherwise stipulated in the charter party, the 
owner shall provide and pay for all provisions and wages, insurance of the vessel, all deck and 
engine room stores, and shall maintain the vessel in a thoroughly efficient state in hull and 
machinery during the charter period. All other expenses incidental to the operation and 
commercial management of vessel shall be borne by the charterer. 
ART. 143. Warranty ofPerformance. - The owner warrants that the vessel is capable of 
steaming in good weather and smooth water at a stated speed at a stipulated rate of consumption 
of bunker oil or fuel. 
42 


ART. 144. Control Over the Muster. - The master shall prosecute all voyages with the 
utmost dispatch and render customary assistance with the vessel’s crew. He shall be under the 
orders of the charterer as regards the employment of the vessel, the appointment of ship agents 
and other similar arrangements. 
The owner shall be responsible for any loss or damage of the cargo caused by negligence 
or willful misconduct of the master and/or the crew. If the charterer has reasons to complain 
about the conduct of the master, officers, or engineers, the owner, on receiving the complaint, 
shall investigate the matter and make a change in the appointments, if necessary and practicable. 
ART. 145. Allocution of Risks. - The shipowner and charterer may agree on how to 
apportion their liabilities under the time charter. In the absence of stipulations to the contrary, the 
charterer shall indemnify the owner against all consequences or liabilities arising from the 
master, officers or agents signing bills of lading or other documents or otherwise complying with 
his orders or for overloading, as well as from any irregularity in the documents of the vessel 
caused by the charterer or his agent. 
ART. 146. Nonpayment of Hire. - Unless otherwise stipulated, the shipowner shall have 
the right to withdraw the vessel from the services of the charterer, for default in payment of the 
hire, provided that he gives notice to that effect to the charterer, and that the latter fails to pay the 
same within forty-eight hours after said notice. 
ART. 147. 08-Hire. - (1) Hire shall be suspended for delays arising from specific events 
or conditions not attributable to the charterer which deny the latter the full use of the vessel to the 
extent that time is actually lost. Unless othenvise stipulated, off-hire period begins on the 
happening of any of the following incidents: 
(a) Dry-docking or other necessary measures to maintain the efficiency of the ship; 
(b) Crew deficiencies and strikes; 
(c) Lack or deficiency of stores; 
(d) Breakdown of machinery; 
(e) Damage to the hull; and 
43 


(0 
Accidents or any other cause which hindeis or prevents tlie full working of the vessel 
[or inore than twenty-four (24) hours. 
(2) The off-hire period shall terminate when the vessel’s efficiency or lull use is restored. 
However, where the vessel deviated from its course Tor repairs, and the repairs have been 
completed at Uie port of reCuge, off-hire does not terminate until the vessel is in the same positioii 
as it was when the event rendering the vessel off-hire occurred, or until the vessel has regained 
the line of the voyage, whichever is tlie shorter distance to the port of destination. 
i 
ART, 148. Redelivery of Vessel. - The time charterer is obliged to redeliver the ship in 
the same condition as it was on delivery, except those due to ordiiiay wear and tear. The 
condition of tlie ship on delivery and redeliveiy shall be based on the “on-hire” aid “off-hire” 
survey reports. 
Section Four -Bareboat Cltcirter Party 
ART. 149. Barebont Charter Party de$ned - A bareboat charter party is a conlract 
whereby tlie charterer takes over the control, nianageinciit, manning and provisioning of the 
vessel. 
ART. 150. Form and Contents. - A bareboat charter party must be in writing, signed by 
the parties, or by their authorized representative, and shall include among others, the following: 
(1) Name, surname, and domicile of the owner, 
(2) Name, surname, and domicile of the charterer, 
(3) Type, liaiiie, class, and tonnage of the vessel, 
(4) Its flag, countly of registry, call sign, year and place and built, 
(5) Port and time of delivery, canceling date, and port of redelivery, aid 
(6) Trading limits, period, hire, and fiequency of diy-docking. 
ART. 15 1. &ligations of tile Owner.. - The owner is obliged: 
(a) to deliver the vessel properly documented and seaworthy in every respect ready in hull 
and machinery fit for the use intended at the port and time stipulated. 
44 


(b) to mainlain the charterer in tlie peacefd and adequate enjoyiuent of the charkr for tlie 
eiitire duration of tlie contract. 
(c) Unless otherwise stipulated, to bear tlie expenses for repairs and replacements 
occasioned by latent defecls in the vessel, her niacliinery or appurtenances existing at the time of 
delivery, provided such defects have manifested themselves within eighteen months after 
delivery. 
i 
ART. 152. Oblignfiarrs ofthe Charterer. - The charterer is obliged: 
(a) To pay the charter hire accordiiig to the terms slipulated; 
(b) To maintaiu the vessel, her machinery, boilers, appurtenances and spare parts in a 
good stale of repair, in efficient operating condition, and in accordance with good commercial 
maintenance practice; 
(c) To man, provide victuals, and to operate, navigate, supply and fuel the vessel at his 
own expense. 
(d) To nialte no structural changes in the vessel or in the niachineiy, boilers, 
appuitenances or spare parts, without, in each instance, first securing the owner's approval 
thereoc 
(e) To bring to the luiowledge of tlie owner, within the shortest possible time, eveiy 
usurpation or untoward act which any third person may have committed or may be openly 
preparing to carry out upon vessel; 
(0 
To redeliver the vessel, all its outfit, equipment, and appliances in the same or as good 
structure, state, condition, and class as that id wliicli it was delivered, save ordinary wear and 
tear. 
Section Five - Volrmte Contract ofAJfieiglrtrnerit 
ART. 153. D1.firzitiorz. - A volume contract of affreiglitment is a charter party 'for tlie 
carriage of a large quantity of cargo at an agreed scl1edule of shipments over a loiig period of 
time. 
45 


ART, 154. Obligation of the Owner. - The owner undertakes to carry on vessels owned 
or chartered by him a specified quantity of cargo during a specified period of time, in lots of 
specified iuinitnum and maximum weight or volume, at the option of either the owuer or 
charterer, to specified ports or areas i of loading and unloading. 
ART. 155. Period ofCo~~racf. 
- The period of the contract shall be expressly provided, 
indicating the first layday for the initial vessel and the canceling date for the final vessel. 
ART. 156. Schedule and Quantity of Skipnrent. - (1) The parties shall agree on the 
schedule of shipments and nomination of tonnage. 
(2) The total quantity to be shipped shall state the mininiuni and maximum weight or 
volume, giving the charterer the option to increase the same, subject to the determination by the 
shipowner of the exact quantity to be carried. 
(3) The shipowner shall not be bound to carry any shipment, which is less than the 
minimum quantity agreed upon in the contract. 
ART. 157. Failzire io Give Program ofShipnierzl. - If the charterer fails to give specific 
program of shipment in due time, any expenses incurred or any loss suffered by the shipowner 
shall be refunded by the charterer. 
ART. 158. Nomination of Vessels. - The shipowner shall nominate vessels with detailed 
specifications, depending on the type of transportation agreed upon. The nomination shall give 
the vessel’s name, the approximate quantity of cargo required, and first layday for such vessel. 
ART. 159. Failure to Norninaie Tonnage. - Unless otherwise agreed upon by the parties, 
should the owner fail to nominate tonnage in accordance with the provisions of the contract, the 
charterer shall have the option to postpone the shipment within the period agreed upon, or cancel 
the agreement. 
ART. 160. Charterer’s Refusal of Tonnage. - If tlie charterer has refused tonnage validly 
nominated in due time, the shipowner shall have the option to postpone tlie shipment within the 
period of the contract or lo cancel the agreement. 
46 


ART. 161. Definitions. - ( I )  A ‘tfreight forwnrrler” is a person who, for compensation, 
without being a coininon carrier, holds himsell out to the general public, to procure 
transportation of goods, assemble and consolidate shipments of such goods, perform or provide 
for the performance of break-bulk and distribution with respect to such consolidated shipments. 
i 
(2) A “Non-VesseZ-Q~erntiizg-ConlNlon-Ca~rier” 
or NVOCC is a €reiglit forwarder who 
assumes responsibility for the transportation of such goods from the point of receipt to the point 
of destination, utilizing for such transportation, the services of common carriers. 
ART. 162. Issuance of Bill of Lading and ibfanifst. - The NVOCC shall prepare an 
accurate bill of lading for each shipment consigned for transportation to a common carrier, and a 
copy thereof furnished the consignor and consignee of such shipment. 
He shall also prepare an accurate manifest, showing every individual shipment included 
in each consolidated shipment consigned for transportation to a common carrier. 
ART. 163. Liability. - The NVOCC assumes the liability of a common carrier with 
respect to the shipper, but in relation to the common carrier, the NVOCC is the shipper. 
ART. 164. Options. - The NVOCC may accept a particular shipment as an agent of the 
shipper or as the agent of a common cmier, in the event that a volume of freight adequate to 
permit a consolidated shipment cannot be assembled. 
Chapter § - Towage 
ART. 165. Definition of Terms. - The following terms used in this Chapter shall have 
these meaning, unless the context or usage of the term indicates otherwise: 
(a) “Toru” is any vessel that is the object of towage. 
(b) “Towage” or “towing” is the hiring of a vessel in connection with the holding, 
pushing, pulling, moving, escorting or guiding of a vessel owned by another, not constituting a 
salvage operation. 
(c) “Tug” is any vessel designed for towage. 
ART. 166. Harbor Towage. - In harbor towage, navigation and maneuvering are 
conducted under the direction and responsibility of the tow owner or the hirer. 
47 


ART. 167. Liability of lhe Tow. - The tow owner or hirer sliall indemnib the tug owner 
against any claim by any person not a party to the contract of towage for any loss, damage, delay, 
personal injury or death, unless the cause is due to the negligence of the tug. 
The tug owner shall not be liable to the tow owner for any loss, damage or delay suffered 
by the tow or for any personal injury or loss of life suffered by any person on the tow, unless the 
cause is due to the negligence of the crew of the tug. 
ART. 168. Tevminalion of Contract. - If the tow is in serious danger of being lost or 
damaged, and the cause thereof is not due to any breach of the contract by the tug owner, the 
contract of towage shall be terminated, and the relationship between the tng and the tow shall be 
governed by the law on salvage. If the danger is due to a breach of contract of towage on the part 
of the tug, the contract shall be terminated at the option of the tow owner, without prejudice to 
the tug owner’s liability for damages. 
TITLE IV - MARINE INSURANCE 
Chapter 1 -Scope and Coverage of Marine Inscrrame 
ART. 169. Marine insurance defined. - A contract of marine insurance is a contract 
whereby the insurer undertakes to indeninify the assured in manner and to the extent thereby 
agreed, against marine losses, i t :  losses incident to iiiarine adventure. 
ART. 170. Mixed sea and land risks. - (1) A contract of marine insurance may, by its 
express terms, or by usage of trade, be extended so as to protect the assured against losses on 
inland waters or on any land risk which may be incidental to any sea voyage. 
(2) Where a ship in course of building, or the launching of a ship, or any adventure 
analogous to a marine adventure, is covered by a policy in the form of a marine policy, the 
provision of this Title insofar as applicable, shall apply thereto: Provided, however, that nothing 
in this Title shall altdr or affect any law applicable to a contract of insurance other than marine 
insurance. 
ART. 171. Marine adventure dejned. - (1) Subject to this Title, every lawful marine 
adventure may be the subject of a contract of marine iiisurance. 
48 


(2) In particular there is a marine adventure where - 
(a) any ship, equipment on ships, cargo, casgo containers or other movables are exposed 
to marine perils. Such property is referred to as “insurable property”; 
(b) the earning or acquisitidn of any freight, wages, passage money, cornmission, profit, 
or other pccuniaiy benefit, or the security for any advances, loan, or disbursements is endangered 
by the exposure of insurable property to marine perils; 
(c) any liability to a third party niay be incurred by the owner of, or other person 
interested in or responsible €or, insurable property, by reasan of marine perils. 
ART. 172. Murine perils dejned. - “Marine perils” mean perils consequent on, or 
incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, 
rovers, thieves, captures, seizures, restraints, embargoes, blockades, jettisons, barratry of the 
master and mariners, and any other perils, either of the like, kind or which inay be designated by 
the policy. 
Chapter 2 - Insiirable Interest aiidIiisiirabZe Valiie 
ART. 173. Wugering or gaming contracts. - (1) Every contract of marine insurance by 
way of gaming or wagering is void. 
(2) A contract of marine insurance is deemed to be a gaming or wagering contract - 
(a) where the assured has no insurable interest as defined by this Title, and the contract is 
entered into with no expectation of acquiring such an interest; or 
(b) where the policy is made “interest or no interest”, or “without further proof of interest 
than the policy itselP’, or “without benefit of salvage to the insurer”, or subject to any other like 
them: Provided, that where there is no possibility of salvage, a policy may be elfected without 
benefit or salvage to the insurer. 
ART. 174. Inkuruble inferest &$?zed, - (1) Subject to the provisions of this Title, every 
person has ail insurable interest who is interested in a marine adventure. 
(2) In particular a person is interested in a marine adventure where lie stands in any legal 
or equitable relation to the adventure or to any insurable property at risk therein, in consequence 
49 


of wliich he may benefit by the safety or due arrival of insurable property, or may be prejudiced 
by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect 
thereof. 
Art. 175. When interest nzdt attach. - (1) The assured must be interested in the subject 
matter insured at the time of the loss though he need not be interested wlien the insurance is 
eflected: Provided that where the subject-matter is insured “lost or not lost”, the assured may 
recover for loss occurring during the period covered by the insurance, noiwilhstaiiding that the 
loss occurred before the contract of insurance was concluded unless at the time of effecting the 
contract of iiisurance the assured was aware of the loss, and the insurer was not. 
(2) Where the assured has no interest at the time of the loss, l e  cannot acquire interest by 
any act or election after he is aware or the loss. 
ART. 176. Defeasible or contingent interest. - ( I )  A defeasible interest is insurable, as 
also is a contingent iuterest. 
(2) In particular, where the buyer of goods has insured them, he has an insurable interest, 
notwithstanding that he might, at his election, have rejected the goods, or have treated them as at 
the seller’s risk, by reason of the latter’s delay in malting delivery or otherwise. 
ART. 177. Who has Insurable Interest. - (a) Re-insurance. -The insurer under a contract 
of marine insurance bas an insurable interest in his risk, and may re-insure iu respect of it. Unless 
the policy otherwise provides, the original assured has no right or interest in respect of such re- 
insurance. 
(b) Bottomry. - The lender of money on bottomry or respondentia has an insurable 
interest in respect of the loan. 
(c) Muster’s and seanzen ’s wages. - The master or any member of the crew of a ship has 
an insurable interest in respect of his wages. 
(d) Advancejkight. -In the case of advance freight, the person advancing the freight has 
an insurable interest, insofar as such freight is not repayable in case of loss. 
(e) Churges of insurance. - The assured has an insurable interest in the charges of any 
insurance that he may effect. 
50 


(0 Moy/gogedpropey@, - Where ihe subject-matter insured is mortgaged, tlie mortgagor 
has an insurable interest in the full value thereoi; and the mortgagee has an insurable interest in 
respect of any sum due or to become due under the mortgage. A mortgagee, consignee, or other 
person having an interest in the subject matter insured may insure on behalf and for tlie benefit of 
other persons interested as well as for his own benefit. 
(g) The owner of insurable property has an insurable interest in respect of tlie full value 
thereof, notwithstanding that some third person may have agreed, or be liable, to indemnify him 
in case of loss. 
ART. 178. Measure of instirable value. - Subject to any express provision or valuation in 
the policy, the insurable value ofthe subject-inatter insured must be ascertained as follows: 
(a) in insurance on ship, the insurable value is the value, at the commencement of the 
risk, of the ship, including her outfit, provisions and stores for the officers aid crew, money 
advanced for seamen’s wages, and other disbursements incurred to make tlie ship fit for tlie 
voyage or adventure conteinplated by the policy, plus the charges of insurance upon the whole. 
The insurable value, in the case of a steamship, includes also tlie machinery, boilers, and coals 
and engine stores if owned by the assured, and, in tlie case of a ship engaged in a special trade, 
the ordinary fittings requisite for the trade; 
(b) in insurance on freight, whether paid in advance ox otherwise, the insurable value is 
the gross amount of tlie freight exclusive of primage at tlie risk of the assured, plus the charges of 
insurance; 
(c) in insurance on goods or merchandise, the insurable value is the actual cost to the 
assured or its market value at the time and place of lading of the property insured, plus the 
expenses of and in incidental to shipping and the charges of insurance upon the whole; 
(d) in insurance on any other subject-matter, tlie insurable value is the amount at the risk 
of the assured when the policy attaches, plus the charges a€ insurance. 
51 


Chapter 3 -Disclosure uiid Xeyresentutions 
ART. 179. General Principle. - A coiitract of marine iiisuraiice is based upon the utmost 
good faith, aid, if the utmost good faith be not observed by either party, the contract may be 
avoided by the other party. 
I 
.ART. 180. Disclosure by assured. - Subject to the provisions of the following Article, the 
assured must disclose to the insurer, before the contract is concluded, every material 
circumstance that is knowii to the assured. The assured is deemed to know every circumstance 
which, in the ordinaly course of business, ought to be lmown by him. If the assured fails to make 
such disclosure, the insurer may avoid the coiitract. 
ART. 181. @’hat conslitutes material fact. - (1) Every circumstance is material which 
would influence the judgment of a prudent insurer in fixing the premium, or determining whether 
he will take the risk. The term “circumstance” iiicludes any comniunicatioa made to, or 
iiiforinatioii received by the assured. 
.(2) In the absence of inquiry, the followiiig circumstances need not be disclosed, iiamely: 
(a) any circumstance which diminishes the risk; 
(b) any circumstance which is known or presumed to be lcnowi to the insurer. The 
iusurer is presumed to luiow matters of common notoriety or knowledge, aid matters which an 
insurer in the ordinary course of his business ought to know; 
(c) any circuinstaiice as to which information is waived by the insurer; 
(d) any circumstance which it is superfluous to disclose by reasoii of any express or 
iinplied warranty. 
ART. 182. Disclosure by agent effecting insurance. - Subject to the provisions of the 
preceding Article, where an insurance is effected for the assured by an agent, the agent must 
disclose to the insure; - 
(a) eveiy material circumstance which is known to himself. An agent to insure is deemed 
to Iuiow every circumstance which in the ordinary course of business ought to be known by, or l o  
have been communicated to, him; and 
52 


(b) every material circumstance which tlie assured is bound to disclose, unless it comes to 
his luiowledge too late to communicate it to tlie agent. 
ART. 183. Representations pending negofiation of contract. - (1) Every material 
representation made by the assured or his agent to the insurer during the negotiations for the 
contract, and before the contract is concluded, must be true. If it be untrue, ihe insurer may avoid 
the contract. 
(2) A representation is material, which would influence the judgment of a prudent insurer 
in fixing tlie premium, or determining whether he will take tlie risk. 
(3) A representation may be either a representation as to a matter of fact, or as to a iiiatter 
of expectation or belief. 
(4) A representation as lo a matter of fact is true, if it be substantially correct; that is, if 
the difference between what is represented and what is actually correct would not be considered 
material by a prudent insurer. 
(5) A representation as to a matter of expectation or belief is true if it be made in good 
faith. 
(6) A representation may be withdrawn or corrected before the coniract is concluded. 
(7) Whether a paiticular representation be material or not is, in each case, a question of 
fact. 
ART. 184. Assessed Insurable Value. - Where the insurable value by agreement between 
the parties has been fixed at a definite amount, the assessment is not binding on tlie insurer if the 
person affecting the insurance has given misleading information concerning those particulars of 
the subject-matter insured, which were of importance for the insurer to lonow for the purpose of 
the valuation. 
ART. 185. Over-Insurance. - Where the sum insured exceeds the insurable value, the 
insurer shall compensate the loss up to the insurable value. 
Where the interest is over-insured with fraudulent intent, the contract is not binding on 
the insurer. Fraudulent intent is presumed when the assured had knowledge that the property was 
grossly over-insured at the time of effecting tlie insurance. 
53 


Chapter 4 -Perfection of Co?itrnci 
ART. 186. When contract is deemed to be co~~cluded 
- A  contract ocmarine insurance is 
deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the 
policy be then issued or not; and, for the purpose or showing when the proposal was accepted, 
referenqe inay be made to the slip or covering note or other customary memorandum of the 
contract. 
ART. 187. +When premium payable. - Unless otherwise agreed, the duty of the assured or 
his agent to pay the premium, and the duty of the insurer to issue tlie policy to the assured or his 
agent, are concurrent conditions, and the insurer is no1 bound to issue the policy until payment or 
tender of the premium. 
ART. 188. Policy efected through broker. - (1) Unless otherwise agreed, where a marine 
policy is effected on behal€ of the assured by a broker, the broker is directly responsible to tlie 
insurer for the premium, and the insurer is directly responsible to the assured for the amount 
which may be payable in respect of losses, or in respect of returnable premium. 
(2) Uqless otherwise agreed, the broker has, as against the assured, a Iien upon the policy 
for the amount of the premium and his charges in respect of effecting the policy; and, where he 
has acted as brolcer for a person who purports to be the assured, he has also a lien on the policy in 
respect of any balance on any insurance account which may be due to him €rom such person, 
unless when the debt was incurred, he had reason to believe that such person was only an agent 
of the owner oftlie insured property. 
ART. 189. Effect of receipt on policy. - Where a marine policy effected on behall of the 
assured by a broker acknowledges the receipt of the premium, such achiowledgment is, in the 
absence of fraud, conclusive as between the insurer and the assured, but not as between the 
insurer and broker. 
' 
Chapter 5 - The Policy 
ART. 190. Contract inust be embodied in policy. - Subject to the provisions of the 
preceding Articles, a contract of marine insurance is inadmissible in evidence unless it is 
54 


embodied in a marine policy in accordance with this Title. The policy may be executed and 
issued either at the time when the contract is concluded, or afterwards. 
ART. 191. Whatpolicy mist spec& -A marine policy must specify: 
(a) the name of the assured, dr of the person who effects the insurance on his behalf; 
(b) the identity or nature oftlie subject-matter insured; 
(c) the risks insured against; 
(d) the amount of premium; 
(e) the sum insured or the maximum amount for which the insurer may be liable under tlie 
contract; 
(f) the interest of the assured in the property insured, if he is not the absolute owner 
thereto; and 
(g) the period during which the insurance is to continue. 
ART. 192. Signature of insurer. - (1) A marine policy must be signed by or on behalf of 
the insurer, provided that in the case of a corporation, the corporate seal may be sufficient, but 
nothing in this Article shall be construed as requiring tlie subscription o f  a corporation to be 
under seal. 
(2) Where a policy is subscribed by or on behalf of two or more insurers, each 
subscription, unless the contrary be expressed, constitutes a distinct contract with the assured. 
ART. 193. Voyage and tinzepolicies. -Where the contract is to insure the subject matter 
“at and fiom”, or from one place to another or others, the policy is called a “voyage policy”, and 
where the contract is to insure the subject matter for a definite period of time, the policy is called 
a “time policy”. A contract for both voyage and time may be included in the same policy. 
ART. 194. Designalion of subject matter. - (1) The subject matter insured must be 
designated in a marine policy with reasonable certainty. 
(2) The nature and extent of the interest of thc assured in the subject matter insured need 
not be specified in the policy. 
(3) Where the policy designates the subject matter insured in general tenns, it shall be 
construed to apply to the interest inteiided by tlie assured to be covered. 
55 


(4) 111 the application of this Article, regard shall be had to any usage regulating the 
designation of the subject matter insured. 
ART. 195. VuZuedpoZicy. - (1) A policy may be either valued or unvalued. 
(2) A valued policy is a p'hicy that specifies the agreed value of the subject-matter 
insured. 
(3) Subject to the provisions of this Title, and in the absence of fraud, the value fixed by 
tlie policy is, as between the insurer and assured, conclusive of the insurable value of tlie subject 
intended to be insured, whether the loss be total or partial. 
(4) Unless tlie policy otherwise provides, the value fixed by the policy is not conclusive 
for the purpose of determining whether there has been a constructive total loss. 
ART. 196. Unvaltiedpolicy. - An unvalued policy is a policy which does not specify the 
value of the subject matter insured, but, subject to the limit of the sum insured, leaves tlie 
insurable value to be subsequently ascertained, in the manuer herein before specified. 
ART. 197. Floating policy by skip or ships. - (1) A floating policy is a policy which 
describes the insurance in general terms, and leaves tlie name of the ship or ships and other 
particulars to be defined by subsequent declaration. 
(2) The subsequent declaration or declaration may be made by indorsement on tlie policy, 
or in other customary inanner. 
(3) Unless the policy otherwise provides, the declaration must be made in the order of 
dispatch or shipment. They must, in the case of goods, comprise all consignments within tlie 
terms of the policy, and the value of the goods or other property must be honestly stated, but an 
omission or erroneous declaration may be rectified even after loss or arrival, provided the 
omission or declaration was made in good faith. 
(4) Unless the policy otherwise provides, where a declaration of value is not made until 
after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the 
subject-matter of that declaration. 
56 


ART. 198. Pnmizmz to be avanged - (1) Whcre an insurance is effected at a premium to 
be arranged, and no arrangement is made, a reasonable premium, as determined by reference to 
the main insurance market, is payable. 
(2) Where an insurance is kffected on the ternis that an additional premium is to be 
arranged in a given event, and that eveiit happens but no arrangement is made, then a reasonable 
additional premium, as determined by reference to the main insurance market, is payable. 
Chapter 6 - Warranties 
ART. 199. Nature ofwarranty. - (1) A warranty, as used in this Chapter, means a 
promissory warranty; that is, a warranty by which the assured undertakes that some particular 
thing shall or shall not be done, or that some conditioii shall be fulfilled, or whereby he affirms or 
negates the existence of a particular state of facts. 
(2) A warranty is a condition which must be exactly complied with, whether it be material 
to the risk or not. If it be not so complied with, then, subject to ally express provision in the 
policy, .the insurer is discharged from liability as from the date of the breach of warranty, but 
without prejudice to any liability incurred by him before that date. 
ART. 200. When breach ofwarmnty excused. - (1) Non-compliance with a warranty is 
excused when, by reason of a change of circumstances, the wmanty ceases to be applicable to 
the circcunistances of the contract, or when compliance with the warranty is rendered unlawful by 
any subsequent law. 
(2) Where a warranty is broken, the assured can avail himself of the defense that the 
breach has been remedied, and the warranty complied with, before loss, unless such breach 
contributed to the risk. 
(3) A breach of warranty may be waived by the insurer. 
ART. 201. Eipress warranties. - (1) An express warranty may be in any form of words 
fiom which the intention to warrant is to be inferred. 
(2) An express warraiity must be iiicluded in, or written upon, the policy or must be 
contained in some document incorporated by reference into the policy. 


(3) An express warranty does not exclude an implied warranty, unless it be inconsistent 
therewith. 
ART. 202. TVarranty ofneurrality. - (1) Where insurable property, whether ship or goods, 
is expressly warranted neutral, tlierdis an implied condition that the property shall have a neutral 
cliaracier at the commencemeiil of tlie risk, and that, so far as the assured can control the matter, 
its neutral character shall be preserved during the risk. 
(2) Where a ship is expressly warranted “neutral”, there is also an implied condition that, 
so far as the assured can control the matter, it shall be properly documented; that is, that it shall 
carry the necessary papers to establish its neutrality, and that he shall not falsify or suppress its 
papers, use simulated papers, or carry any documents which cast reasonable suspicion thereon. If 
any loss occurs through breach of this condition, tlie insurer may avoid the contract. 
ART, 203. No implied warranty ofnationalily. - There is 110 implied warranty as to the 
nationality of a ship, or that its nationality shall not be changed during the risk. 
ART. 204. Warranty ofgood safety. - Where tlie subject matter insured is warranted 
“well” or “in good safety” on a particular day, it is sufficient if it be safe at any time during that 
day. 
ART. 205. Warranty of seaworthiness of slzip. - (1) In a voyage policy, there is an 
implied warranty that at the coinmencement of the voyage the ship shall be seaworthy for the 
purpose of the particular adventure insured. 
(2) Where the policy attaches while the ship is in port, there is also an iinplied warranty 
that it shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of 
the port. 
(3) Where the policy relates to a voyage which is performed in different stages, during 
which the ship requires different kinds of or further preparation or equipment, there is an implied 
warranty that at the coinmencement of each stage, the ship is seaworthy in respect OF such 
preparation or equipment for tlie purposes of that stage. 
(4) A ship is deemed to be seaworthy when it is reasonably fit in all respects to encounter 
the ordinary perils of tlie seas of the adventure insured. 
58 


(5) h i  a time policy, there is no implied waimity that the ship shall be scawortliy at any 
stage of the adventure, but where, with the privity of the assured, the ship is sent lo sea in an 
unseaworthy state, the insurer is not liable for any loss attributable to unseawortliiness. 
ART. 206. No implied wadanty tlmt goods are seaworthy. - (1) In a policy 011 goods or 
other movables there is no implied warranty that the goods or niovables are seaworthy. 
(2) In a voyage policy 011 goods or other movables, there is an implied warranty that at the 
coillinencement of the voyage, the ship is not only seaworthy as a ship, but also that it is 
reasonably fit to carry the goods or other movables to the destination contemplated by the policy. 
ART. 207. Warranty of 1egaZiy. -There is an implied warranty that the adventure insured 
is a lawful one, and that, so far as the assured can control the matter, the adventure shall be 
carried out in a lawful manner. 
Chapter I - The Voyage 
ART. 208. Implied condition as to cominenceinent ofrisk. - (1) Where the subject matter 
is insured by a voyage policy “at and from” or “from” a particular place, it is not necessary that 
the ship should be at that place when the contract is concluded; but there is an implied condition 
that tlie adventure shall be commenced within a reasonable time, and that if tlie adventure be not 
so commenced, the iiisurer may avoid the contract. 
(2) The implied condition may be negatived by showing that the delay was caused by 
circumstances lcnown to the insurer before the contract was concluded, or by showing that lie 
waived tlic condition. 
ART. 209. Alteration ofport of departure. - Where the place of departure is specified by 
tlie policy, and the ship, instead of sailing from that place, sails from any other place, the risk 
does not attach. 
ART. 210. Suilingfor dSferent destination. - Vv‘liere the destination is specified in the 
policy, and the ship, instead of sailing for that destination, sails for any other destination, the risk 
does not attach. 
59 


ART. 21 1. Chmge ufvupge. - (1) Where, after the comniencemeiit of the risk, the 
destination of the ship is voluntarily changed from the destination contemplated by the policy, 
there is said to be a change of voyage. 
(2) Unless the policy otherdse provides, where there is a change of voyage, the insurer is 
discharged froin liability as from the time of change; that is, as from the time when the 
deterniination to change it is manifested. 
ART, 212. Deviation. - (1) Where a ship, without lawful excuse, deviates fioni the 
voyage contemplated by the policy, the insurer is discharged from liability as from the time of 
deviation. 
(2) There is a deviation from the voyage contemplated by the policy - 
(a) where the course ofthe voyage is specifically designated by the policy, arid that course 
is departed from; or 
(b) where the course of the voyage is not specifically designated by the policy, but the 
usual and customary course is deputed from. 
(3) The intention to deviate is immaterial; there must be a deviation in fact to discharge 
the insurer from his liability under the contract. 
ART. 213. Several ports of discharge. - (1) Where several ports of discharge are 
specified by the policy, the ship may proceed to all or any of them, but, in the absence of any 
usage or sufficient cause to the contrary, it must proceed to them, or such of them as it goes to, in 
the order designated by the policy. If it does not, there is a deviation. 
(2) Where the policy is to “ports of discharge”, within a given area, which are not named, 
the ship must, in the absence of any usage or sufficient cause to the contrary, proceed to them, or 
such of them, in their geographical order. If it does not, there is a deviation. 
ART. 214. Delay in voyage. - In the case of a voyage policy, the adventure insured must 
be prosecuted throughout its course with reasonable dispatch, and, if without lawful excuse it is 
not so prosecuted, the insurer is discharged from liability as from the time when the delay 
became unreasonable. 
60 


ART. 215. Excuses for deviation or delay. - (1) Deviation or delay in prosecuting the 
voyage conteinplated by the policy is excused - 
(a) where authorized by any special term in the policy; 
(b) where caused by circumsfances beyond the control of the master and his employer; 
(c) where reasonably necessaiy in order to coinplp with an express or implied warranty; 
(d) where reasonably necessary for the safety of the ship or subject-matter insured; 
(e) for the purpose of saving liuinan life, or aiding a ship in distress where human life may 
be in danger; 
(f) where reasonably necessary for the purpose of obtaining medical or surgical aid for 
any person on board the ship; or 
(g) where caused by the barratrous conduct of the master or crew, if barratiy be one of the 
perils insured against. 
(2) When the cause excusing the deviation or delay ceases to operate, the ship must 
resuine its course, and prosecute its voyage, with reasonable dispatch. 
Chapter 8 - Assigiznzent of Policy 
ART. 216. When and how policy is assignable. - (1) A marine policy is assignable unless 
it contains terms expressly prohibiting assignment. It may be assigned either before or after loss. 
(2) Where a marine policy has been assigned so as to pass the beneficial interest in such 
policy, the assignee of the policy is entitled to sue thereon in his own name; and the defendant is 
entitled to make any defense arising out of the contract which he would have been entitled to 
make if the action had been brought in the name of the person by or on behalf of whom the 
policy was effected. 
(3) A marine policy may be assigned by indorsement thereon or in other customary 
manner. 
ART. 217. Assignment oflnterest. - Where the assured assigns or otherwise parts with 
his interest in the subject-matter insured, he does not thereby transfer to the assignee his rights 
61 


under the policy, unless there be an express or iniplied agreement with  he assignee to that effect. 
This provision does not affect a transmission o f  interest by operation o f  law. 
ART. 218. Assuved who has no interest cannot assign. - Where the assured has parted 
with or lost his interest in the subject-matter insured, and has not, before or at the time of so 
doing, expressly or impliedly agreed to assign the policy, any subsequent assignment of the 
policy is inoperative. 
Nothing in this Arlicle aflecis the assigiment of a policy after loss. 
Chapter 9 -Loss nizrlAbniirloiimerit 
ART. 219. Included and excluded losses. - (1) Subject to the provisions of this Title, and 
unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a 
peril insured against. 
(2) In particular, - 
(a) the insurer is not liable for any loss attributable to the willful misconduct of the 
assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by 
;L peril insured against, even though the loss would not have happened but for the misconduct or 
negligence of the master or crew; 
(b) unless the policy otherwise provides, theinsurer on ship or goods is not liable for any 
loss proximately caused by delay, although the delay be caused by a peril insured against; 
(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and 
tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for 
any loss proximately caused by rats or vermin, or for any injury to machinery not proximately 
caused by maritime perils. 
Art. 220. Wilyul misconduct defined. - Willful misconduct is the personal act or omission 
of the assured with intent to cause the loss, or with recltlessness and knowledge that such loss 
would probably result. 
62 


ART. 221. Inhereni vice dejnea! - Inl~erent vice is the natural propensity or tendency 
found in all property of the same kind as the insured property to surfer damage or deterioration 
within the same period. 
ART. 222. Combinaiioiz oflerils. - Where the loss has been caused by a combination of 
different perils and one or more of these perils are not covered by the insurance, tlie loss shall be 
apportioned proportionally over the several perils according to tlie influence which each of them 
must be assumed to have had on the occurrence and extent ofthe loss, and the insurer shall only 
liable for that part ofthe loss which is attributed to thc perils covered by the insurance. 
ART. 223. Combination ofmarine and warperils. -Where the loss has been caused by a 
combination of marine and war perils, the whole loss shall be deemed to be caused either by the 
marine or war perils, whichever is considered dominant. Where neither the marine nor the war 
perils can be considered dominant, both shall be deemed to have had equal influence on the 
occurrence and extent of the loss. 
ART. 224. Losses deemed to be caused entirely by war perils. - War perils shall always 
be deemed to be the dominant cause ofi 
(a) loss attributable to tlie ship being damaged though the use of other implements ofwar 
for war purposes, or in the course of militaty maneuvers in times of peace or during armed 
neutrality; 
(b) loss attributable to the ship, in consequence of war or warlike conditions, having an 
alien crew placed aboard, depriving the Master, wholly or partly, of his free command of the 
ship; 
(c) loss of or damage to a life-boat attributable to its having been swung out owing to war 
perils, and damage to die ship caused by such boat. 
ART. 225. Loss nttributnble either to marine or to warperils. - If it is evident that a loss 
is occasioned either by marine perils or by war perils but impossible to identib either marine or 
war perils as the more probable cause, both shall be deemed to have had equal influence on the 
occurrence and extent of the loss. 
63 


ART. 2215. Kinds ofloss. - (1) A loss may be either total or partial. Any loss other than a 
total loss, as hereinafter defined, is a partial loss. 
(2) A total loss may be either an actual total loss, or a constructive total loss. 
(3) Unless a di€krent intedon appears from the terms o€ the policy, an insurance against 
total loss includes a constructive, as well as an actual, total loss. 
(4) Where the assured brings an action for a total loss and the evidence proves only a 
partial loss, he may, unless the policy otherwise provides, recover for a partial loss. 
(5) Where goods reach their destination in specie, but by reason of obliteration of marks, 
or otherwise, they are incapable of identification, the loss, if my, is partial, and not total. 
ART. 227. Actual total loss dejned. - (1) Where the subject matter insured is destroyed, 
or so damaged that from a commercial point of view, it has ceased to be a thing of the kind 
insured, or where the assured is irretrievably deprived thereof, there is an actual total loss. 
(2) In the case of an actual total loss, no notice of abandonment need be given. 
ART. 228. Missing ship. - Where the ship concerned in the adventure is missing, and 
after the lapse of a reasonable time, no news of it has been received, an actual total loss may be 
presumed. 
ART. 229. Bfect oftransshipment, etc. - Where, by a peril insured against, the voyage is 
interrupted at an intermediate port or place, under such circunistances as, apart from any special 
stipulation in the contract of aFfreightment, to justify the master in landing and re-shipping the 
goods or other movables, or in transshipping them, and sending them on to their destination, the 
liability of tlie insurer continues, notwithstanding the landing or transshipment. 
ART. 230. Constructive rotal loss dejned. - (1) Subject to any express provision in the 
policy, there is a constructive total loss where the subject-matter insured is reasonably abandoned 
on account of its acFual total loss appearing to be unavoidable, or because it could not be 
preserved from actual total loss without an expenditure, which would exceed its value when the 
expenditure had beeii incurred. 
(2) In particular, there is a constructive total loss - 
64 


(i) wliere the assured is deprived of the possession ofliis ship or goods by a peril insured 
against, and (a) it is unlikely that he can recover the ship or goods, as the case may be, or (b) the 
cost of recovering the ship or goods as the case may be would exceed Uieir value when 
recovered; or 
1 
(ii) in the case of damage to a ship, where she is so damaged by a peril insured against 
that the cost of repairing the damage would exceed tlie value of tlie ship when repaired. 
In estimating the cost of repairs, no deduction is to be made in respect of general average 
contributions to those repairs payable by other interests, but account is to be taken of the expense 
of future salvage operations and of any future general average coiitributions to which the ship 
would be liable if repaired; 
(iii) in the case of damage to goods, where the cost of repairing the damage and 
forwarding the goods to tlieir destination would exceed their value on arrival; or 
(iv) the contemplated adventure is frustrated by reason of loss of or damage to the ship or 
physical destruction of ports, in case of cargo insured. 
ART. 231. Effect of constructive total loss. - Where there is a constructive total loss, the 
assured may either treat the loss as a partial loss, or abandon the subject matter insured to the 
insurer and treat tlie loss as if it were an actual total loss. 
ART. 232. Notice of abandonment. - (1) Subject to the provisions of this Article, where 
the assured elects to abandon the subject matter insured to the insurer, he must give notice of 
abandonment. If he fails to do so, the loss can only be treated as a partial loss. 
(2) Notice of abandonment may be given orally or in writing, within a reasonable time 
after receipt by the assured of reliable information of the loss. If notice was given orally, a 
written notice shall be given within seven days from such oral notice. 
(3) Notice of itbandonment must be explicit, speciying the cause of the abandonment and 
indicating the intention of the assured to abandon his interest in the subject matter 
unconditionally to the insurer. 
(4) Where notice of abandonnient is properly given, tlie rights of the assured are not 
prejudiced by tlie fact that the insurer refuses to accept the abandonnient, in which case, the 
65 


insurer shall be Iiable as upon an actual total loss, deducting fiom the aniount any proceeds of the 
thing iusured which may have been received by tlie assured. 
(5) The acceptance of an abandonment may be either express or implied from the conduct 
of tlie insurer. The mere silence d f the insurer for an uiireasonable length of time after notice 
shall be construed as an acceptance. 
(6) Where notice of abandonment is accepted, the abandonment is irrevocable, unless the 
ground upon which it was made proves to be unfounded. The acceptance of the notice 
conclusively admits liability for the loss and the sufficiency of the notice. 
(7) Notice of abandonment is unnecessary where at the time wlien the assured receives 
information of tlie loss, there would be no possibility of benefit to the insurer i€notice were given 
to him. 
(8) Notice of abandonment may be waived by tlie insurer. 
(9) Where an insurer has re-insured his risk, no notice of abandonment need be given by 
him. 
ART. 233. EfSect of abandonnzent. - (1) Where there is a valid abandoninent, the insurer 
is entitled to take over the interest of the assured in whatever may remain of the subject matter 
insured, and all proprietary rights incidental thereto. 
(2) Upon the abandonment of a ship, the insurer therefore is entitled to any freight in 
course of being earned, and wliich is earned subsequent to the casualty causing the loss, less the 
expenses of earning it iiicuired after the casualty; and, where the ship is carrying the owner’s 
goods, the insurer is entitled to a reasonable reniuneration for tlie carriage of them subsequent to 
the casualty causing the loss. 
Chapter 10 -Measure of Zirdenzizity 
ART. 234. D&:Jinitions. - (1) “Pnrticailau average loss” is a partial loss of the subject 
matter insured, caused by a peril insured against, and which is not a general average loss. 
(2) “Particular charges” are expenses incurred by or on behalf of the assured for the 
safety or preservation of the subject matter insured, other than general average and salvage 
66 


cliarges. They inclnde the expenses of services in the nature of salvage rendered by the assured or 
his agents, or any person employed for hire by them, for the purpose of averting a peril insured 
against. Such expenses, where properly incurred, may be recovered as particular charges or as a 
general average loss, according to d e  circumstances under wliicli they were incurred. 
(3) “Geizernl nvcmnge loss” is a loss caused by or directly consequential on a general 
average act. It includes a general average expenditure as well as a general average sacrifice. 
There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and 
reasonably made or incurred in time of peril for the purpose of preserving the property imperiled 
in the common adventure. 
(4) “Salvage cltarges” means the charges recoverable by a salvor independently of 
contract. Subject to any express provision in the policy, salvage charges incurred in preventing a 
loss by perils insured against may be recover as a loss by those perils. 
ART. 235. Extent of liabilily of insurer for loss. - (1) The sum which the assured can 
recover in respect of a loss on a policy by which he is insured, in the case of an unvalued policy 
to the full extent of tlie insurable value, or, in the case of a valued policy to the €XI extent of tlie 
value fixed by the policy, is called the measme of indemnity. 
(2) Where there is a loss recoverable under the policy, tlie insurer, or each insurer if there 
be more than one, is liable for such proportion of the ineasuxe of indemnity as the aniount of his 
subscription bears to the value fixed by the policy in the case of a valued policy, or to ‘the 
insurable value in the case of an unvalued policy. 
ART. 236. Total loss. - Subject to the provisions of this Title and to any express 
provision in the policy, where there is a total loss of the subject matter insured - 
(a) if tlie policy be a valued policy, the measure of indemnity is tlie sum fixed by tlie 
policy; 
(17) if the policy be an unvalued policy, the iiieasnre of indemnity is the insurable value of 
the subject matter insured. 
ART. 237. Partial loss ofship. - Where a ship is damaged, but is not totally lost, the 
measure of indemnity, subject to any express provision in the policy, is as follows: 


(a) where the ship has been repaired, the assured is entitled to the reasonable cost of the 
repairs, less customaty deductions, but not exceeding the sum insured in respect o f  any one 
casualty; 
(b) where the ship has bken only partially repaired, tlie assured is entitled to the 
reasonable cost of such repairs, computed as above, and also to be indemnified for the reasonable 
depreciation, if any, arising from the unrepaired damage, provided that the aggregated amount 
shall not exceed the cost of repairing the whole damage, computed as above; 
(c) where tlie ship has not been repaired, and has not been sold in her damaged state 
during tlie risk, the assured is entitled to be indemnified for the reasonable depreciation arising 
lrom the uilrepaired damage, but not exceeding the reasonable cost of repairing such damage, 
computed as above. 
ART. 238. Partial loss offieight. - Subject to any express provision in the policy, where 
is a partial loss of freight, tlie measure of indemnity is such proportioii of the sum fixed by the 
policy in the case of a valued policy, or of the insurable value in the case or an unvalued policy, 
as the proportioil of freight lost by the asswed bears to the whole freight at the risk of the assured 
under the policy. 
ART. 239. Partial loss ofgoods, merchandise, etc. - Where there is a partial loss or 
goods, n~erchandise, or other movables, the measure of indemnity, subject to any express 
provision in the policy, is as follows: 
(a) where part of tlie goods, merchandise or other movables insured by a valued policy is 
totally lost, the measure of indemnity is a proportionate part of tlie sum fixed by the policy; 
(b) where part of the goods, merchandise, or other movables insured by an unvalued 
policy is totally lost, the measure oE indemnity is the insurable value of the part lost; 
(c) where the,whole or any part of the goods or merchandise insured has been delivered 
daniaged at its destination, the ineasure of indemnity is the proportionate part of the sun1 fixed by 
the policy in the case of a valued policy, or of the insurable value in the case of a11 unvalued 
policy based on the value which tlie market price at that port, of the thing so damaged, bears to 
the market price it would have brought if sound. 
68 


ART. 240. Ap-yo~?io~~~mnt 
of valuation. - (1) Where different species of properly are 
insured under a single valuation, the valuation must be apportioned over the different species in 
proportion to their respective insurable values. The insured value of any part of a species is such 
proportioil of the total insured val J e of tlie same as tlie insurable value of the part bears to tlie 
insurable value of the whole. 
(2) Where a valuation has to be apportioned, and particulars of the prime cost 01 each 
separate species, quality, or description of goods camot be asccrtained, the division of the 
valuation may be made over tlie net arrived sound values of the different species, qualities, or 
descriptions of goods. 
ART. 24 1. Liability of Zizsurer for General Average. - (1) Where there is general average 
loss, the party 011 whom it falls is entitled, subject to the conditions imposed by this Code, to a 
ratable contribution from other parties interested, aid such contribution is called a general 
average contribution. 
(2) Subject to any express provision in the policy, where tlie assured has incurred a 
general average expenditure, he may recover from the iiisurer in respect of the propoition of tlie 
loss which ijlls upon him; and, in the case of a general average sacrifice, he may recover hom 
the insurer in respect of the whole loss, without having enforced his right of contribution from 
tlie other parties liable to contribute. 
(3) Subject to any express provision in the policy, where the assured has paid, or is liable 
to pay, a general average coiitributioii in respect of the subject insured, he may recover therefor 
from the insurer. 
(4) In tlie absence of express stipulation, the insurer is not liable for any general average 
loss or contribution where the loss was not incurred for tlie purpose of avoiding, or in connection 
with the avoidance of, a peril insured against. 
(5) Where ship, freight, and cargo, or any two of those interests, are owned by the saiiie 
assured, the liability of the insurer iu respect of geiicral average losses or contributions is to be 
determined as if those subjects were owned by different persons. 
69 


ART. 242. Ayyorfionmenl of general average co~ilributions arid salvage charges. - (1) 
Subject to any express provision in tlie policy, where tlie assured has paid, or is liable for, any 
general average contribution, tlie measure o€ indemnity is tlie full amount of such contribution, if 
the subject matter liable to contridution is insured for its full contributory value; but, if such 
subject matter be not insured for its full contributory value, or if only part of it be inswed, the 
indeiniiity payable by the insurer must be reduced in proportion to the under-insurance, and 
where tliere has been a particular average loss wliicli constitutes a deduction from tlie 
contributory value, and for which the insurer is liable, that amount must be deducted from tlie 
insured value in order to ascertain what the insurer is liable to contribute. 
(2) Where the insurer is liable for salvage charges the extent of his liability must be 
determined on the same principle. 
ART. 243. Liabilities to thirdparlies. - Where tlie assured has effected an insurance in 
express terms against any liability to a third party, the measure of indemnity, subject to any 
express provision in the policy, is tlie amount paid or payable by him to such third party in 
respect of such liability. 
ART. 244.811 other losses. - (1) Where tliere has been a loss in respect of any subject 
matter not expressly provided for in tlie foregoing provisions, tlie measure of indemnity shall be 
ascertained, as nearly as inay be, in accordance with those provisions, in so far as applicable to 
tlie particular case. 
(2) Nothing in the provisions of this Chapter relating to the measure of indemnity shall 
affect the rules relating to double insurance, or prohibit the insurer from disproviiig interest 
wholly or in part, or from showing that at the time of the loss, the whole or any part oftlie subject 
matter insured was not at risk under h e  policy. 
ART. 245. Particular average iuarranties. - (1) Where the subject matter insured is 
warranted free froin particular average, tlie assured cannot recover for a loss of pal, other than a 
loss incurred by a general average sacrifice, unless tlie contract contained in the policy be 
appoitionable; but, if tlie contract be apportionable, tlie assured may recover for a total loss of 
any apportionable part. 
70 


(2) Wiere the subject matter insured in warranted free fiom particular average, either 
wholly or under a certain percentage, the insurer is nevertheless liable for salvage charges, and 
for particular charges and other expenses properly incurred pursuant to the provisions o f  the 
suing and laboring clause in order td avert a loss insured against. 
( 3 )  Unless tlie policy otherwise provides, where tlie subject matter is warranted free from 
particular average under a specified percentage, a general average loss cannot be added to a 
particular average loss to malce up the specified percentage. 
(4) For the purpose of ascertaining whether the specified percentage has been reached, 
regard shall be had only to tlie actual loss suffered by the subject matter insured. Particular 
charges and the expenses of and incidental to ascei-taining and proving tlie loss must be excluded. 
ART. 246. Successive losses. - (1) Unless the policy otherwise provides, and subject to 
the provisions of this Title, the insurer is liable for successive losses, even though the total 
amount of such losses may exceed the sum insured. 
(2) Where, under the same policy, a partial loss, which has not been repaired or otherwise 
made good, is followed by a total loss, the assured can only recover in respect of the total loss; 
Provided, that nothing in this Article shall affect the liability of the insurer under tlie suing and 
laboring clause. 
ART. 247. Suing and laboviitg clause. - (1) Where the policy contains a suing and 
laboring clause, the engagement thereby entered into is deemed to be supplementary to the 
contract of insurance, and the assured may recover from the insurer any expenses properly and 
reasouably incurred pursuant to the clause, notwithstanding that the insurer may have paid for a 
total loss, or that the subject matter may have been warranted free from particular average, either 
wholly or under a certain percentage. 
(2) General qverage losses and contributions and salvage charges are not recoverable 
uuder the suing and laboring clause, but expenses or services in the nature o f  salvage rendered by 
tlie assured or his agents, or any person employed by them, for the purpose of averting a peril 
insured against, are recoverable under this clause. 
71 


(3) Expenses incurred for tlie purpose of averting or diminishing any loss not covered by 
the policy we not recoverable under the suing and laboring clause. 
(4) It is the duty of the assured and his agents, in all cases, to take such measures as may 
be reasonable for the purpose of avkrting or minimizing a loss, and to take any rights of recourse 
against third parties in respect of the loss. The insurer shall not be liable to indemnify the assured 
to the extent that the assured's failure to comply with these obligations increased the loss or 
prejudiced any right of recovery. Nevertheless, the insurer is not exonerated by the negligence of 
the master, officers or crew. 
Chapter 11 -Rights of Insurer on Pnynzent 
ART. 248. Right of subrogation. - Where the insurer pays for a total loss, either of the 
whole, or in the case of goods or any apportionable part, of the subject matter insured, he 
thereupon becomes entitled to take over the interest orthe assured in wliatever niay remain of the 
subject matter so paid for, and he is thereby subrogated to all the rights and remedies of the 
assured in and in respect of that subject matter as from the time of the casualty causing the loss. 
Subject to the foregoing provisions, where the insurer pays for a partial loss, he acquires 
no title to the subject matter insured, or such part of it as may remain, but he is thereupon 
subrogated to all rights and remedies of the assured in and in respect of the subject matter insured 
as from the time of the casualty causing the loss, in so far as the assured has been indemnified, by 
such payment for the loss. 
ART. 249. Double insurance. - (1) Where two or more policies are effected by or on 
behalf of the assured on the same adventure and interest or any part thereof, and the sums insured 
exceed tlie indemnity allowed by this Title, the assured is said to over-insured by double 
insurance. 
(2) Where the' assured is over-insured by double insurance - 
(a) the assured, unless the policy otherwise provides, inay claim payment from the 
iiisurers in such order as he niay think fit, provided that he is not entitled to receive any sum in 
excess of the indemnity allowed by this Title; 
12 


(b) where the policy under which the assured claims is a valued policy, the assured must 
give credit as against the valuation for any sum received by him under any other policy, without 
regard to the actual value of the subject matter insured; 
(c) where the policy under dhich the assured claims is an unvalued policy he must give 
credit, as against the full insurable value, for any sum received by him under any other policy; 
(d) where tlie assured receives any sum in excess of the indeniiiity allowed by this Title, 
lie is deeiiied to hold such sum in trust for the insurers, according to their right of contribution 
among tlieinselves. 
ART. 250. Right of contribution. - (I) Where the assured is over-insured by double 
insurance, each insurer is bound, as between liimself and the other insurers, to contribute ratably 
to the loss in proportion to the amount for which lie is liable under his contract. 
(2) If any insurer pays more than liis proportion of the loss, he is entitled to maintain an 
action for contribution against the other insurers, and is entitled to similar remedies as a surety 
who has paid more than his proportion of the debt. 
ART. 25 1. Effect of under-insurance. - Where the assured is insured for an amount less 
than the insurable value or, ia the case of a valued policy, for an amount less than tlie policy 
valuation, lie is deemed to be his own insurer in respect of tlie uninsured balance. 
Chapter 12 - Retiint of Preaziuiii 
ART. 252. Enforcement of relurn. - Where the premium or a proportiomle part therefore 
is, by this Title, declared to be returnable, - 
(a) if already paid, it may be recovered by the assured from tlie insurer; and 
(b) if unpaid, it may be retained by the assured or his agent. 
ART. 253. Return by ngreenzent. - Where the policy contains a stipulation for the return 
of the premium, or a proportionate part thereof, on the happening of a certain event, and that 
event happens, the premium, or, as the case may be, the proportionate part thereof, is thereupon 
returnable to the assured. 
13 


ART. 254. Return for failure of consideralion. - (1) Where the consideration for the 
payment of the premium totally fails, and there has been no fraud or illegality on tlie part of tlie 
assured or his agents, the premium is thereupon returnable to the assured. 
i 
(2) Where the consideration for the payment of the premium is apportionable and there is 
a total failure of any apportionable part of the consideration, a proportionate part of the premium 
is, under tlie like conditions, thereupon returnable to tlie assured. 
(3) In particular - 
(a) wliere tlie policy is void, or is avoided by the insurer as from tlie commencement of 
the risk, the premium is returnable, provided that there has been no fraud or illegality on the part 
of the assured; but if the risk is not apportionable, and lias once attached, tlie premium is not 
returnable; 
(b) where the subject matter, or part thereof, has never been imperiled, the premium, or as 
the case may be, a propoitionate part thereof, is returnable; Provided, that where the subject 
matter has been insured “lost or not lost” and lias arrived in safety at the time when tlie contract 
is concluded, the premium is not returnable unless, at such time, the insurer knew of tlie safe 
arrival. 
(c) where the assured has no insurable interest thoughout the currency oE tlie risk, tlie 
premium is returnable, provided that this rule does not apply to a policy affected by way of 
gaming or wagering; 
(d) where the assured has a defeasible interest which is terminated during the currency of 
tlie risk, the premium is not returnable; 
(e) where the assured has over-insured under an unvalued policy, a proportionate part of 
the premium is returnable; 
(0 subject to, the foregoing provisions, where the assured has over-insured by double 
insurance, a proportionate part of the several premiums is returnable, unless the double insurance 
is effected knowingly by tlie assured; for this purpose, the person effecting the insurance is 
entitled to demand a propoilionate reduction of the sun1 insured as soon as lie becomes aware 
that the total sums insured will exceed the indemnity allowed by this title. The reduction takes 
14 


effect from the moment the demand reaches the insurer, Provided: however, that if the policies 
are effected at different times, and any earlier policy has at any time borne the entire risk, or if 
claim has been paid on the policy in respect of the fnll sum insured thereby, no premium is 
returnable in respect of that policy. i 
TITLE V - MARITIME F“ 
UD 
ART. 255. Declaration ofpolicy. -It is the policy of the State to consider maritime fraud 
as inimical to the best interest of the nation and international maritime commerce, and towards 
this end support efforts of every slate to minimize, if not suppress and prevent, the occurreiice of 
fraud and other deceits in maritime commerce. 
ART. 256. Exfrateviforial application. - This Title shall apply to maritime fraud, which 
shall be committed not only within Philippine territory but also outside its jurisdiction, in any of 
the following cases: 
(a) Where the offender is a national or a resident of the Philippines or is under the custody 
of the Philippine government; 
(b) Where the offense was committed, planned, or set in motion within the Philippines; 
(c) Where it affects the national interest of the State; 
(d) Where the injured party is a political subdivision, instrumentality or agency of the 
Philippine government, including government-owned or controlled corporation or a national of 
the Philippines; 
(e) Where a Philippine flag vessel is used as an instrument of the offense; 
(Q Where the offender is on board a vessel or airship, which doclted or landed at or on 
Philippine territory. 
ART. 257. Marifime docuiiienls defined. - For purposes of this Title, the term “nzaritinze 
rlocrrinerzts” shall inllude bills of lading, charter party, marine insurance, commercial letters of 
credit and other similar documents used in maritime commerce. 
ART. 258. Mrrritiinejizud. - The penalty of imprisonment for not less than six years nor 
more than twelve years or a fine not less than the amount of the actual damage nor more than 


three times of the same, or both, shall be imposed upon any person, who, with intent to defraud, 
shall: 
(a) issue, alter or substitute any bill of lading, letter of credit, coinniodity sales contract or 
other maritime document to misre&.esent the quality, quantity, description or existence of goods 
€or shipment or shall lcnowingly use, negotiate, or transfer the same for value lo the prejudice of 
another; 
(b) print, photograph, or in any manner reproduce any maritime document or a colorable 
“imitation” thereof, and shall use or allow the use of such document; 
(c) affix, annex, or use in connection with any goods for maritime transport or services, or 
any container or containers for goods, a false designation or origin, or any false description or 
representation, and shall sell such goods or services; 
(d) being the charterer of a vessel, sub-charter the same and collect the freight in full, and 
shall not pay the shipowner the hire under the charter party, resulting in the retention of the cargo 
shipped by the sub-charterer, to answer for the hire or freight under the charter party; or 
(e) being tlie shipowner, ship operator or assured, either as principal or agent, in order to 
collect the insurance on the vessel andor cargo, scuttle or sink the vessel to conceal the theft of 
cargo, or the fact of its non-existence or the fact ofdeviation of the vessel, or to make i( appear 
that the loss was due to marine peril. 
TITLE VI -ACCIDENTS AT SEA 
Chapter 1 -Arrivals cinder Stress 
ART. 259. When Necessaiy. - The ship may head for the nearest and most convenient 
port if during the voyage or trip, the ship cannot continue to the port of destination on account of 
lack or provisions, well-founded fear of seizures, pirates, or bad weather conditions, or by reason 
of any accident at sea disabling it to navigate. 
Art. 260. Expenses of Arrival. - The expenscs of arrival under stress shall always be for 
the account of the carrier, unless they constitute general average. However, the carrier shall not 
be liable for damages caused by such delay, if the arrival under stress is legitimate. 


ART. 261. When Arrival Not Legitimate. - An arrival sliall not be considered legitimate 
in the following cases: 
(a) If tlie laclc of provisions should arise fioni the failure to take the necessaiy provisions 
€or the voyage or trip according to &age and custom or if they should have been rendered useless 
or lost through bad stowage or negligence in their care. 
(b) If the risk of enemies or pirates should not have been well lcnown, manifest, and based 
on positive and provable facts. 
(c) If the defect of the vessel should have arisen from tlie fact that it was not repaired, 
rigged, equipped, and prepared in a manner suitable €or the voyage or trip, auld 
(d) Whenever malice, negligence, want of foresight or lack of sltill on the part of the 
master exists in the act causing tlie damage. 
ART. 262. Unloading ofCargo. - (1) If in order to make repairs on the vessel, it should 
be necessary to unload some or all of tlie cargo, the expenses of unloading and reloading shall be 
€or the account of the carrier unless they constitute general average. 
(2) If there is danger that the cargo may suKer damage, and it should be necessary to 
unload them, the expenses shall be for the account of the owners of the cargo. 
(3) If tlie unloading is necessary for both purposes, the expenses shall be borne by tlie 
carrier and the cargo owners, in proportion to the value of the ship and the cargo. 
ART. 263. Damaged Cargo. - If the entire cargo or part thereof should appear to be 
damaged, or there should be imminent danger tliereo€, tlie master shall notify the shipper and the 
consignee of such fact and await instructions. In default of instructions, the master may proceed 
to sell perishable goods at a public sale and hold the proceeds in tivst for the owner of the goods, 
after deducting the expenses of tlie sale. 
Chapter 2 - General Average 
ART. 264. Kinds ofAverage. -Averages may be either particular or general. 
ART. 265. Particular Averages Defined. - Particular averages sliall include all the 
expenses, damages, and losses incurred or caused to the ship or to tlie cargo which have not 


inured to common benefit of all the persons interesled in the ship and the cargo, and shall be 
borne by their respective owners, without prejudice to the right of the aggrieved party to recover 
the corresponding indemnity fiom the party at fault. 
1 
ART. 266. General Averages Dejined. - There is general average when and only when 
any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for 
the common safety, for the purpose of preserving from peril the property involved in a maritime 
voyage and more particularly any of the following: 
(a) The effects jettisoned to lighten tlie ship whether they pertain to the cargo, ship or 
crew, where such effects are carried in accordance with maritime custom; 
(b) Damage done to the ship or cargo, or either of them, by or in consequence of a 
sacrifice made for the common safety, and by water entering through the opening of the ship’s 
hatches or other opening made for the purpose of malting a jettison for the common safety; 
(c) Damage done to tlie ship or cargo by intentionally stranding for the common safety or 
scuttling the ship to extinguish a fire on board; 
(d) The expenses of removing or transferring a portion of the cargo in order lo lighten tlie 
ship in case of a storm and place it in a condition to enter a port or roadstead, and the damage 
resulting therefrom to the goods removed or transferred; 
(e) Expenses of arrival under stress, in consequence of accident, sacrifice or other 
extraordinary circumstances which render such act necessary for the common safety, or to enable 
damage to the ship caused by sacrifice or accident to be repaired, including tlie wages and 
maintenance of the officers and crew, fuel and provisions consumed during tlie period of 
detention until the ship shall be ready to proceed upon its voyage or trip, and the cost of 
unloading and reloading the cargo and storage charges when such unloading is necessary to 
enable such repairs tq be made for the safe prosecution of the voyage; 
(f) The expenses caused in order to float a ship intentionally stranded for the purpose of 
saving it; 
(9) Damage caused to any machinery or boilers of the stranded ship which was in a 
position of peril in the effort to refloat it for the common safety; 


(11) 
Expenditure on account or salvage, to the extent that tlie salvage operations were 
undertaken for the purpose of preserving from peril the property involved in maritime adventure, 
and 
(i) Expenses of the liquidatidn of the average. 
ART. 267. Contribution. - In order to satis@ the amount of general averages, all the 
persons having an interest in the ship and cargo at the time of the occurrence of the average shall 
contribute: Provided, however, that there can be no general average contribution when the peril 
arose through tlie fault of one of the parties to the maritime voyage or when tlie sacrifice or 
expenditure was not useful or beneficial to the party called upon to contribute. 
The burden of proof is on the master to show that the loss or expense claimed is properly 
allowable as general average. 
ART. 268. Requisites for Jettisoned Goods as General Average. - In order that the goods 
jettisoned may be included in tlie general average and tlie owners thereor be entitled to 
indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be 
proven by means of the bill of lading, and with regards to those belonging to the ship, by means 
of tlie inventory prepared before departure. 
ART. 269. Proof and Liquidation of Averages. - Those interested in the proof and 
liquidation of averages may mutually agree and bind themselves at any time with regard to the 
liability, liquidation, and payment thereof. In the absence of such an agreement, tlie provisions of 
this Chapter shall apply. 
ART. 270. Venue. - The venue for proving tlie average shall be in the port where the 
repairs are made, should any be necessary, or in tlie port of unloading. The liquidation shall be in 
the port of arrival, of unloading, or in the port of destination at the option of tlie master. 
ART. 271, Procedure. - (1) At the instance ofthe master, the adjustment, liquidation, and 
distribution of general averages may be held extra-judicially, with the consent of all the interested 
parties. Within seventy-two (72) liuurs following the arrival of the ship at the port where 
liquidation is to be held, the master shall conveiie all the persons interested in order to decide on 
I9 


whether the adjustment or liquidation of the general average is to be made by experts and 
liquidators appointed by them. 
(2) If they cannot agree the master, the ship ageut or any of the shippers shall apply to the 
court in the port where liquidation 8 to be held. 
ART. 272. Valuation ofObjects for Contribtition. - (1) Merchandise saved which are to 
contriljute to the payment of general average shall be valued at the current price at tlie port of 
unloading, deducting tlie freightage, customs duties, and expenses of unloading, without 
coiisideriiig tlie value appearing in the bill o f  lading, unless there is an agreement to the contrary. 
If the liquidation is to be made in the port of departure, tlie value of the merchandise loaded shall 
be determined by the piircliase price, including tlie expenses incurred until they are placed on 
board, the insuraice premium excluded. 
(2) Damaged merchandise shall be appraised at tlieir actual value. 
(3) The net proceeds of inerchandise sold in a foreign port, as a result of a general 
average, shall be taken as the contributing capital. 
(4) The ship shall be appraised at its actual value in the condition in which it is found. 
(5) Fifty percent of the fieightage shall represent the contributing capital. For this 
purpose, merchandise jettisoned for the common safety and merchandise seized by pirates or 
enemies shall not pay freightage, but merchandise sold by the niaster to pay for necessary repairs 
to the ship or for unavoidable aid urgent needs shall pay freightage. 
ART. 273. Valuation of Objects Constituting General Average. - (1) Merchandise lost, 
which constitute general average, shall be appraised at the value which merchandise of the same 
lcind may have in the port of unloading, provided the kind and quality appeared in the bill of 
lading; should they not appear, the value shall be that stated in the invoices of purchase issued in 
the port of shipment, adding thereto the expenses and freightage subsequently incurred: Provided, 
however, that goods which were wrongfully declared at a value lower than their real value, shall 
be contributed for at the declared value. 
(2) Equipment rendered useless for the purpose of saving the ship shall be appraised at 
the current value, deducting reasonable depreciation except as to anchors and chains. 
80 


(3) Freightage lost, as a result of a general average act, shall exclude the charges that have 
not been incurred by the ship-owner to earn such freightage. 
(4) If repairs were made on the ship, the actual reasonable cost of replacing the damage or 
loss shall be subject to reduction &here old materials or parts are replaced by new ones. If no 
repairs were made, reasonable depreciation shall be allowed, not exceeding the estimated cost or 
repairs. 
(5) The cost of temporary repairs on the ship at a port for the common safety or to repair 
the damage caused by general average sacrifice shall also be admitted as general average. 
ART. 274. Object Not Entitled to Indemnity. - (1) Merchandise loaded on the upper deck 
of the ship shall Contribute to the general average should they be saved, but there shall be no right 
to indemnity if they should be jettisoned for common safety, except when marine ordinances or 
maritime custom allow their shipment in this manner. 
In any case, the shipowner and the master shall be liable to the shippers for the damages 
€ram the jettison if the storage on the upper deck was made without the consent of the latter. 
(2) Goods willfully misdescribed at rhe time of shipment, shall not be allowed as general 
average, but such goods, if saved, shall remain liable to contribute upon their actual value. 
ART. 275. Objects Not Bound to Contribute. - (1) Provisions and persoiial eflects of the 
master, officers and crew sliall not contribute to the general average. 
(2) Passengers’ luggage and personal effects not shipped under a bill of lading shall not 
contribute to the general average. 
(3) Neither shall the goods jettisoned contribute to the payment of the general averages, 
which may occur to the merchandise saved in a different and subsequent risk. 
ART. 276. Appoutionment of the General Average. - (1) After determining the amount o€ 
the contributing capital and of the general average in accordance with the provisions of this 
Code, the amount of the general average shall be apportioned pro rata among all persons having 
an interest in the ship and cargo at the time of the occurrence of the average. 
(2) The insurers of the ship, of the freightage and of the cargo shall be obliged to pay for 
the general average insofar as is required of each respectively. 
81 


(3) The apportioiunent of tlie general average shall iiot be final until it has been agreed to 
or until approved by tlie court after conducting a hearing for such purpose. 
ART. 277. Collection of Contribution. - (1) After the liquidation has been approved, it 
shall be tlie duty of the master to coi‘lect the amount of the coutributions, and he shall be liable to 
the owners of tlie goods averaged for the damages they may suffer through his delay or 
negligence. 
(2) If tlie persons interested in receiving the goods saved should not give security 
sufficient to answer for the amount corresponding to the general average, tlie master may defer 
delivery thereof until payment has been made. 
(3) If the persons liable to contribute should not pay tlie amount of the contribution at the 
end of tlie third day after liaviiig been required to do so, the goods saved shall be sold at the 
instance o f  the master and tlie proceeds applied to the payinent of the contribution. 
Chapter 3 -Collision 
,ART. 278. Dejkitions. -For purposes of this Chapter, the term: 
(a) “Collision” iiot only includes physical contact between ships but also a physical 
maneuver by one ship causing damage to another, like excessive speed, causing another ship to 
brealc its anchor. 
(b) ‘‘Shi,,’’ include floating platforms constructed for tlie purpose of exploring or 
exploiting the natural resources of the sea bed or its subsoil when in the process of moving from 
one place to another, or vessels constructed for or adapted to and engaged in drilling or dredging 
at sea, but not warships or ships operated by any State for non-commercial purposes. 
ART. 279. Liability irz case ofcollision. - The liability of the parties shall be governed by 
the following rules: 
(a) In case 0; collision between ships though tlie fault of one, the owner of the ship at 
fault shall be liable for the loss and the damage resulting therefrom; 
(b) If the collision is imputable to both ships, the owner of both ships shall be jointly 
liable in equal amounts for tlie total loss and damage suffered by both ships and their cargo, 
82 


unless otherwise determined by the court, taking into consideration tlie degree of fault of each 
ship. With respect to damages resulting from death or personal injuries, the owners of both ships 
at fault shall be solidarily liable therefor, without prejudice to the right of the shipowner inaltiiig 
the payment to obtain reinibursenieh froin the owiicr of [lie ship or ships at fault in accordance 
with the preceding rule. The same rule shall apply where it cannot be determined which of the 
ships caused the collision. 
(c) If the collision is due toforce majeure, each ship and cargo shall bear its own loss or 
damage. 
ART. 280. Condition Precedent to Recovery. -No action for recovery of loss or damage 
to a Philippine flag vessel arising from collision can be brought unless a protest or declaration is 
presented as soon as possible before the competent authority of the nearest port where Ihe 
collision took place or of the first port of anival in the Philippines, or the duly authorized consul 
of the Philippines in a foreign country. With respect to damage caused to persons or to cargoes, 
tlie absence of a protest shaIl not be a bar to an action for recovery of damages. 
ART. 281. lnvestigalion of Collision. - If the collision should take place between 
Philippine flag vessels in foreign waters or on the high seas, and the ship should arrive at a 
foreign port, the consul of the Philippines in said port shall hold a sunimary investigation of the 
collision which may be held behind closed doors, at the petition of the shipowner or master, and 
forward a report thereof to the proper maritiine authority. 
ART. 282. Limitation ofrlction. - All claims arising out of this Chapter shall be brought 
within four years from the tiine the collisions occurred. 
Chapter 4 - Sdvngc 
Section One - Piwe SnIvnge 
ART. 283. D&niiion. - Pure salvage is service voluntarily rendered on the occasion of a 
shipwreck, when the ship and its cargo are beyond the control of or have been abandoned by the 
crew, by those under no obligation to do so and who conveyed the ship and its cargo to a safe 
place. 
83 


ART. 284. Effect of Opposilion. - If the master of the ship or the person acting in his 
stead is present, no one shall take from tlie sea or from the shores or coasts, merchandise or 
effects proceeding from a shipwreck or proceed to the salvage of the vessel, without the consent 
of such master or person acting in his stead. 
ART. 285. Obligafion of the Salvor. - He who shall save or pick up a vessel o: 
merchandise at sea, in the absence of the master of the ship, owner or a representative of either of 
them, if they me unknown, shall convey aid deliver such vessel or merchandise, as soon as 
possible, to the nearest Coast G U X ~  
District, and give tlie particulars of tlie salvage operation, a 
list of merchandise saved, tlie name and registry of tlie vessel, and other circumstances relative to 
tlie salvage operation. 
ART. 286. Salvor’s Lien. - (1) The expenses of salvage as well as the reward for the 
salvage shall be a charge 011 the thing salvaged or its value. 
(2) The proper reward of a salvor is one half (%) of the value of the ship or things saved. 
(3) After the salvage is accomplished, tlie owner or his representative shall have tlie right 
to delivery of the ship or things saved provided that he pays, or gives a bond from a reputable 
bonding company to secure the payment of expenses and the proper reward. The amount and 
sufficiency of the bond, in the absence of agreenieiit, sliall be determined by the court or by 
arbitration. 
ART. 287. Procedure nfier Salvage. - The District Coast Guard Commander, to whom a 
salvage is reported, shall: 
(a) Cause the things saved to be safeguarded and iiiventoried; 
(b) Ascertain the ideiitity ofthe vessel and the persons involved in tlie salvage operation; 
(c) Coordinate with the Bureau of Customs wliich shall sell at public auction the things 
saved which may b~ in danger of immediate loss or those whose conservation is evidently 
prejudicial to the interests of tlie owner, wlien no objection is made to such sale; 
(d) Cause the advertisement within thirty days subsequent to the salvage in a newspaper 
of general circulation, of the details of the disaster, with a statement of the marks and iiumber of 
the effects, and notifying all interested persous to file their claims; aid 
84 


(e) Recormneiid to the Commandant of tlie Coast Guard the issuance of a permit to 
qualified salvors if further salvage operation is necessary to save the vessel from further 
destruction. 
ART. 288. Claim by the Umdmr. - While the ship or things saved are at the disposition of 
the authorities, if the owner or his representative shall claim them, such authority shall order their 
delivery to the owner or his representative upon payment of the expenses and the proper reward 
or delivery of a bond from a reputable bonding company to secure the payment of the expense 
and the proper reward, and there is no controversy over their value; otherwise, delivery shall not 
be made until tlie matter is decided by the court, by arbitration, or by agreement with the salvor. 
ART. 289. Efect ofno claim. - No claim having been presented by the owner or his 
representative within three months after the publication of the prescribed advertisement, the 
things saved shall be sold at public auction, and the proceeds, after deducting the expenses and 
the proper rewards, shall be deposited into the Naiional Treasury. If thee years shall elapse 
without anyone claiming it, one-half of the deposit sliall be adjudged to him who saved the 
things, and tlie other half to the National Government. 
ART. 290. Salvors who ape not entitled to rei,vard. -The following shall have no right to 
a reward for salvage: 
(a) The crew of the ship sliipwreclted or which was in danger of shipwreck; 
(b) He who shall have coniinenced the salvage notwithstanding the express and 
reasonable prohibition of the master or of his representative; and 
(c) He who shall have failed to comply with the provisions of Article 285. 
ART. 29 1. Deductions. - From the proceeds of the sale of the things saved shall be 
deducted first: the expenses of their custody, conservation, advertisement, and auctions, as well 
as whatever taxes or,duties imposable on them; then, the expenses of salvage, and from the net 
amount remaining, shall be taken the reward for the salvage which shall not exceed fifty percent 
(50%) of the remainder. 
85 


ART. 292. Apportionment of the Reward. - (1) If in the salvage, different persons shall 
have intervened, the reward shall be divided among them in proportion to the services which 
each may have rendered, and in case of doubt, in equal parts. 
Those who, in order to sav k persons, shall have been exposed to the same dangers shall 
also have a right to participation in the reward. 
(2) If salvage was effected by another ship, the reward [or salvage shall be divided anlong 
the owner, the master, and the crew ofthe ship, so as to give the owner a half, the master a fourth 
and the reniainder of the crew tlie other fourth of the reward, in propoi%ioii to their respective 
salaries, in the absence of an agreement to the contrary. 
ART. 293. Measures in Preventing Darnage to Marine Environment. - Notwithstanding 
failure to save an oil-laden tanker, the efforls of the salvors in minimizing or preventing damage 
to the environment shall be rewarded by the owner or charterer of the tanker. Such reward shall 
include expenses reasonably incurred by the salvor in tlie salvage Operation, and a fair rate for 
equipment and personnel actually and reasoilably used in the salvage operation, which amount 
shall not exceed the reward which woukd be payable if the tanlcer were saved. 
Section Two - Assistame or Coritrnct Salvage 
ART. 294. Definition. - Assistance or contract salvage is an agreement for the purpose of 
saving a distressed ship or its cargo or both from an impending peril at sea whereby, for 
compensation, service will bc rendered by a person duly licensed by the proper government 
authority to engage in the busiiiess of salvage. 
ART. 295. Duty of the Salvor. - The salvor shall endeavor to prevent or minimize 
damage to the marine environment. He shall accept the intervention of other salvors when 
requested to do so by the owner or master of the ship: Provided, however, that the amount of his 
reward shall not be reduced, should it be found that such intervention was unnecessary. 
ART. 296. ESfect of Salvor’s Misconduct. - A salvor may be deprived of the whole or part 
of the compensation to the extent that the salvage operations have become unnecessary or more 
difficult due to the fault, neglect or fraud on the part of the salvor. 


ART. 297. Amounf of Reward - If, during the danger, an agreement is entered into 
concerning tlie amount of the reward for assistance, the amount, if excessive, may be reduced by 
the court, afrer taking into consideration the factors as follows: 
(a) The value of the propeid saved; 
(b) The nature and degree of danger from which the property was rescued; 
(c) The efforts of the salvors iii rendering tlie salvage service, including the time, 
expenses, and losses incurred by them; 
(d) The promptitude, sltill, energy displayed in rendering the service and saving the 
property; 
(e) The value of the property employed by the salvors in rendering the service, and the 
danger to which such property was exposed; 
(Q The risk incurred by the salvors in securing the property from the impending peril; and 
(g) The skill and eflorts of tlie salvors in preventing or minimizing any damage to the 
marine environment, which inay be caused by, oil spillage, explosion or contamination. 
The same factors shall also be talcen into consideration by the court if the parties have not 
fixed tlie amount of tlie reward. 
ART. 298. Removal of Wreck. -The owner of a vessel which was shipwrecked is obliged 
to remove the same if it would obstruct navigation or, if it occurred without his fault or that of 
the master or crew, he may abandon the wreck in favor of the salvor. 
TITLE VI1 -LIMITATION OFSHIPOWERS’ LIABILITY 
Chapter 1 - General Provisions 
ART. 299. Scope ofApplicability. - This Title shall apply to tlie liability of shipowners 
arising out of claims arising from contracts oftransport under Title I11 and from cases arising out 
of collision under Title VI, Chapter 111 of this Code, except for loss or damage resulting from 
their personal act or omission done with intent to cause such damage, or recltlessly and with 
knowledge that such loss or damage would probably result. 
ART. 300. DeJinitiom. - For purposes o€ this Title, tlie following terms shall mean: 
87 


(a) ‘‘Slt~oivner” includes the owner, charterer, manager and operator of any ship, 
whether engaged in domestic or international transportation; 
(b) ‘‘SIiY, does not include ships constructed for or adapted to and engaged in drilling at 
sea, floating platform constructdd for the purpose of exploring or exploiting the natural 
resources of the sea-bed or its subsoil, or to air-cushioned vehicles. 
(c) “Uiziis of Accanni” shall have the same meaning as defined in Article 84(h) of this 
Code. 
ART. 301. Effect of loss of ship. - The loss of the ship as a result of collision or sinking 
does not relieve the shipowner from liability under this Code, although his liability shall be 
limited to an amount of the value of the ship at the time of the occui~ence giving rise to his 
liability or in accordance with the following Articles, whichever amount is lower. 
Chapter 2 - Limits of Lirrbilig 
ART. 302. Aggregalion of Claims. - (1) The limits of liability provided in the following 
Articles apply to the aggregate of all claims arising on a distinct occasion or event against the 
shipowner and any person ror whose act, neglect or default he is responsible. 
(2) Such claims include loss of life or personal injury or loss of or damage to property 
occurring on board or in direct connection with the operation of the ship or loss resulting fiom 
delay in the carriage by sea o f  cargo, passengers or their luggage. 
ART. 303. Limit for passenger claims. - In respect of claims arising on any distinct 
occasion for loss of life or personal injury to passengers of a ship, the limit of liability of the 
shipowner thereof shall be in the amount of 46,666 Units of Account multiplied by tlie number of 
passengers which the ship is authorized to caiiy, but not exceeding 25 million Units of Account 
for all such aggregate claims. The term “passengers” shall have the same meaning as defined in 
Article 84(c) of this Code. 
ART. 304. Limits for all other claims. - (1) The limits ofliability for all claims other than 
those mentioned in the preceding Article arising on any distinct occasion, shall be calculated as 
follows: 
88 


(a) in respect to claims for loss of life or personal injury (other than to a passenger): 
(i) 166,667 Units of Account for a ship with a tonnage of less than 300 tons 
(ii) 333,000 Unils of Account for a ship with a tonnage from 300 tons but not 
exceeding 500 tons;j 
(iii)for a ship with tonnage in excess thereo€, the following amount in addition to that 
mentioned in (i): for each ton from 501 to 3,000 tons, 500 Units of Amount; for 
each ton from 3, 001 to 30,000 tons, 333 Units of Account; for each toilfroin 
30,001 to 70,000 tons, 167 Units of Account; aid, for each ton in excess of 
70,000 tons, 167 Units of Account; 
(b) in respect to any other claims: 
(i) 83,333 Units of Account for a ship with a tonnage of less than 300 ton; 
(ii) 167,000 Units of Accounts for a ship with tonnage froin 300 tons but not 
exceeding 500 tons; 
(iii)for a ship with a tonnage in excess thereof, the following amount in addition to 
that mentioned in (ii): for each ton from 501 to 30,000 tons, 167 Units of 
Account; for each ton from 30,001 to 70,000 tons, 125 Units of Account; and for 
each ton in excess of 70,000 tons, 83 Units of Account. 
(2) Where the amount calculated in accordance with paragraph (1) (a) above is 
insufficient to pay the claims mentioned therein in full, the amount calculated in accordance with 
paragraph (1) (b) above shall be available for payment of the unpaid balance of claims under 
paragraph (1) (a) and such unpaid balance shall rank ratably with claims mentioned under 
paragraph (1) (b). 
(3) For the purpose of this Article, the ship’s tonnage shall be the gross tonnage 
calculated in accordance with the tonnage measurement rules contained in Annex I of the 
International Convention on Tonnage Measurement o€ Ships, 1969. 
TITLE VI11 -AXBITRATION 
Chapter 1 - Enforcenzent arid Validity of Agreemerits to Arbitrate 
89 


ART. 305. Form ofilgmenzents to Arbitrcde. - (1) Any dispute between the parties 
arising out of this Code, except under Titles I aid 11, may be settled by arbitration. 
(2) A written provision in any maritime transaction to settle by arbitration a controversy 
thereafter arising out of such transdtion, or the refusal to perforni the whole or any p a t  thereof, 
OK an agreement in writing to submit to arbitration ai existing controversy arising out such 
transaction shall be valid and enforceable, except upon grounds for aimulmeiit or invalidity of 
contracts. 
(3) The term “ngreenzent in writing” shall include an arbitral clause in a contract or an 
arbitration agreement signed by tlie parties or contained in an exchange of letters or 
communications. 
(4) The term “ninritime tmmzsnction” means charter parties, bills of lading of water 
carriers, supplies furnished vessels, repairs to vessels, collisions, salvage or other matters relating 
to admiralty. 
(5) Where a charter party contains an arbitral clause and the bill of lading issued pursuant 
to tlie charter party does not contain a special annotation providing that such arbitral clause shall 
be binding upon the holder of the bill of lading, the carrier may not invoke such arbitral clause as 
against a holder who acquires the bill of lading in good faith. 
ART. 306. Fuiltire to Arbitrate. - Unless otherwise provided in the agreement between 
the parties or the arbitration rules referred to therein, any party aggrieved by the failure, neglect 
or refusal of mother to arbitrate under a written agreement for arbitration, may apply in cou-t for 
an order directing that such arbitration proceed in the manner provided in such agreement. Five 
days’ notice in writing of such application shall be served on the party in default. The court shall 
summarily hear tlie issues and direct the parties to proceed with the arbitration if the finding is 
that such agreement was made and there is default in the proceeding thereunder. 
ART. 307. Summary Proceedirzg. - Any proceeding filed in court relating to arbitration 
shall be summary in nature. The court shall decide all applications in tlie same maimer as 
motions within ten (IO) days after hearing, except petitions for the confirmation, vacating, 
modification or correction of final awards of arbiters. 
90 


ART. 308. Stay ofCotirt Pruceedings. - (1) If any suit or proceeding is brought in court 
upon any issue referable to arbitration under an agreement in writing for such arbitration, the 
court, upon being satisfied that the issue is referable to arbitration, shall, on application of any of 
the parties to the agreement, stay die trial of the action until such arbitration has been held in 
accordance with the ternis of their agreement. 
(2) Where the issue involved in the suit is that the arbitration agreement is null and void 
or inoperative or incapable of being performed or that there is in fact no dispute referable to 
arbitration, the court shall proceed summarily to the determination of such issues. 
Chapter 2 - Appoiiztnrent and Powers of Arbitrators 
ART. 309. Appointment of Arbitrrriors. - (I) If in the arbitration agreement, provision is 
made for a method of naming or appointing an arbitrator or arbitrators or any umpire, such 
method shall be followed. If no method is provided therein, or if a method is provided and any 
party thereto shall fail to avail himself of such method or if for any other reason there shall be a 
default, in the naming of an arbitrator or arbitrators or umpire, or in filling a vacancy, then, upon 
application of any party to the controversy, the court shall designate or appoint an arbitrator or 
arbitrators or umpire, as the case may require, who shall act under said agreement with the same 
effect as if he or they had been specifically named therein. 
(2) Unless otherwise provided in the agreement, the arbitration shall be by a single 
arbitrator who must be either a maritime lawyer, a professional maritime arbitrator, a maritime 
expert or one engaged in maritime commerce. 
(3) Arbitrators appointed shall either accept or decline their appointment. In case of 
declination or failure of an arbitrator to accept the appointment, the parties or the court, as the 
case may be, shall proceed to appoint a substitute. 
ART. 310: buty to Disclose. - (1) Each arbitrator shall make a full and detailed 
disclosure on record at the commencement of the hexing my relationship within the fourth civil 
degree of consanguinity or affinity, any business relationship or dealings he has had, if any, with 
a party to the arbitration or with any of their counsel. 
91 


(2) A party may challenge in writing the qualification or partiality of an arbitrator who 
shall determine whether to withdraw therefrom or proceed with the hearing. His decision to 
proceed with the hearing shall not be reviewed by the court until after a filial award is rendered. 
ART. 31 1. Power to Issue Subpoena and Subpoena Duces Tecum. - (1) The arbitrator or 
arbitrators, or a majority of them, may summon in writing any person to attend before them as a 
witness, and in a proper case, to bring with him any book, record, document or paper which may 
be deemed material as evidence in the case. The fees for such attendance shall be the same as 
fees of witnesses before courts. 
(2) Said summons shall issue in the name of the arbitrator or arbitrators, or a majority of 
them, and shall be signed by said persons. If any person so summoned shall refuse or neglect to 
obey said summons, the arbitrators may petition the court to compel the attendance of said person 
before them or to punish said person to contempt in the same manner provided by law for neglect 
or refusal to attend in court. 
ART. 3 12. Arrest of Vessel. - Notwithstanding an agreement to arbitrate, the aggrieved 
party may start proceedings in court for the arrest of the vessel for the purpose of securing it until 
the arbitration is concluded. The court shall have jurisdiction to direct the parties to proceed with 
the arbitration and shall retain jurisdiction to enter a decree upon the rendition ofthe award. 
ART, 313. Powers of Arbitrators. - (1) The arbitrator or arbitrators, or a majority of 
them, shall be the sole judge of the relevancy and materiality of the evidence of€ered or produced 
before them, and shall not be bound by the technical d e s  of evidence. 
(2) They may grant any remedy or relief which they deem just and equitable and within 
the scope of the agreement of the parties. They shall have the power to decide 011ly those matters 
that have been submitted to them. The ternis of the award shall be confined to such disputes. 
(3) All proceedings before the arbitrator or arbitrators shall be duly recorded. 
ART. 314. DisqunliJicntion of Arbitrators. - An arbitrator shall not act as champion or 
advocate the cause of any party to the controversy. No arbitrator shall act as a mediator in the 
settlement of the dispute before him. All negotiations towards settlement of the dispute must take 
place without the presence of arbitrators. 
92 


Chapter 3 - Finn1 AsbitsnlAwnsd 
ART. 315. Conzrniation of Award. - (1) If the parties agreed that the award shall be 
confirmed by the court, any party to the arbitration may apply to the court for an order confirming 
the award. The petition shall be accompanied by (a) the original agreement to arbitate or duly 
certified copy thereof; and (b) the duly authenticated original award or a certified copy thereof. 
Notice of the application shall be served on the adverse party, as in motions, within thirty (30) 
days from the filing of the application. 
1 
(2) The court shall confirni the award unless vacated, modified or corrected on grounds 
provided in the succeeding Articles. The judgment coiifrrniing the award may be enforced in the 
same manner as judgment of the court rendered in actions brought before it. 
ART. 3 16. Groundsfor Vacating Award. - (1) Within thirty (30) days from the rendition 
of the award, any party to the arbitration may apply to the court to vacate the award, on any of the 
following grounds: 
I (a) Where the award was procured by corruption, fraud or undue means; 
(b) Where there was evident partiality or corruption of any of the arbitrators; 
(c) Where the party against whom the award is rendered was not given proper notice of 
the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to 
present his evidence; or 
(d) Where the arbitrators exceeded their powers or so imperfectly executed them that a 
mutual, final, and definite award on the dispute submitted was not made; or 
(e) Where the enforcement of the award would be contrav lo public policy. 
(2) Where an award is vacated, and the time within which the agreement required the 
award to be made has not expired, the court, may in its discretion, direct a rehearing by the 
arbitrators or the reappointment of new arbitrators. 
ART. 317. ModiJcafion or Correction ofdward. - (1) In any of the following cases, the 
court may take an order modifying or correcting the award, on application of any party to the 
arbitration: 
93 


(a) Where there was an evident material miscalculation o f  figures or an evident material 
mistake in the descriptio11 of my person, thing, or property referred to in the award; 
(b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a 
matter not affecting the nizrits of thkdecision upon tlie matter submitted; or 
(c) Where the award is imperfect in matter of form, not affecting the merits of the 
controversy. 
(2) The order may modify and correct the award so as to effect the intent thereof and 
promote justice between the parties. 
TITLE I X  -FINAL PROVISIONS 
ART. 318. Repealing Clause and Consequential Amendments. - (1) The provisions of the 
Civil Code on Common Carriers shall not apply to common carriers by water. 
(2) The provisions of Republic Act No. 876 (Arbitration Law) shall not apply to 
arbitrations in maritime disputes. 
( 3 )  The provisions of the Revised Penal Code (Act 3815) and the Rules of Court shall 
apply in matters not regulated by this Code. 
(4) The following laws, decrees, Executive Orders, Letters of Instructions, Rules and 
Regulations are hereby expressly repealed: 
(a) Presidential Decrees 760,761, 866, and 171 1; 
(b) Presidential Decrees Nos. 214 and 1521; 
(c) Commonwealth Act No. 65; 
(d) Articles 580 to 5S4 inclusive and Articles 5 and 7,652 to 869 inclusive o€ the Code of 
Commerce; 
(e) Act No. 2616 or the Salvage Law; 
(0 Any othei law, decree, executive order, letters of instruction, rules and regulations 
which are inconsistent with this Code. 
(g) Section 99 to 166 (inclusive) of tlie Insurance Code, Presidential Decree 612. 
94 


ART. 3 19. Separability Clause. - If for any reason any section or provision of this Act, or 
any portion thereof, or the application of such section, provision or portion to any person, group 
or circuiiistances is declared invalid or unconstitutional, the remainder of this Act or the 
application of such section, prdision or portion thereof to other persons, groups or 
circumstances shall continue to be in full force and efkct. 
ART. 320. Date of Effectivity. - This Code shall take effect one (1) year after its 
publication in at least two (2) newspapers of general circulation or the Official Gazette. 
Approved. 
95