THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
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 alniost 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 Plzilippines." It upgrades the laws 
dealing with registration of ships, maritime liens and ship mortgages, maritime fraud, accidents 
at sea aid shipowner's liability. The bill provides for a separate common carrier provision to 
apply specifically to ships or vessels transporting passengers and/or goods, domestically or 
internationally. Liltewise, 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 advauces in the means of communication and transportation, the greater interaction 
among people, especially in business, has made more complex 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 G. BIAZON 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
Introduced by Senator Bi&?:on 
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 lmown 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. Dejnitions. - 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 
1 


Commission (SEC) registered enterprise, at least sixty percent (60%) of tlie capital stock 
outstanding and entitled to vote of each corporation must be owned aiid held by citizens o f  the 
Philippines aiid at least sixty penxiit (60%) of the members of the Board o€ Directors lnust be 
citizeiis of the Philippines, in order hiat tlie corporation sliall be considered a Pliilippine national. 
(b) “CIas,~zj?cation societies” means an accredited organization established for tlie 
purpose of setting slaidards 011 construction, propulsion, equipment, seaworthiness and safety of 
ships or vessels and other iiiarine ships or vessels and platforms, conducting surveys and 
inspectioiis niid iiiaiiitaiiiiiig standards as a requisite for legal purposes such as marine iiisuraiice 
and official documenlation. 
(c) “MARINA” refers to the Maritime Industry Aathority or its successor. 
(d) “Mwitime lien” meam an encumbraice on a vessel adhering to it wherever it iiiay go, 
vesting in the person whose claim is thereby secwetl to cause its sale in a proceeding directly 
against it, to obtaiii satisractioii of his claim. 
(e) “Plzilippirie flog vessel” refers to a ship registered in the Pliilippines ill accordance 
with this Code. 
(0 “Plzitippine sliQping conqmrties” refer to shipping companies registered and licensed 
in the Philippines and authorized to engage in the business of overseas and/or doiimtic 
transportation. 
TITLE I -REGISTRATION OFSHIPS AND RIGHTS TQ SHIPS 
ART. 4. Vessels io De regisfered. - Evecy vessel owned by citizens of the Philippines and 
more than three gross tons shall be registered with the appropriate iiiaritinie authority. 
Registration may be periiiaieiit, provisional or temporary in nature. 
ART. 5. Requirement for a Pevwinnent Cerl8cate. - No vessel sliall be issued a 
Periiiuient Certificate of Philippine Registry unless it has been classed by a classification society 
or by the MARINA as seaworthy, aid that ii be mauled by Filipino crew except highly tecluiical 
positions in tlie case of specialized vessels or where rliere are 110 available qualified Filipino 
officers or crew as deterniiiied by the appropriate govcriniieiit agency, 
2 


AI1T. 6. Temporary Cer/$cale of Philippine Xegisliy. 
~ The followilig vessels may be 
issued Teiiiporay Certificates of Philippine Registry: 
(a) Vessels owned and/or operated by an eiiterprise duly registered with the Board of 
Investnieiits (BOT) uilc~er pertiiieni incentive laws wlietlier or not sucli enterprise is eiitirely 
owned by fooreigii nationals, if such vessels are to be used exclusivcly to transport its owl raw 
materials and finished proclucts within Philippine waters as an incident to its manufacturing, 
processing or business activitjj registered with the €301 aid certified to by it as an esseiitial 
eleineiit in tlie operation of the registered project. 
(b) Foreign-owned vessels under charter or lease for not less than one year to cilizeiis of 
[lie Philippines subject to the following conditions: (i) that said charter or lease has tlie prior 
written approval of tlie MARINA, aid (ii) that tli$ niaiiiiiilg,, aid operation of the vessel shall be 
entirely in the hands of citizens of the Pliilippines, except highly teclmical positions in tlie case of 
specialized vessels or where there a e  no available qualified Filipino officers or crew as 
determined by tlie appropriate goveriinient agency. 
ART. 7. Provisioizal Cer/lficate of Philippiiie Registry. - Vessels constructed and/or 
acquired abroad shall, before being brought to the Philippines, have a Provisional Certificate of 
Philippine Registry. Application therefor shall be filed with the MAIUNA together with 
supporting documents. 
If the application is found to be in order, the MARINA shall endorse the same to tlie 
Departnient 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 
upon submission of the required documelits. 
ART. 8. Stpportiitg Documents for Registintioil of Locally Constilicted Veuels. - To 
secure registration of a vessel constructed in the Philippines, the owner, master or agent shall file, 
[ogctlier with tlie application, with the MARINA Rcgioiial or District Office at or nearest the 
home port or intended home port of such vessel, among oiliers, the following documents: 
(a) 
(b) 
Approval of the coiistructioii plans of the vesseI by MARINA; 
Builder's Certificate or any document signifying ownership; 
3 


(c) 
(dj 
(e) 
Certificate of inspection; 
ART. 9. Szpporting- Docurizents for Registration of Iiizl-o'tecE/ChLirt~r~~ Vessel. - (1) 
Within fihmi (15) days upon arrival or upon accepting delivery of the vessel iii tlie Philippines, 
Affidavit of Citizenship, in case of iiidividual owiier; 
Affidavit of Corporate Owiiersliip in case oFa corporation; and 
1 
the owiier, inaster or ,agent shall apply with the MARINA Regional or District Orfice of the 
iiiteiided home port for a periiiaiieiit Certificate of Philippine Registry with the subiiiissioii of the 
Mlowing documents: 
(a) 
(b) 
(c) 
(d) 
Builder's Certificate; 
(e) 
Protocol o-TDeliveiy and Acceptance; 
(0 
(g) 
Certificate of Adineasiirement, iiicluding Calculatioii sheets lor tonnage 
measureinent, as performed by the official adiiieasurer or the country where the ship is built or 
acquired; 
MARINA approval of the acquisition or charter; 
Provisional Certificate oCPhilippine Registry, if any; 
Deed of Sale/Chaiter Agreement, as tlie case may be; 
Protocol of Inventory of the Vessel; 
(11) 
Provisional Loadliiie Certificate issued by authorized classification society under 
whose rules tlie vcssel is coiistructecl or acquired; 
(i) 
Certificate of Inspection or an equivaleiit Certificate pursuant to the SOLAS 1960 
Coiiveiition issued by the govemiient of the country where the vessel is built or acquired; 
(j 
j 
Iiicliiiiiig experimeiit with calculations and trim and stability calculatioii for all 
service loading conditions in case of iiewly built ships; 
(IC) 
(1) 
Ship Safety Radio-Telegraphy Certificate; 
(111) 
Coiisular Invoice; aiid 
(11) 
Ship Safety Radio-Telephony Certificate (Xapplicable); 
Permit to deliver iniported goods (Customs formal entry) 


(2) 
The Philippine Consulate sliali duly authenticate all docullleiits from sub- 
paragraphs (b) through (e), aid sub-paragraph (i). 
ART. 10. Port ofllegisliy. -The registration ora vessel shall he effected at its home port, 
where a MARINA Regional or Didrict Office is in said home port or at the newest MANNA 
Regional or District Office when the home port does not have one. 
ART. I 1. Register ojr Vessels. - A Register of Vessels shall be kept at eveiy MARINA 
Regional or District Office in which sliall be entered the following facts concerning each vessel 
registered in such form and detail as iiiay be prescribed: 
Name of Vessel; 
Rig of Vessel; 
Material or I-Iull; 
Priiicipal dimensions; 
Gross toimage; 
Net toimage; 
Where constructed, including name of shifiyard and its address; 
Year constructed; 
Name, citizenship, natioiiality and resitleiice of owner; 
Date of issuance of Certificate of Philippine Registry; 
Mode by which the vessel was acquired and registered; 
Any inaterial change of conditions with respect to any of the preceding items; and 
Other data as may be required by MARINA or sucli other agency as may be 
authorized by law. 
I1 shall be tlie duty of tlie owner, master 01’ agent of every registered vessel to idorill the 
MARINA o€ aiiy change in the iiiforiiiatioii entered in the Register pertaining to the vessel. 
ART. 12. Issuance of Ce?tijicure. - Upon registration of a vessel, a Ceriificaie of 
Philippiiie Registry sliall be issued therefor by the IvlARINP,. 
I[ the vessel to be registered is more than tlme (3) tons gross but not more than fifteen 
(1 5 )  tons gross, the lalting of a Certificate of Philippine Registry shall be optional with the owiier 
5 


and in lieu hereof a Ceitificate of Ownership sliall be issued, except when the vessel will be 
eiignged in towing, comme~cial fisliiiig or carrying of articles and passengers for hire fiom port to 
port in the Philippines. 
ART. 13. Efsects of Regishalion. - Registration of a vessel in accordance with the 
provisioiis of this Code confers upon it the status of a Philippiiie flag vessel aiid entitles it to tlie 
protection of the Philippine flag. Conespondingly, il imposes on the vessel the duty to fly thc 
Philippine flag aiid the obligation to abide by all applicable laws, orders, rules and regulatioiis of 
the Philippines. 
ART. 14. Markings, Nmze nizd .Irloiizep,ort. - All vessels duly registered in accordniice 
with the provisioiis hereof shall have their respective miles and homeports plainly ~iiarked upon 
cadi side of tlie bow. ! 
ART. 15. Correctioiz ofErrors in the Recordiiig of Docziiiients Afjctiiig Tiile arid in the 
Register of Vessels. - Errors made in recording shall be corrected in tlie following iiiaiuieK: 
(a) Slight or clerical errors not affecting the seiise and intent of the doclunerits such as 
inisspelled words, sliall be corrected by writing the correction above tlie errors and initialing the 
correction. 
(b) Any iiiislake or error that might affect the meaning aiid substaiice of the docuinents 
may be corrected by order of MARINA, after notice and Iiearing of the interesled parties. 
ART. 16. Cl?ni?ge of01~i~rzerslzip 
of Vessels. - An o:ecuted bill of sale or other certificate 
iiidicatiiig the transfer of ownership of a Pliilippine flag vessel shall be presented by tlie 
transkree within fifteen (15) days after executioii of the sale to tlie District Office at or nearest 
tlie homeport of the vessel for appropriate recording. 
ART. 17. Xeconstilulioiz of Lost Cerlijcale. - When the Certificate of Philippine Registry 
of a vessel is lost or daiiiaged, the owner, mster or agent thereof may file ail appropriate 
applicalioii with the MARINA Regional or Dislrict Office of the homeport for issualice of a 
replacement cerlificate, wliicli shall indicate that the original shall henceforth be considered 
cancelled and revoked. If aAer the issuance of the replacemelit certificate, the lost original 
certificates shall have been found, it sliall bc the duQ of the owner, master, agent or ally person 
6 


having possession of tlie same to surrender tlie saliie to the MANNA Regional and District 
Oi’iice oftlie lioiiieliort. 
ART. 18. GrotuzdsJor Cnncellcrtio~z ofRcgistry. - (1) In any of the following cases, the 
registraiioii of a Pliilippine vesselishall be caiicellcd froiii the Register of Vessels and the 
Certificate of Philippine Registry or of Ownership revolted: 
(a) 
(17) 
Wheii tlie Certificate was illegally or fraucluleiitly obtained; 
When the vessel is sold, transferred and/or assigied to a foreign citizen, 
corporation or association not qualified to register a vcssel uiider Philippine flag; 
(c) 
When the vessel is sold, traiisferred or assigned to a Filipino citizen, corporatioii 
or association a i d  appropriate application lias been made for change of ownership; 
(d) 
(e) 
When tlie vessel is sold at public auctioii; 
When a vessel is sold for scrapping or lias exceeclecl its ecoiioiiiic life and 
deteriiiiiied to be unsafe aiid unserviceable; 
(f) 
When the charter or lease of a vessel registered uiider Article 6 (b) has expired or 
llas been caiicelled or leriiiiiiatcd for any reason, in which case the caiicellatioii from the Register 
of Vessels aiid revocation of tlie Certificate of Philippine I?egistry shall autoinatically tale place; 
and 
(g) 
(2) It shall be ihe duty of the managing owner, illaster or agent of a vessel, 1:aving reasons 
to believe that it lias been lost, to promptly said a writteii notice, uiider oath, to the MARINA 
Regional or District Office at her Iioiiieport giving advise of such loss and the probable occasion, 
therefor stating the iiame of the vessel and tlie name of all persons on board, as far as tlie sainc 
can be ascertained, aiid shall furiiisli upoii request of the District Officer such additional 
inforlnalion as shall be required. Such iiotice of loss sliall be duly noted in the hgister of 
Vessels and the lZecord of Transfers aiid Eiicuinbrrrnces and all persons having m y  claim or 
interest ofrecord in said vessel shall be duly notified. 
When a vessel has heen declared lost or missing. 
ART. 19. Record of Docuineizcs ild%c/iiig Tiile. - A Record o f  Traders and 
Encuiiibrances of Vessels shall he kept at tlie MANNA Regional or District Office in which 
I 


sliall be recorded at length all transfers, bills of sale, inortgages, liens or other doc~unients directly 
or indirectly affecting the title of Philippine flag vessels, and likewise therein shall be recorded 
all receipts, certilicates or acluiowleilgmeiits canceling or satisbing, in whole or in part, any such 
obligations. 
i 
In order to be enfoIceable against tlie ship arid third persons, all entries in tlie Record of 
Transfers aiid Encunibrances of Vessels shall be annotated at tlie hack of the Certificate of 
I’liilippine Registry or of Ownership, stating the date of entry and the nature or subject matter of 
the doculnent. 
ART. 20. Conlerils ofhforlgnge Appliccrlion. - Eve17 applicatioii to register a mortgage 
shall be accoinpanied by an authenticated copy of (lie mortgage contract or other similar 
insti-unient aiid shall set forth ‘die following: 
(a) 
(b) 
(c) 
(a) 
the iiaine or description of tlie ship being mortgaged; 
the name, nationality, and place of residence oftlie owner of (lie ship; 
the naiiie or each mortgagor and mortgagee; 
tlie interest of the mortgagor in the ship being mortgaged; and in the case of a ship 
under construction, the applicaiion sliall state, among otlier things: 
(d) 
(e) 
the name and location of the constructioii yard; 
the intended port of registration; 
(f) 
tlie yard number; and 
(d) 
ART, 21. Eizdorserizent ofhforfgages. - (1) The appropriate iiiaritiine agency sliall, at tlie 
request of the mortgagee or his authorized agent, cause the endorsemelit upon tlie Certificate of 
Philippine Rcgistry of tlie ship subject to the mortgage those matters set forth in the preceding 
Arlicle. 
the dimensions aiid approximate deadweight of the ship on completion. 
(2) If the ship in respect of which a mortgage has been made holds only a Provisional 
Certificate of Philippine Registry aiid is abroad at the time of the registration of tlie mortgage, the 
endorseiiient shall be made by such coiisular officer of tlie Philippines as tlie appropriate 
inxitime agency shall direct. 


(3) If a new Certificate of Philippiiie Registry is issued, any endorsement upon thc old or 
pi-ovisional certificate of a morlgage, which remains uiidischarged at the time of the issuance of 
the new certificatc shall be transferred to aiid re-endorsed upon such new cerlificale. 
ART. 22. Iiwpecliorz ofand &opiesf?on? lhe Regislev. - (1) The register shall be open to 
public inspection during ordinary business hours and subject to such reasonable regulations as 
m y  be prescribed by the MANNA. 
(2) At tlie request of any person aiid on the payment of reasonable fees, extracts from the 
Register o f  entries setting out the details mentioned in the preceding Articles and/or authenticated 
copies of any dociiineiit or iiislruiieiit, which is requircd to be filed under this Title, shall be 
fuumished such person. 
ART. 23. De-Regislralion of rhe Ship Subject to a Mortgage. - (1) Except in case of 
forced sales, a Philippine flag vessel shall not be &-registered without the written consent of all 
holders of registered mortgages. 
(2) A ship, which is or has been registered in another state, shall not be cligible for 
permmelit registration in the Philippines, unless: 
(a) a certificate has been issued by the former state to the effect that Ihe sliip has bee11 de- 
registered; or 
(b) a certificate has been issued by tlie former state to the effect that the vessel will be dc- 
registered 011 the day when such new registration is effected. 
TITLE 11 - I1fAXITIME LIENS AiVD SHIP MORTGAGES 
Chapter 1 - Mmifiine Liens 
ART. 21. Claims secured by nzrrriliiize liens. - (1) The following claims in relation to a 
ship shall be secured by iiiaritiiiie liens 011 the ship, except those which arose out of or which 
resulted from the radioactive properties or a combination of radioactive properties with toxic, 
explosive or other hazardous properiies of nuclear fuel or of radioactive produce or waste: 
(a) Port, canal aiid other waterway dues, tonnage dues, light dues, pilotage dues and other 
public taxes, dues and chages of the same character; 
9 


(b) Wages and otlier stuns doe to the master, officer and oilier iiieiiibe~’~ 
of llie ship’s crew 
ill respect ol: their eiiiployinent on board the ship; 
(c) Claims against the owner in respect of loss of life or personal injuly occurring 011 land 
or on water, in direct coiiiiectioii wid the operation ofthe ship; 
~ 
(d) Claims against tlie owner based on tort and not capable of being based on contract, in 
respect of 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, cweck reinoval and contribution ill general average. 
(2) Subject to tlie provisioiis of the succeeding Article, tlie abovementioned inariliine 
liens shall be paid in the order in which hey are enumerated. The maritime liens set out in each 
of paragraph (a), (b), (c), and (d) shall rank equally as bet\vcen theinselves. 
ART. 25. Clainzs foi Sdvrrge, Ifieclr, Removal, urzd Geiieval Avercge. - (1) Maritime 
liens, which secure claiiiis for salvnge, wreck removal aid contribution in general average, shall 
be prekrred over all iiiaritiine liens which have attached to tlie ship prior to the time when 
operatiotis giving rise to the said liens were performed, other than those iiiaritiine liens rekrred 
to in paragraph (a) of tlie preceding Article, and tliey sliall rank in the inverse order of llie time 
when the claiins secured thereby accrued; 
(2) Claims for contribution in general average shall be deemed to have accrued on the 
date on which the general average act was performed. Claims for salvage shall be deemed to have 
accrued on the date oil which the salvage operation wns terminated. 
ART. 26. Naizae ofhfaiitinze Liens. - (1) Maritime liens shall arise whether the claims 
secured by such liens are against the owner, or against the demise or other charterer, inaiiager or 
operator oftlie ship. 
(2) Except iii,,case of forced sale of the ship, the maritime liens sliall follow the ship 
iiotwithstanding aiiy change or owncrship or of registration. 
ART’. 27. Assigimeizt or subrogation. - The assignment of or subrogatiou io a claim 
secured by a inaritiine lien shall entail the siinultansous assiginiieiii of or subrogation to such 
inaritiiiie lien. 
10 


ART. 28. ~x:ulingz~iskment 
of ~ 7 1 a 1 4 h e  
liens. - (1) n/laitiine liens shall be extiIiguished 
afLer a period of one year froin the Lime wheu tlie claiiiu secured thereby arose unless, prior to the 
expiration of such period, the ship has been arrested, such arrest leading to a forced sale. 
(2) The period of one year dial1 not be subject to suspeiisioii or interruption, provided, 
however, that time shall nol run during the period that ihe person exercising the lien is legally 
preveiited from arresting tlie ship. 
! 
ART. 29. Rights ofretenlion. - (1) The rollowing persons, wlieii in possession of ship or 
! 
ship that is under construction, shall have the right to retain such ship or ship under construction: 
(a) a shipbuilcler, to secure claims arising out of the construction of, or other work carried 
out in relation to the ship; aiid 
(b) a ship repairer, to secure claiiiis arising out or the repair of, or other work carried out 
in relation to the ship affected during such possession. 
(2) Said right of retention sliall be extinguished when: 
(a) the claiin in respeci of which the said riglit has 'been exercised is met or is otherwise 
discharged; 
(IJ) tlie ship ceases lo be in the possession of llie shipbuilder or ship repairer as the case 
may be; or 
(c) the court orders that the ship is to be releascd. 
Chapter 2 - Ship Jforfgqys 
ART. 30. Applicatiotz. - The provisions of this Chapter shall apply to every mortgage 
wherever executed in respect of: 
(a) a ship that is registered in the Philippines, or 
(b) a ship that is uiider construction in the Philippines. 
ART. 3 1. Subject oflhe mortgage. -Unless otherwise stipulated: 
(a) a mortgage of a ship shall include all the property of the iilortgagor whicli is 
appropriated to the ship and on board at the time when the mortgage contract is eiitered into, or 
which is later substituted for such property, aild 
1 1  


(b) a mortgage of a ship uiider construction shall include all materials, machinery and 
equipiiieiit oiviied by the mortgagor which are within the premises of the builder's yard aiid 
distiiictly identified as iiiteiided to be incorporated in the ship uiider construction. 
i 
ART 32. Foi,i~znZ mlidiQ. -A mortgage shall not be valid unless it is: 
(a) made by or with the consent ofthe owner ofthe ship or ship under construction; aiid 
(b) made in mriting sjgned by tlie mortgagor and mortgagee. 
ART. 33. Registmlioiz oJnzorlgnges. - (1) Every mortgage of a ship, which is registered 
in tlie Philippines or which is under construction therein, shall be registered in the Register of 
Mortgages aiid Encumbraices kept by the WlARIhVL I€ such a mortgage is not registered, it shall 
be uneiifoi-ceable agaiiist tlie ship and third persons. 
(2) On tlie registration of a mortgage, an authenticated copy of the mortgage contract and 
agreements shall be furnislied the Baigko Seiitral ng Pilipinas (BSP). 
(3) If the mortgage is traderred or materially mielided or if one mortgage is substituted 
lor another, the traiisfer, amendment or substitution shall be registered in the sane Register. Any 
Iransrer, amendment or substitulioii that is iiot registered shall be unenforceable against the ship 
and third persons. 
ART. 34. Publiention ofnzoifgnges. - (1) The MARTNA shall, upoil the registration of a 
mortgage, issue two ofiicial copies of tlie relevait entry in the Registry to the mortgagor. Each 
official copy oftlie entry shall bear the official date of the registration oftlie mortgage. 
(2) The mortgagor shall exhibit tlie following docuineiits in a proininelit place on board 
tlie ship subject to the mortgage: 
(a) at least one of tlie official copies issued tinder subsection (1); and 
(b) an autlieiiticatecl copy of the ship's Certificate o f  Philippine Registry duly endorsed 
with particulars of the mortgage. 
(3) The moltgagor upon request by the mortgagee before the executioii oftlie mortgage to 
which they are parties, shall give delails iii writing to ilie mortgagee of: 
(a) any prior mortgage on the ship which is to be the subject of the mortgage; and 
(b) aiiy iiiaritiiik lien to which the said ship is subject, which are laio~v11 to the mortgagor. 
12 


such rules and regulations concerning: 
(a) the fociu oftlie transkr of a mortgage; 
(b) tlie procedure for tlie re 4 . '  
istiatioii of a mortgage or a transfer of a mortgage; 
(c) tlie recording of a mortgage which relates to a ship under construction in a special 
register for such mortgages; 
(d) tlie recording of tlie transfer, discharge or foreclosure of any mortgage in the 
appropriate register; 
(e) the aniendnieiit of any entry in the register iii relatioii to a mortgage; 
(f) the recording of particulars of mortgages oil certificates of registty; 
(g) fees in relatioii to the registration of mortgages, inspection of the register and for 
aullieiiticatecl copies of entries iii the register; 
(11) forins to he used in coniiection wit11 tlie registralion of a morhgage or the transfer, 
discharge or foreclosure of a mortgage or any application for ai aiiiendment of the register; and 
(i) aiiy matters iiicideiital to the registration of mortgages and related subjects. 
ART. 36. Priori& belween morlgnges. - Mortgages shall rank in the order of heir being 
recorded in Ilie Register, the earlier before the latter. 
the security represented by tlie ship under a mortgage if: 
(a) the inortgagor defaults in the discharge of the indebtedness or other obligations 
secured by the mortgage; or 
(b) the mortgagor or aiiy person in possessio11 of the mortgaged property substantially 
prejudices the security of the mortgagee by any act or oiiiissioii; or 
(c) the mortgagor coiiiiiiits any breach of the mortgage contract which, by the ter~~is 
of the 
contraci, elltitles the isiortgagee to enforce Ihe security. 
13 


ART. 3 9. Xerizedfes o f l h  nzor/gagees. - The eiirorcenieiit or secority under the niorlgage 
may be effected by: 
(a) Arresting the ship subject to the mortgage and apklyiiig to the court for ail order for its 
i 
forced sale; or 
(b) Foreclosing the mortgage; or 
(c) Any iiialmer permitted by the mortgage contract. 
ART. 39. Arrest lending 10 forced sale. - (1) A mortgagee entitled to enforce his 
mortgage or a person exercising a iiiaritime lien inay bring proceediiigs in rem against the ship, 
which is the subject of the iiiortgage or to which the maritime lien attaches, as tlie case may be, 
before the court having jurisdiction over tlie ship. The petitioner shall be entitled to apply to the 
court exparre for an order Tor the arrest of said sliip. 
(2) The petitioner shall file in support of his claim an affidavit deposing to the 
circumstances which entitle him 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 require a bond or other security before issuing the order of arrest. The 
bond or security shall bot exceed tliz amount of tlie iiiortgage debt or lien. 
(4) The court, upon the arrest of the ship, shall order its forced sale unless tlie mortgagor, 
the owner of the ship or any person authorized to act on his behalf of any oilier 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 amomt equal to tlie mortgage debt or lien, or oil the ground that the order of 
arrest was iniproperly or irregularly made. 
ART. 40. Notice of the forcedsale of a s/i@ -Prior to tlie forced sale o f a  ship, the cotirt 
shall give, or cause to be given, at least thirty (30) days, written notice of the time and place of 
such sale to: 
(a) all holders of registered mortgages; 
(b) such holders of iiiaritiine liens 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) the regislrar orthe registry in which tlie vessel is registered. 
ART. 41. efecl ofliiejb~ced sale of a ship. - (1) In the event o f  lhe forced sale or the 
ship, all mortgages, except those assumed by the purchaser with the coiisenl of the holders, aid 
all liens aiid other eiicuiiibrances ofhiatsoever iiature shall cease to atlach to the ship btll shall 
attach to tlie proceeds of sale, provided however that: 
(a) at the time of the sale the ship is in the jurisdiction ofthe Philippines; and 
(b) tlie sale has been efkctecl in accordance with the law ofthe I’hilippiiies. 
(2) Any charter party or contract for the use of the ship in existence at the time of the 
h c e d  sale shall be deemed to be terminated, williout prsjudice to any claiiii the charher may 
have against the owner of tlie ship at the time ofthe sale. 
ART. 42. Dislribzilioii oJ1h Pmceedy. - (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 shall be satisfied out of the balance of the proceeds ofthe sale in 
the order lierein eiiumerated: 
(a) Maritime liens; 
(1)) Registered mortgages; 
(c) Rights of retention, observing also the prekrence among each category of claims 
established in Articles 24, 25 & 36 of this Code. 
ART. 43. Cer.t$cnte of Release. - (1 ) When a ship registered in the Pliilippines has been 
the ob.jecl of a forced sale ill tlie Philippiiies, the court having jurisdiction shall, at the request of 
the p~ircliaser, issue a certificate to the effect that the ship is sold free of all mortgages, maritime 
liens, and oher eiicumbraiices, except those assumed by the purchaser. 
(2) Upon the production of the above-mentioned certificate, the registras of the Register 
of Vessels shall delete all regislered mortgages, except those assumed by the pu&tser 
or issue a 
certificate of de-registration for the purpose of regislratioii, as the case may be. 
ART. 44. Eflecl of lhe forced sale of a ship in .fooreigrz stntes. - The forced sale in a 
foreign slate of a ship wliicli is registered in the Philippines sllall be recognized a11d effective ixi 
15 


tlie Pliilippities, provided that [lie procedure for such forced sale in that foreign state substantially 
corresponds to tlie procedure set out in Articles 40,41, and 42. 
Chapter 4 -Foreign Liens nitif Foreign nforrgqps 
1 
ART. 45. Foreign Mcwiliine Liens. - (1) A claim against the owner or against the demise 
or otlier charterer, tiianager or operator o€ a ship being a claim which is governed by tlie law of a 
state other than the Philippines aiid which is recognized by that law as giving rise to a maritime 
lien, or right of a similar nature shall be recognized by and enforceable in the Philippines 
provided said claim coiistitules or corresponds substantially \p a claiiii set out in Article 24. 
(2) 
The provisions of this Code relating to maritime liens including priority, ranking 
of liens between themselves, and enforcement, shall also apply to such claims. 
ART. 46. Foreign niorrgcrges. - (1) For tlie purposes of this Article, ‘tforeip iiiorlgnye” 
shall iiieaii any iiiortgage or aiiy 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 has been effected aiid registered or otlieiwise recorded in accordance 
with the law of the state where the ship is registered; 
(b) such register aiid any iiistruinents or documents which are required to be deposited are 
open to piiblic inspection, aiid that extracts of the register and copies of such instrunieiits are 
obtaiiiable from tlie registrar, aiid 
(c) either the register or tlie loan agreement speciiizs: 
(i) tlie name aiid address of the person in whose favor the mortgage has been efkcted or 
that it has been issued to bearer; 
(ii) the aiiiouiit secured by the mortgage or tlie manner of calculating said amount; 
(iii) clate of 111; mortgage; and 
(iv) such otlier particulars which, according to ~iie law of the state where the ship is 
registered, determine the rauk in regard to other registered mortgages. 
16 


ART. 47. Lni,v goiJernirig,ioreigr inoifgccges. - (1) The raiilcing of registered mortgages as 
between themselves aiid rlieir effect as regard io third parties sliall be goveriied by the state wherc 
1he sliip is registered. 
(2) All matters relating to pkmdure for cnforceiiicnt shall be goveriied by this Code. The 
Rdes of Gout shall have suppletory effect. 
TITLE 111 - TXANSPORTAND OTHER CONTMCiS 
Chapter 1 - Dornesdc Shipping 
Section One - Coorr~nzcii Provisions 
ART. 48. Dejnition. - For purposes of this Chapter, the term ‘‘coiiznioi! cnrriers” are 
persons, corporations, firiiis or associations eiigaged in the business of carrying or transporting 
passengers or goods or both, for coiiipensation, ofrering tlieir service to the public. 
ART. 49. Diligeirce Required. - Coiiiiiioii carriers, from tlie iiatue oT tlieir business and 
for reasons of public policy, are hound to observe extraordinary diligence in the vigilance over 
the goods and for the safety of passengers transported by them, according to all the circuiiistaiices 
of each case. 
Extraordinary diligence is the degree of care required of tlie obligor to take all tlie 
iiecessary lawful steps aiid precautions to lxeveiit any loss, damage or iiijury wliich could have 
been reasoilably foreseen at the time the obligation was constituted or at m y  time prior to the 
happeiiiiig of tlie event giving rise to tlie loss, damage or iiijuiy. 
In case of loss or damage to goods or death or or injury to passengers, co~iitiioii carriers 
are presuiiied io have been at fm!t or to have acted negligently, unless they prove that they 
obscxved extraordinary diligence. 
ART. 50. Conb.ibi.ilorjj Negligence. - The contributory negligence of the passenger or of 
[lie shipper of goods ioes not bar recovery o€ danages €or death or injury of the passeliger or for 
damage or loss of the goods, if the proximate cause tliereof is the negligelice of the carrier. The 
amount of daiiiages recoverable sliall, however, be equitably reduced. 
w 
17 


A m .  5 1. Liability of Successive Crrrriers. - In case of trmsportatioii to be perforiiied by 
various successive carriers, uiider a single contract, siicli common carrier slid1 be deemed to be 
one of the contracling parties to tlie agreeinelit i n s o h  as coliceriis that part ol tlie transportation 
wliicli is performed by each coiiiiiioh carier. 
These coiiiiiioii carriers shall be jointly and scverally liable €or loss, daniage, destruction 
or delay, except where by express agreement, the firs[ carrier has assumed liability for tlie wliole 
j oui-iiey. 
1 
ART. 52. Unautizorized Carriers. - Without prejudice to any crimiiial liability, persoiis 
eiigagiiig in the traiisportatioii business without beiiig authorized to do so, sliall iiicur tlie same 
responsibilities, obligatiolis and liabilities olcommon carriers as provided for in this Chapter. 
Section Two - Carriage ofPassengers 
ART. 53. Obligation of Coiiznzon Carrier. - The coinmoii carrier shall be bound bePore 
and at the begiiiiiiiig of aiiy trip or voyage to exercise exiraorcliiiaiy diligeiice to iiiake the vessel 
seaworthy aiid to properly iiian, equip and supply the vessel. 
RRT. 54. Obligation of Crrpmiiz or Muster. - The iiiaster of any passenger vessel shall 
Iteel) a lis1 of all tlie passengers, wliicli shall be open to inspection by the Philippine Coast Guai-d. 
A copy oftlie list sliall be forwarded to the shipowner or ship agent. 
ART. 55. Overloading. -No coiiiiiioii carrier shall take on board a nuiiiber of passengers 
greater tliaii that stated in tlie certificate of inspection, 
Every vessel sliall carry in accessible places oiie life preserver for every passenger aid for 
every member of tlie crew, in addition to liceboats required by regulations. 
ART. 56. Cariyi7zg uf Explosives. - No passenger-carrying vessel shall transport, carry or 
stow on board the vessel any explosives except tlie vessel’s signal aiid emergeiicy equipment, 
and others as may be ~erinitteil by regulations of tlie MARINA. 
ART. 57. Discipline. - Iii all matters peilaiiiiiig to tlie preservation of order and cliscipliiie 
011 board tlie vessel, passengers shall be subject to the orders of tlie master. 
IS 


ART. 58. Dtim/ion qfReqmiisiBili/y - Tlic extraordinary cliligencc required of coiii~iion 
carriers shall begiii when a person boards the vessel with tlie inleiition o f  becoiiiiiig a passenger 
and is accepted as such by the co~iiiiioii carrier and coiitiiiue until h e  trip, exprcssly or iiiipliedly 
contracted Cor has been coiicluded!aiid 
the passenger has left the coiii~i~oii 
cari-ier's vessel in 
safety, unless tlie passenger sooiier teriiiiiiates or relinquishes liis rights as such. 
ART. 59. Right of Carrier fo Rejise TrunspaYalion. - A coiiiiiioii carrier may refuse to 
carry as passengers, persons who refuse to comply with its reasonable regulations or who are 
likely to become obnoxious or dangerous to other passengers or interfere with the safe and 
coiiveiiieiit coiiduct o f  transportation, or who are unable to take care oi" themselves, unless 
accompanied by a coinpeteiit person. 
ART. 60. Dillies of Pcrsrsserzger. - Tlie passenger shall observe tlie reasonable regulatioiis 
of the coiiiiiioii carriers, and exercise ordinary diligciice to avoid iiijury to himself aiid loss or 
claiiiage to his property uiider liis custody. 
ART. 61. Void Siipulalioi?. - A stipulalioii liiiiiting the liability of the carricr to a fixed 
sum for the death or iiijury of a passenger is void, as contrary to public policy. 
ART. 62. Nafzire of Respoizsibilify oJ1'Cwrier. - The responsibility of a cointnoii carrier 
for the safety of passenger caiuiol be dispensed with or less6bed by stipulation, by the posting of 
notices, by stateineiits or tickets, or otherwise. 
Tlie reduction o f  fare does iiot justify aiy limitation of tlie coiniiioii carrier's liability. 
When a passenger is carried gratuitously, a stipiilatioii limiting the coiiiinoii carrier's 
liability for iiegligeiice is valid, but iiot for willhi1 acts or gross iiegligeiice. 
ART. 63. Liabilily ofh'cgligeiice or A m  ofl'rqdoyees. - Coiiiiiion carriers are liable €or 
tlic death of or injuries to passengers though h e  iiegligence or willful acts of the foriner's 
einployees, altliough such eiiiployees may have acted beyond tlie scope of tlieir authority or in 
violation of tlie orders of tlie coiiiiiioii carrier. 
This liability of coiiiiiioii carriers does not cease upon proof that they exercised all tlie 
diligerice of a good father of a family in the selection and supervision oftheir e~nployees 
I I O ~  call 
19 


such responsibility be eliminated or limited by slipulatioii, postiiig of notices, statements 011 the 
ticltet or otherwise. 
ART. 64. Liubililyfoi. Acfs of Ofhers. - A coinmon carrier is responsible for iiijuries 
suffered by a passenger oii ascoui~~ 
of the willful acts or negligence of other passengers or of 
strangers, if the coiniiion carrier’s einployees through the exercise of the diligeiice of a good 
I!itlier oflhe family could have prevented the injury. 
ART. 65. Linbilib for Discozirteoas Coizducf. - Comiion carriers shall protect their 
passengers from insults aiid iiidigiiities on the part of their employees aiid shall be liable for 
moral dainages for indecent, abusive and insulting language or conduct o f  their eiiiployees 
toward tlie passengers. 
ART. 66. Linbilily fo Persoid Buggage. - With respect to personal baggage in the 
possession aiid control of a passenger, the coiiiiiion curier is liable for loss or daiiiage resulting 
thereto only €roiii its iiegligeiice or willful act of its employees. Liability of the coiiiiiion carrier 
lor its iiegligeiice does not extend to large sums of money or other property of exceptional value 
retained by tlie passenger in his control, without the Iuiowledge of the common carcier. 
Section Three - Ccirrifige of Goods 
ART. 67. Duly of Conmorz Carrieil - The co~ninon carrier shall be bouiid before and at 
the begiriiiing of any trip or voyage to exercise extraordinary diligence to make the vessel 
seaworthy, and to properly iiiaii, equip and supply the vessel aid make the holds, refrigerating 
aiid cooling chambers and all other parts of the vessel in which goods are carried, fit and safe Cor 
their reception, carriage and preservation. 
ART. 68. Duralion qf Respisibility. - The extraordinary diligence required by coiiiinoii 
carriers shall be exercised from tlie time the goods are uiicoiiditioiially placed in the possession 
or, and received by tlie coiiiiiiou carrier for traiisportatioii aiid continues even when the goods are 
temporarily iinloaded or stored, in transit and during the iiiiie tlie goods are stored ill warehouse 
of the coiiiiiioii carrier at the place of destination until the salic are delivered, actually or 
constructively to tlie consignee, or to the person wlio has a riglit to receive’ them, or until the 
20 


colisignee has been advised of the arrival or tlie goods aiid has had reasonable opportunity 
thereafter to remove them or otherwise dispose of them. 
ART. 69. Liabilioifor Loss or Damage. - (1) Co!ninon carriers are responsible for the 
loss, destruction or deterioration odic goocis uiiless tliey prove that tliey observed extraordinary 
diligence. 
(2) Any of the following, if the sole and proximate cause of the loss or daniage to tlie 
goods, shall exempt tlie carrier froiii liability: 
(a) Flood, storm, eaitliqualte, liglitiiing, or other iialural disaster or calamity; 
(b) Act or the public enemy in war, wlietlier international or civil; 
(c) Act or oniission of the consignor of the goods; 
(d) The character of tlie goods or defects in the paclting or in the containers; or 
(e) Order or act of coiiipetent public authority. 
In any of tlie foregoing cases, tlie coiiiinoii carrier inust exercise due diligence to forestall 
or lessen the loss or damage. 
ART. 70. Eflecl of Delaji aizd Deviation. - If the coliinion carrier negligently incurs in 
delay in transporting the goods, or deviates from the stipuhted or usual routes witlioul just cause, 
a natural disaster sliali not kee such carrier fioiii responsibility. 
ART 71. Vdid Stipulalions. - (1) A stipulation imposing a duty on tlie coiniiioii carrier 
to observe iiierelp the diligence of' a good fatlier of a faiiiily in the care of the goods is valid 
provided that it has been freely agreed upon in writing, sigiied by tlie consignor for a 
consideration other than the usual and ordinary service rendered by the coinmoll cmier to the 
public. 
Such stipulation, however, cannot be availed of by the carrier if' it delays or clialiges the 
stipulated or usual route, without just cause. 
(2) A stipulalioii exempting the coiniiion carrier fioiii liability for &lay caused by strikes 
or riots is valid. 
(3) A stipulation that the coniiiioii carrier's liability is lin~ited to tlie value of tlie goods 
appearing in the bill of lading, uiiless tlie consignor declares a greater value, is binding. 
21 


(4) A stipulation fixing the sum that may be rccovered by tlie consignor for the loss, 
destruction, or deterioration of the goods is valid, if it is reasonable a i d  just wider the 
circumstances, and has been fairly aiid freely agreed upon, aiid the loss, destruction or 
delerioratioii of tlie goods is not dde to the willful act or conduct of the coiiiiiioii carrier, or its 
employees. 
The fact that tlie coininoil carrier has iio coiiipcij,ipr along tlie line or route, or a part 
thereof, to which the contract refers sliall be talteii into consideration 011 the question of whether 
or iioL the stipulation is reasoiiable aiid just. 
ART. 72. Void Slfpzdnrioiu. - Aiiy of the following or similar stipulations shall be 
coiisidered void or contrary to public policy: 
(a) That the goods are transported at the risk ofthe consignor; 
(b) That tlie coininon carrier will not be liable for any loss, destruction, or deterioration of 
tlie goods; 
(c) That the coiiniioii carrier shall exercise a degvce of diligence less than that of a good 
father of a family, or ofa ~iiaii ofordiiiaiy prudence in the vigilance over the goods transported; 
(d) That the comiioii carrier shall iiot be respoiisible for the acts or omissions of his or its 
employees ; 
(e) That the coiniiioii carrier is iiot responsible for the loss, destruction, or clelerioratioii of 
goods 011 account of the defective condition of the ship, or other equipiiient used in coiiiiection 
with the coiitract of transportation. 
ART. 73. Right lo Iiupecl. - It shall be the duty of tlie person shippiiig dangerous articles 
to inform the coiniiioii carrier of their character. The coiiimoii carrier has a riglit to refuse to 
accept for transportation dangerous objects which might endanger its safety or that of iis 
passengers and other goods carried, as well as those unfit for transporlation. If the colnnioIi 
carrier has reasonable grounds to suspect that a package contain contrabai1cl goods, explosives or 
highly inflammable substances, it may demand inspection io ascertain its contents. 
22 


AR~'. 
74. L)uiy qf Cwrier lo Isszie li'eceipr or Bill oflading. - It shall be the duty of the 
carrier to issue a receipt or a bill of lading for goods delivered to it for transl~ortation. The bill 
i 
may be negotiable or rlon-negotiable in form. 
ART. 75. Evide~tia~y 
Valudof Bill ofladi77g. - The bill of lading shall be p r i m  facie 
evidence of the contract between the parties and shall bind the shipper to all its term and 
conditions, if signed by tlie latter. 
It sliall also be evidence of the weight, dimensions, and packing ofthe goods delivered to 
the coinnioii carrier for transportation, but 1101 of the description aiid condition thereor, unless 
hey shall have been checked by the coininoil carrier aid so stated in the bill or lading. 
ART. 76. Period to Deliver.. - If no period has previously been fixcd Lor the deliveiy of 
tlie goods, the carrier shall be under the obligation to forward them in the first scheduled trip to 
the place of destination. 
ART. 77. Nolice ofStoppge. - When a notice of stoppage irz transitu is received by the 
coiniiio~i carrier, the latter must not deliver the goods to the consignee, but shall hold the goods 
as depositary and await iiistructioiis lrom tlie consignor, unless a third person to \vIioiii the bill of 
lading has been negotiated, in good faith aiid for value, demands delivery oftlie goods. 
ART. 78. To K'honz Delivery A4ude. - The coininon carrier shall deliver tlie goods to the 
consignee designated in tlie bill of lading or if it is negotiable in form, lo the person to whom it 
appears to have been negotiated. 
The coininon carrier shall in no case be coinpelled to deliver the goods until the 
mgoliablc bill of lading is surrendered to it or iinpouiided by tlie court. 
ART.' 79. hah'ilify ro Deliver. - Where the coiisigiiee 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, the coininon carrier may sell the goods at a public or 
private sale and shall hold the proceeds iii trust for the owiier of the goods, after deductilig the 
costs of storage aiid sale. 
In case the consignor or consignee fails to claim the goods kom the carrier within a 
period of thirty (30) days from notice, the coiniiion carrier shall have the right to sell such goods 
23 


through a notary public, at a public auction. The proceeds thereof, alter dcductiiig the costs 01 
storage aid sale, shall be deposited in a bank in the name of the consigiior and/or consignee, who 
sliall he notified thereof by the cmier. 
ART. 80. Lien over Goods. 1 
The coiiiiiioii carrier shall have a right to witldiold dcliveiy 
of tlie goods until the freight and storage fees have been paid in full. For the satisfaction of such 
lien the coiiinioii carrier may, after thirty (30) days from deiiiand for payment, sell such goods 
through a uotary public, at a public auction. The proceeds of the sale sliall be applied to the 
aiiiouiit of his lien and the expenses of the sale, and the surp1us sliall be turned over to tlie 
consignee. 
ART. 81. Caizcellatioiz ofNegotinble Bill ofLading. - Except as provided in Arlicles 79 
and SO, where tlie coiniiion carrier has delivcred the goods to the person elititled tliereto and fails 
to cancel tlie bill of lading, it shall be liable to anyonc who purchases for value and in good faith 
such document, whether the purchase is made before or after delivery of the goods by the 
coniinon carrier. 
ART. 82. Claim for Dar72ages. - Wliere the goods are tendered for deliveiy to the 
consignee, the latter shall have the right to iiispect the coudition of the goods and shall 
immediately notify tlie coiiiiiioii carrier of any loss or damage to the goods. Where the damage is 
not apparent, the consignee must notify the coniiiion carrier of such defect within seven (7) days 
after delivery. Otherwise, receipt of the goods by the person entitled thereto, without complaint, 
shall be prima facie evidence that the same had been delivered in good condition and in 
accordance with tlie contract. 
ART. 83. Damages Recoverable. - Damages for breach of contract shall be awarded in 
accordatice with Title XVIII of Book IV of the New Civil Code of the Pliilippines. 
Chapter 2 - Ii~ter~zntiorrnl 
Carriage 
Section Bme - Commrr Provisions 
ART. 81. Definitions. - As used in this Chapter, the following term shall have their 
corresponding meanings: 
24 


(a) “Cabin ltrggnge” nieans luggage that tlie passciiger has in his cabin or in possession, 
custody or co11trol. 
(1.) 
“Carrier” means a person by or on behalf of whom, a contract or carriage has beeii 
concluded, whether the carriage is aaiually performed by liim or by a performing or actual carrier. 
(c) “Corztrnct of carrirlge” means a contract made by or on behalf of a carrier for the 
carriage’ by sea of a passenger or of a passenger and liis luggage ,or for tlic carriage or goods by 
sea against payment of freight, as the case may be. 
(d) “Cuotls” includes live animals and ilie coiitainci, pallet or similar article of transport 
or paclcagiiig in which goods are consolidated, if supplied by the shipper. 
(e) “Znterrzntionnl carriage” applies to any carriage in which, according to the contract, 
either the place of departure oftlie passenger or of loading of goods or the place of destination of 
tlie passenger or of discharge of the goods, as the case niny be, is located within tlie Philippines, 
but not to a contract of carriage which takes place solely withill Pliilippiiie waters. 
(f) “Passenger” means any person carried iii a ship under a contract of carriage or who, 
wih the consent of the carrier, is accompanying a vehicle or live animals covered by a contract or 
carriage or goods. 
(g) “Performing or Actid Carrier” means a person to whom tlie performance of the 
whole or a part or the carriage has been entrusted by tlie carrier, and includes tlie owner, charterer 
or operator of the ship. 
(11) ‘‘Unit of Accorirzt” is the Special Drawing Right as defined by tlie Inlernational 
Monetary Fund (IMF), which shall be converted into Pliilippine currency on tlie basis of the 
official value of such curreiicy at the date of judgment or tlie date agreed upon by the parties., 
ART. 85. Liabilily oflhe Carrier and the Performing or ilclual Carrier.. - (1) Where tlie 
pcrformnnce of the carriage or part thereof has been cnkusted to a pelforming or actual carrier, 
the carrier shall nevertheless reniain liable for tlie entire carriage, and the performing or actual 
carrier shall be liable for the acts and oniissions of liis servants and agents aciing within the sco11e 
of their eriiploynient. 
~ 
’, 


(2) ~ n y  
special agreenient under which the carrier assumes obligatiolis not imposed by 
this Chapter or waives rights conferred by this Chapter shall not affect the performing or actual 
carrier unless expressly agreed hy the latter in writing. 
(3) Where and to the extent hiat both the carrier aud tlie actual or perforniing carier are 
liable, their liability shall be joint and several, without prejudice to any riglit of recourse as 
between the carrier aid the perloriiiiiig or actual carrier. 
(4) The aggregate of the aino~nt recoverable from the carrier, tlie pcrforniing 01- actual 
carrier and their servants and agents shall not exceed the liniits of liability provided for in this 
Chapter. 
ART. 86. Loss ofRight lo Limit Liability. -Tile carrier or the performing or actual carier 
or their servant or agent, sliall not be entitled to the benefits of the liiiiitatiou o f  liability provided 
in Articles 92 and 10 1 ,  if it is proved that tlie damage resulted fioni an act or omission of such 
person done with intent to cause such danage, or recltlessly and with luiowledge that such 
damage would probably result. 
Scction Two - Carriage ufpnsseirgers mid their Luggage 
ART. 87. Period of Carriage. - (1) Wilh regard tolie passenger and his cabin luggage, 
the period of carriage covers the.tiiiie the passenger and/or his cabin luggage are on board the 
ship or in the course of enibbaslcation or disenibarlation, and tlie period during which the 
passenger and his cabin luggage are transported by water fiom 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 the passenger by the canier. 
(2) With regard to cabin luggage or otlier luggage, the period also covers the period when 
the luggage has been taken over by the carrier or his servant or agent 011 shore or on board until 
the time of its re-delivkiy by the carrier or his servant or agent. 
ART. 88. Liability oflhe Carrier. - (1) The cmier shall be liable for the damage suffered 
as a result of the death or personal injury to a passenger and the loss of or daiiage to luggage if 
the incident which caused the damage occurred in the course of tlie carriage and was due to the 
26 


raLIlt or licglect of the carrier or of his servaiils or agents actiiig witliiii the scope of their 
employment. 
(2) Loss or damage to luggage, otlier than cabin luggage, iiicludes pecuiiiary loss resulting 
fiom delay in redelivery to the pa$eiiger within a reasonable time after arrival of tlie ship in 
wliich such luggage has been or should have been carried, but does iiot include delay due to labor 
disputes. 
(3) The burden of proving that the incident, which caused the loss or damage, occui-red in 
the course of tlie carriage and the extent of the loss or damage shall be 011 tlie claimant. 
ART. 89. Pr.eszmytioiz oj”Fau2t OF Negligence. - (I) Unless the coiitraiy is proved, ‘fault 
or neglect of the carrier or of his servants or agents acting within the scope of their einployiiieiit 
shall be presumed ir the death of or personal injury to thc passenger or the loss of or damage lo 
cabin luggage arose from or in coiuiectioii with shipwreck, collision, stranding, explosioii or fire, 
or defect in the ship. 
~ 
(2) With respect to.loss of or damage to luggage, other than cabin luggage sticli fault or 
neglect ‘shall be presumed, irrespective of the nature of the incident that caused the loss or 
damage, unless the contrary is proved. 
(3) In all other cases, the burden of proving fault or neglect shall be on the claimant. 
AKr. 90. Conlributory Negligence. - The contributory negligence of the passenger shall 
not bar recovery of damages for deal11 or personal iiijui-y or for tlie loss of or damage to his 
luggage, if die proximate cause thereof is the negligence of Iiie carrier. The aiiiount of damages 
shall, however, be equitably reduced. 
ART. 91. Valuables. - The carrier shall iiot be liable for the loss or daiiiage to monies, 
negotiable securities, gold, silverware, jewelry, omamelits, works of art, or other valuables, 
except where such valuables have been deposited with the carrier for safe-keeping, in which case 
the limit of the liability for fault or negligence of the carrier shall iiot exceed 1,200 Uiiits of 
hccouiit per passenger; per carriage. 
ART. 92. Liiiziis ofLiabili@ - (1) Unless expressly agreed upon iii writing between the 
carrier and the passenger, tlie liability of the carrier shall in no case exceed: 
27 


(a) For death of or personal injury to a passenger, 46,666 Units of Account per carriage, 
exclusive of interests and costs; 
(b) For the loss of or damage to cabin luggagc, 833 Units of Accouiit per passenger, per 
carriage, exclusive or interests and chsts; 
(c) For loss of or damage to vehicles includilig all luggage carried in or on the vehicle, 
3,333 Units or Account per vehicle, per carriage; 
(d) For loss of or damage to other luggage, 1,200 Units of Account per passenger, per 
carriage. 
(2) The above-mentio~ied amount inay be rediiced by agreenient by an amouiit not 
exceeding 116 Units of Account in case of damage to a vehicle, and by ail amount not exceeding 
13 Units of Account per passenger in case of loss of or damage to other luggage. 
ART. 93. Nolice ofloss or Damage. - (1) The passenger shall give written notice to the 
carrier or his agent: 
(a) In the case of appareiit damage to luggage: 
(i) For cabin luggage, belore or at the time of disembarkation or the passenger; 
(ii) For all other luggage, before or at the time of its redelivery; 
(b) In case of damage to luggage, which is not apparent, or in case of loss of luggage, 
witliiii fifteen (15) days froni the date of diseiiibarltation or redelivery or from the time when 
such redelivery should have taken place. 
(2) If the passenger fails to comply with this requirement, lie shall be presuiiied to have 
received the luggage undamaged. Notice of damage to luggage in writing iiced not be given if the 
coiidition of the luggage bas at the lime of receipt been tlic subject of joint survey or inspection. 
ART. 94. Slattite oflinzirnliori,. - (1) Unless exteiided 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 the loss or damge to luggage 
shall be brought within two (2) years fioni the time thc cause of action accrues. 
(2) The cause of action accrues: 
(a) In the case of personal injury, koin the date of disenibxkatioii of the passenger; 
28 


(b) 111 tlic case of death occurring during carriage, from tlie dale wheri the passeiiger 
should have disembarked; 
(c) In the case of persunal injury occurring duriiig the carriage and resulting in the death 
or the passenger after disembarltatidn, €rom the date of death, but not later than tliree (3) years 
from the date of disembarltation; 
((I) In tlie case of loss or damage to luggage, froin the dale of diseiiibarltation or fxon1 tlie 
date when diseinharlcatioii should have talteii place, whichever is later. 
Sectioii Thee - Cnriioge of Goods 
ART. 95. Scope ofAppilcalion - This Seclioii sliall apply to all coiitracls of carriage of 
goods by sea, -whether or not covered by bills of ladiiig, but not to charter parties, uiiless a bill of 
lading is issued pursuant to the cliaiter party, iii which case tlie provisions of tliis Section sliall 
apply to such bill of ladiiig if it goveriis tlie relalion betweeii the carrier and its holder, other tliaii 
tlie charterer. 
ART. 96. Period ofCcvriage. - (1) The respoiisibility of tlie carrier for the goods covers 
the period during which the carrier is in charge of the goods at the port of loading, during the 
transportation, atid at the port of discliarge. 
(2) The carrier is deeiiieil to be in charge of the goods - 
(a) from the time lie or 1iis servant or agetit 1ias talteii over the goods froiii: 
(i) tlie shipper, or a person acting on his behalc or 
(ii) an authority or other third party to whom, pursuant to law or regulatioiis 
applicable at tlie port or loading, the goods intist be handed over for sliipiiient; 
(17) until the time lie lias delivered the goods: 
(i) by handing over the goods to the consignee, his servant or agelit; 
(ii) iii cases where the consignee does not receive the goods from the carrier, by 
placing tlieiii at the disposal of the consignee in accordance with the contract or 
with the law or with tlie usage of thc particular trade applicahlc at tlie port or 
discharge; or 
29 


(iii) by handing over the goods to an authority or other third party to W~IOIII, p"rs"a1iL 
to law or regulatioiis applicable at the port of discharge, tlie goods niust be handed 
over. 
, 
, 
ART. 97. Obligafio~x ofihdCnrrier. - (1) The carrier shall be bound before and at the 
begiiuiing of the voyage to exercise due diligence to: 
(a) iiialce tlie ship seaworthy; 
(b) properly nian, equip aid supplji the ship; and 
(c) nialce the holds, refrigerating and cool chambers, and all other parts o f  the ship in 
~vhich goods are carried, fit and safe for their reception, carriage and preservation. 
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for and 
discharge the goods carried. 
ART. 98. Liability offhe Carrier. - (1) The carrier shall be liable for loss of, damage to 
or delay in deliveiy of the goods while the goods were in his charge, when such loss, daiiage or 
delay is caused by failure of the carrier, his servanls or agents to coniply with its obligations 
under the preceding Article. 
(2) Delay in deliveiy occurs when tlie goods liave not been delivered at the port or 
discharge provided for in tlie contract of easriage of goods by sea within the time expressly 
agreed upon or, in the absence of such agreement, withiii a reasonable time, having regard to the 
circniiistaiices of the case. 
(3) The persoil entitled lo nialce a claim for the loss of goods limy treat the goods as lost if 
they have not been delivered within sixty (GO) consecutive days following the expiration of the 
time in which goods should have been delivered. 
(4) Whenever loss, claniage OK delay has resulted from unseaworthiness, the burden ok" 
proving the exercise of due diligence shall be on the carrier or other person claiming exemption 
under the next Article. 
ART. 99. Exeniplioiifh~i Liabilily - (1) The carrier shall not be responsible for loss, 
damage or delay arising or resulting from: 
30 


(a) act, lieglect or defaaull of the mastcr, marincr, pilol, or the servants or the carrier in thc 
navigation or in the manageluent of the ship; 
(IJ) 
fire, unless'caused by tlie actual fault or privity of the carrier; 
(c) perils, dangers and acciddnts of the sea or other navigable waters; 
(d) act of God, 
(e) act of war; ' 
(f) act of public eiteiiiies; 
(g) arrest or restraint of princes, rulers or people, or seizure under legal process; 
(11) quarantine restrictions; 
(i) act or omission of tlie shipper or owner of the goods, his agent or representative; 
(i) strikes or lock-outs or stoppage or restraint of labor kom whatever cause, wlietlier 
partial or general; 
(IC) riots and civil coinmotion; 
(1) any deviation iii saving or attempting to save lire or property at sea; 
(in) wastage in bulk or weight or any otlier loss or damage arising froiii illherent delect, 
quality or vice of the goods; 
(11) insufficiency of paclciiig; 
(0) insufficiency or inadequacy of maxks; 
(p) latent defects not discoverable by due diligence; or 
(q) any other cause arising without the actual fault or privity of the carrier, or without the 
raLtlt or neglect of the agents or servants of the carrier. The burden of proof shall be on [lie person 
claiming the benefit of this exception to show that neither the actual fault or privity of tlie carrier 
nor the fault or neglect of the agents or servants of tlie carrier contributed to tlie loss, damage or 
delay. 
(2) In relation to tlie carriage of live animals by sea, the carrier shall iiol be liable for loss, 
damage or delay iii deliveiy resiilting horn any specid risks iilliereiit in carriage of that nature. Ir 
tlie carrier proves that he has complied with any special instructions given to Iiim by the shipper 
respectiiig the animals, it is presumed that the loss, damage or delay in delivery was caused by 
31 


such inhereiit risk unless there is proof that all or a part of tlie loss, damage or delay iu deliveiy 
resulted ii.om fault 01 neglect on the part of the carrier, his servants or agents. 
(3) Neither shall tlie carricr be respoiisible for any loss, daiiiage or dday to, or in 
coiiiicctioii with, goods if the naturk or value of tliose goods has been knowvii~gly mis-stated by 
the sliipper in the bill of lading. 
ART. 100. Deck Cargo. - (1) Notwitlistaiidiiig the provisioiis of liaragrapli 1 of the 
preceding Article, the carrier shall be liable for loss of or daiiiage Lo or delay in delivery to the 
goods carried 011 deck resultiiig solely from such carriage uiiless carriage of tlie goods 011 deck is 
in accordaiice with an agreement with the shipper or with the usage of the particular trade or 
allowed by stattutoiy rules or regulations. 
(2) If tlie carrier and the shipper have agreed that tlie goods shall or may be carried on 
deck, the Carrie1 shall insert in the bill of lading or other docuiiieiit evidencing the contract of 
carriage of goods by sea a stateinelit to that effect. In the absence of such a staleinelit tlie carrier 
has the burden or proving that ail agreeinelit for carriage on deck has been entered into: Pyovided, 
however, that such an agreeiiieiit cannot be invoked by the carrier against a third party, iiicludiiig 
a consignee, who lias in good faith acquired the bill of lading or other clocuinent evidencing this 
contract. 
ART. 101. Linzils of LiabililJ! - (1) Where tlie iialu2'e aid value of llie 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 bepairnnficncie evidence oftlie value of the goods, 
but i i o ~  
binding or coiiclusive oii tlie carrier. 
(2) In the absence of such declaration, tlie liability of tlie carrier for loss resulting from 
loss oiT or daiiiage to goods shall be limited to an ainouiit equivalent to 335 Units of Account per 
pacltage or other shipping unit or 2.5 units of account per kilograin of gross weight of tlle goods 
lost or damaged, whichever is the higher. 
(a) Where a container, pallet or siiiiilar 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 uiiits racked in tlie article oftraiisport are eniilnerated iii the bill of Jading or in any other 
32 


document evideiicing the contract of carriage of goods by sea, in which case each shall be 
deemed packages or shipping units. 
(b) In cases where the article of transport itself has been lost or damaged, that aticle of 
transport, if not owned or otIienNise/supplied by tlie carrier, is considexed one separate shipping 
unit. 
(3) The liability of the carrier for delay in delivery is lilnited to an aiiloullt equivalent to 
two and a halftiiiies tlie &eight payable for ?lie goods delayed, but not exceeding the total freight 
payable uiider tlie contract of carriage of goods by sea; and 
(4) In no case shall the aggregate liability of the carrier uiider tlie preceding paragraphs 
(2) aiid (3) exceed the limitation which would be established uiider the preceding paragraph (2) 
for total loss ofilie g o h s  witli respect to wliicli such lialiiity was incurred. 
ART. 102. Application lo 1701z-conlr.acttml clainzs. - The defenses aiid limits of liability 
provided for in this Chapter shall apply in any action against the carrier in respect of loss of or 
damage to tlie goods covered by tlie contract of carriage of goods by sea, as well as of delay in 
delivery wlietlier tlie action is fouiided in contract, in tort or otherwise. 
ART. 103. Through carriage. - Notwithstanding the provisions of Article 85, where the 
contract provides explicitly that a specified part of the cwiage is to be perlorined by a persoii 
oilier than tlie carrier, it may be validly stipulated tiiat the carrier shall not be liable for loss, 
damage or delay in delivery caused by an occurrelice bvliicli talces place while tlie goods are in tlie 
charge of the actual carrier clurhg such part of the carriage. Such stipulation, liowcver, is without 
effect if 1x0 judicial proceedings can be instituted against the actual carrier in a court o€ competent 
jurisdiction. The burden of proving that any loss, daniage or delay in delivery has been caused by 
such an occurrence rests upon the carrier. 
ART. 104. Liability of the Shipper. - The sliipper, his servant or agent is not liable for 
loss sustained by the carrier or the actual carrier, or for damage sustained by the ship, unless~such 
loss or clainage was caused by the fault or neglect of the shipper, his servants or agents. 
ART. 105. qiecial rzilesfoi dangerous goods. - (1) Goods of an inflaiiimable, explosive 
or dangerous nature, the shipment ol'wliich the carrier, his master or agent has consellied without 
33 


Iciiowledge of their nature and character may, a$ any tiiile, before discharge be laiided at a~iy 
place, or destroyed or reiidered iimocuous by the carrier without coinpensation, aiid tlie shipper 
or such goods shall be liable for all damages and expelises directly or indirectly arising out of or 
resultiiig froin sucii sliipineiit. 
1 
(2) If such goods were shipped with kiio~vledge and consent of tlieir imture aid character 
on tlie ;art ofthe carrier, the inaster or agent, aiid shall become a danger to the ship or cargo, they 
may, in like inaiiner, be landed at aiy place, or destroyed or reiidered iiinocuous by tlie carrier 
without liability on liis part, except for general average, if any. 
ART. 106. Issuance ofbill oflading. - (1) When the carrier or tlie actual carrier takes tlie 
goods into liis charge, the carrier shall, issue to tlie shipper a bill of lading. 
(2) The bill of lading may be sigiied by a person having autliorily from the carrier. A bill 
of lading sigiied by or for tlie inaster of the ship casiying the goods is deemed to have been 
sigiied 011 behalf of tlie carrier. 
(3) Tlie signature 011 the bill of lacliiig may be in haiidwritiiig, printed in facsimile, 
perforated, stamped, in symbols, or made by any other inccliaiiical or electronic means. 
(4) After the goods have been loaded on board, the carrier sliall, if tlie shipper so 
deiiiands, issue a “shipped” bill of lading which, in addition to the particulars required in tlie next 
Article, shall state that the goods are on board a nnined ship or ships aid tlie date or dates of 
loading. 
ART. 107. Contents of bill of lading. - Tlie bill of lading shall show, ainoiig other things, 
tlie following: 
(a) the leading marks necessary foor ideiitificatioii of tlie goods as the same are f~~riiislied 
in writing by the shipper before tlie loading of such goods starts, provided such marks are 
stamped or otherwise shown clearly upon the goods if uncovered, or 011 tlie cases or coverings il! 
wliich such goods are contained, in such a iiiamier as should ordiiiarily reinaiii legible uiitil the 
eiid orthe voyage; 
(b) either the iiutnber of packages or pieces, or tlie quantity, or weight, as the case 111ay be, 
as hriiished in writing by the shipper; aid 
34 


(c) the apparent order a d  coiidition of the goods. 
ART. 108. Reservntioizs in Ihe Bills of Lliding, - (1) If the bill of lading contain 
particulars concerning the general nature, leading iiiarlts, tiuunbcr of packages or pieces, weight 
or quailtity of the goods which the {arrier or other person issuing the bill of lading 011 his behalf 
knows or has reasonable grounds to suspect do not accurately repremit the goods actually talteii 
over or loaded 011 board, or if be had no reasonable means of cliecltiiig such particulars, the 
carrier or such other person must insert in the bill of ladiiig a reservation specirying these 
inaccuracies or observations. 
(2) Il tlie carrier or other persoii issuing the bill of ladiiig 011 his behalf fails to iiok on the 
bill of lading the apparent coiidition of tlie goods, he is deciiied to have noted on the bill of ladiiig 
that the goods were in apparent good order aiid condition. 
\ .  
ART. 109. Evidentinyy @ect of Bills of LnLhg. - Except for particulars lor wli~cli a 
reservation perniitted under tlie pmediiig Article has been noted in tlie bill of lading, the bill of 
lading is primnfncie evidence of tlie taking over or, wliere a “shipped” bill of lading is issued, of 
the loading by the carrier of the goods as described therein. 
Proof to the coiitraiy by the carrier is not admissible if the bill of lading has been 
transferred Cor value to a person who in good faith has acted in reliance on (lie description of the 
goods therein. 
ART. 110. Gtiararzteed 0,) h e  sfzipper. - The shipper is deemed to have guaranteed to the 
carrier the accuracy of particulars relatiiig to the general nature of the goods, tlieir marks, 
iiiimber, weight aiid quantity as furnished by him for insertion in the bill of lading, and imst 
iiideiiiiiify the carrier agaiiist loss resulting from imccurecies in such particulars. Tlie shipper 
reiiiaiiis liable even if the bill of lading has been transferred by him. 
The right of ;lie carrier to such indeinnity in 110 way frees him from liability uiider the 
contract of carriage of goods by sea to any persoii other than the shipper. 
ART. 1 11. Notice oj‘loss 01’ dumnge. - (I) Uiiless iiotice of loss or damage, specifying the 
general nature of such loss or damage, is given iii writing by the consignee to tlie calrier or to the 
octual carrier not later than the working day after the clay when the goods were Ilaided o ~ e r  
to the 
35 


coiisignee, such haiidiiig over is pri7na facie evidence of the delivery of tlie goods in good 
conditioii. 
(2) Where the loss or damage is not appari-ii~, notice in wIiting must be given within 
G k e n  (15) days after the day wlieijthe goods were handed over to the consignee. 
(3) If tlie state of the goods at tlie time they were handed over to tlie consignee has been 
the subject o€ a joint survey or inspection by tlie parties: ilotice in writing need iiot be given of 
loss or damage ascertained during such survey or inspection. 
(4) In the case or aii actual or apprehended loss or danage the cairier aid the consignee 
must give all reasoiiable facililies to each other for inspecting and tallying tlie goods. 
ART. 112. Notice of Delay. - No compensation shall be payable for loss resulting from 
delay in delivery unless a notice has been giveii iii writing to the carrier or to tlie actual carrier, 
witliiii sixty (60) days aAer the date when tlie goods were handed over to the consignee. 
ART. 113. Nolice lo the Shipper. - (1) Unless notice of loss or damage, specifying the 
general riature of tlie loss or damage, is given in witiog by the carrier or actual cmier to the 
shipper not later than ninety (90) days a€ter the occurrence of such loss or damage or after the 
delivery of the goods, whichever is later, the failure to give such notice is prima facie evidence 
that the carrier or the actucll carrier has sustained no loss or damage due to the fault or neglect of 
the sliipper, his servaiits or agents. 
(2) For the purposes of‘ this Article aid the preceding Article, notice giveii to a person 
acting 011 tlie carrier’s or the actual carrier’s behalf, including tlie master or tlie orficer in charge 
of the ship, or to a person acting 011 tlie shipper’s behalf is deemed to have been given to the 
carrier, to the actual carrier or to the shipper, respectively. 
ART. 114. Linzilalion ofaclioizs. - (I) Any action relating. to carriage of goods by sea 
under this Section shall be time-barred if judicial or arbitration proceedings have iiot been 
instituted within a period of one (1) year. 
(2) The limitation period coiniiieiices on tlie day 011 which the carrier has delivered the 
goods or part thereof or, in cases where 110 goods lime been delivered, 011 the last day 011 which 
the goods should have been delivered. 
36 


(3) The perso11 against wboiii a claiiii is made may at aiiy time dtuiiig the ruiiiiiiig or the 
limitation period extend that period by a declaration in writing to the claiiiiant. This period may 
bc ftlrther extended b) anotlier declaration or declarations. 
~ 
ART. 115. Arbilmlion - (r‘) The parties may provide by agreement in writing that any 
dispute that may arise relatiiig to carriage of goods by sca tiiider this Section shall bc referred to 
arbitration. The arbitrator or rubiirators sliall apply the l~rovisions or this Section. 
(2) Where a charter party contains a provision that disputes arising tliereuiider shall be 
rererred to arbitration and a bill of ladiiig issued pursuant to tlie charter party does not coiitain a 
special aiiiiotatioii providing that such provisioii shall be bindiiig upon the liolder of the bill of 
lading, the carrier may iiot invoke such provision as against a holder having acquired the bill of 
lading in good faith. 
ART. 116. Contrnctticrl slipnlalioim - (1) Any clause, coveiiaiit, or agreement in a 
coiitracl of carriage of goods by sea relieving the carrier or the ship fi.0111 !iability for loss of or 
daiiiagc to, or in coimectioii with, goods arising fiom negligence, fault or failui-c in the duties and 
obligations provided for in this Section, or lesseiiiiig such liability olherwise Lliaii as provided in 
this Section, shall be void. A carrier may, however, iiicrease his responsibilities and obligations 
uiider this Section. 
(2) For the purposes of this Article, a benefit of insurance in favor or the carrier, or a 
similar clause, sliall be deemed to be a clause relieving the carrier from liability. 
Chapter 3 - Ciinrtcr Parties 
Section One - GeiierciidElovisioils 
i 
ART. 117. De-finitioi? 0fTe.i.m~. -The followiog terms used in lliis Chapter sliall have the 
following meaning, uiiless tlie context or usage of the term iiidicates otherwise: 
(a) ‘ ~ ~ ~ i n r i e r  
Par&” iiiay be ciefiiied as the liiriiig or letting of part or the wliole of a vessel 
or vessels for a particular voyage or \Toyages aiid/or for n particular period, for tllc carriage of 
goods at an agreed freight or hire. 
31 


(b) “Demnn.nge” is a sum fixed in tlie chartcr party to be paid as liquidated damages [Or 
delay in tlie loading or uiiloading of cargo beyond h e  stipulated laytime. 
(c) “Dispcrfclz” is a rebate of freight allowed to the charterer for loading or discharging in 
less than the stipulated laytime. 
(d) ‘‘Lnytinze? is the period of time granted in tlie charter party for the loading and 
i 
cfiscliargiiig oftlie ca&o. 
(e) “Slzipoivner or owner of the vessel” shall iiiclude not only the owner but also the 
. 
charterer. 
ART. 11 8. Tlicrrraizty of Senworthiiiess. - The shipowner warmits that the vessel is 
seaworthy for a particular voyage and for the particular cargo. 
The charter party shall contain an adequate and accurate description of the vessel, listing 
its specifications and capacities. The charterer, if he so desire, may be provided with copies of 
relevant plans of the vessel. 
ART. 119. Right ofSi,;?lhiiiulion of Vessel. - Should the vessel iiained or iioiiiiiiated not be 
available to undertake the carriage, the shipowner sliall be perniilted to substitute another vessel, 
provided that the main particulars and position of the substitute vessel sliall be subject to the 
charterer’s approval. Such approval shall not be uimxtsonably withheld. 
ART. 120. Tmding lii77its. - The chai?ei-er shall eniploy the vessel in la~vful trade for tlie 
carriage o~f lawful cargo only between good and safe ports or places where tlie vessel can always 
lie safely afloat. The shipowner may expressly exclude areas where there are warlike hostilities. 
ART. 121. Cargo. - It is the duty of the chalerer to furnish a complete cargo in 
accordance with the lerins of the charter, giving its description and quantity. I-Ie 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, altliougli 
the period of hire ruki from deliveiy to redelivery of the vessel. 111 such case, the parties shall 
provide a margin within which delivery and redelivery of tlie vessel call be lnade without ftlrilier 
claim against any of the parties. 
In the absence of a stipulation, the margin sliall be a reasoliable period. 
38 


The vessel is coiisidered delivered if it reaches the berth or deck at \vliich the vessel is to 
load or uiiload if it is berth-charter party. If the cliartcr pasty iiaiiies a port for delivery or 
redelivery, and the vessel cannot proceed iiiiiiiecliately to a berth, it is considcred “arrived“ if it is 
within the port where it is at the iiniiiediate aiid effective disposition of the charterer. 
i 
ART. 123. Subcharrering. - Uiiless expressly proliibited in the charier-party, the charterer 
may sub-charter the vessel, in which case the duties of the owiier shall apply also to a disponeiit 
owner aiid the duties of a charterer shall also apply to a sub-charterer. 
AIIT. 124. Lien. - To secure payment of freight and other charges, llie shipowner shall 
have a prior possessory lieii upon all cargoes arid sub-fieiglits beloiiging to the charterer for all 
claims uiider the charter party, but not 011 cargo belonging to the sub-charterer where the latter 
had already paid the freight lo the charterer. 
ART. 125. Clause Paramouiit. - Except in cases of domestic charter parties, the coiitract 
may provide that the Carriage of Goods by Sea Act, whether the I-IagLie or Hague-Visby rules, 
shall apply to bills of lading issued under the charter party. 
Section Two - Voj)nge C/t(irter Party 
ART. 126. Voynge Churter Dejned, - A “voyage charter party” is a cliarter party of a 
specific vessel for a particular ’ voyage from one port or area to ariotlier, the coiiiiiiercial 
iiiaiiageiiieiit aiid navigational coiitrol of the vessel reiiiainiiig with the owiier. 
ART. 127. Implied Uiidertaking. - Uiiless otherwise agreed upon in a voyage charter, the 
sbipowiier iiiipliedly uiic1erlal:es: (a) Chat the vessel shall proceed with reasonable dispatch; and 
(b) that it sliall proceed without uiijustifiable deviation. 
ART. 128. Eflect of Ui~seni.i~orfhiiiess, 
- (1) If the charterer discovers that the ship is 
unseaworthy before the Voyage begins, aiid the defect caimot be reiiiedied w i t h  a reasonable 
time, lie may rescind the contract. 
(2) After the voyage has begun and the charterer is no longer in a position to rescind the 
contract, he can claim damages for aiiy loss caused by initial unseawortliiness. 
39 


ART. 129. Rensorznble Dispnlclz. - The implied undertaltillg of reasonable dispatch 
iiieaiis that the vessel shall proceed aiid complete the voyage agreed upon, with all reasonable 
speed. In the case of a consecutive voyage charter party, the obligation to proceed with 
reasonable dispatcli applies to every’voyage made under it. 
ART. 130. Efecr oj” Uizreasoimble Deluji. - (1) If the unreasonable delay is such as to 
frustrate the coiiiiiiercial object of tlie chai-terer in chartering the vessel, then the charterex may 
rescind the contract and claiiii damages. 
(2) If the delay is not so serious as to have tlie above result, the charterer caii merely claim 
damages for tlie delay, unless the delay is due to excepted perils. 
ART. 13 1. No Ui~jto/ij7nble Deviation. - The implied undertaking that the vessel shall 
proceed witliout unjlstifiable 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 and Reasoliable Rouie. - Uiiless the route is k e d  in the contract, the 
usual and reasonable route is [lie direct geographical route between the places specified in tlie 
contract, or one established by mercantile usage, or tlie most natural, direct, and advantageous 
route. 
ART, 133. PJ’hen 
Deviation is Justified, - Deviation is considered justified in the 
following cases: 
(a) Where it is for the purpose of saving human life; 
(b) Where it is reasonably iiecessary for the sakty of the vessel or its cargo; or 
(c) Where it is due to circumstaiices beyond the coiitrol of the master. 
ART. 134. Efect of UnjusliJiable Deviulion. - Where tliere has been iiiijustifiable 
deviation, the c1iarte;er can either caiicel tlie coiitract or treat the contract as still subsisting, 
reserving his riglit to damages. 
In case he elects to cancel the contract, the charterer caii claim the delivery of his goods 
and shall be liable only up to the proportioiial aiiiouiit of the freight. The shi~io~viler 
shall be 
liable [or any loss or damage to the cargo unless the loss or damages is due toforce imjeure or 
40 


the inherent vice of 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 shiponner shall 
have the right to payment of the stipulated freight hut he shall be liable for damages resulting 
from the deviation. 
ART. 135. Inzplied Underfaking by the charterer. - Unless the shipowner knows or ought 
to luiow 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. ESfect ofshipping Dangerous Goods. - Subject to the provisioiis 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. Undertuking to Proceed to Port ofLoading. - (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 caiiceliiig date is 
fixed and the vessel does not arrive by that date, the charterer may refuse to load and lnay 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 orforce inajezlre. 
ART. 138. Duties ofShipowner. -The shipowner shall: 
41 


(a) send the vessel to the agreed or usual place of loading or unloading and give notice of 
its readiuess to load or unload to the charterer, in which case laytime starts to run h n i  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. Sufe Port or 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 Chnrter Party 
ART, 141, Ti& Ckurter Dejned -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 of Expenses. - 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 ofPerfarnzance. - The owner warrants that the vessel is capable of 
steaming in good weather and smooth water at a stated speed at a stipuIated rate of consumption 
of bunker Oil or fuel. 
42 


ART. 144. C'ontrol Over the Masrer. - 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, ~ l ~ p ,  
owner, on receiving the complaint, 
shall investigate the matter and malce a change in the appointments, if necessaiy and practicable. 
ART. 145. Allocation of Risk.r. - The shipowner and charterer may agree on how to 
apportion their liabilities under the time charter. In the absence of stipulatioiis 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 ofHire. - 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 aiier said notice. 
ART. 147. Off-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 otherwise stipulated, off-hire period begins on the 
happening of any of the following incidents: 
(a) Dry-docking or other necessaiy measures to maintain the efficiency of the ship; 
(b) Crew deficiencies and strikes; 
(c) Lack or deficiency of stores; 
(d) Breakdown of machineiy; 
(e) Damage to the hull; and 
43 


(r) Accidents or any other cause which hinders or prevents tlie hull working ol‘ the vessel 
lor more than twenty-four (24) hours. 
(2) ‘rhe off-de period shall terminate wlieii the vessel’s efficiency or full use is restored. 
I-Iowever, where the vessel deviated fiom its couise loor repairs, and the repairs have been 
completed at the port of rehge, ofl-hire does not teriiiiiiatc until the vessel is in the same position 
as it was when tlie event reiidering the vessel ofr-liire occurred, or until the vessel has regained 
the line of the voyage, whichever is the shorter clistaice to tlie port of destination. 
i 
ART. 145. Redeliveiy of J~essel. - The time charterer is obliged to redeliver the ship in 
the same coiiditioii as it was on delivery, except those due to ordinary wear and tear. The 
condition of the ship on delivery and redelivery shall be based on the “on-hire” aid “OR-hire” 
survey reports. 
Section Four - Dareboa! Clmrter Party 
ART. 149. Bnrebonl Chnrler Pnrly dejncd. - A bareboat charter p a t y  is a contract 
whereby tlie charterer takes over tlie control, rxanagemciit, iiiaiuiing and provisioning of tlie 
vessel. 
ART. 150. Form arid Conlenls. - A bareboat charter party must be in writing, signed by 
the parties, or by their authorized representative, aiid sliall iiiclude aiiioiig others, the Mlowing: 
(1) Name, surname, and domicile of the owner, 
(2) Name, surname, and domicile of the charterer, 
( 3 )  Type, name, class, and toiiiiage ofthe vessel, 
(4) Its flag, country or registry, call sign, year and place and built, 
(5) Port and time of delivery, canceling date, and port olredelivery, aid 
(6) Trading limits, period, hire, aiid frequency of dry-docking. 
ART. 151. Ohgnlioiw oflhe Owner.. -The ovi’iier is obliged: 
(a) to de1ive.r the vessel properly documented and seaworthy in every respect ready in hull 
and iiiachinery fit for the use iiiteiided at tlie port and time stipulated. 
44 


(b) to maintain the charterer in the peaceful and adequate enjoylllent or the charter for the 
entire duration of the contract. 
(c) Unless otherwise stipulated, to bear the cxpeiiscs for repairs aiid replaccments 
occasioned by latent defecls in the vessel, her machinery or appurtenances existing ai the time of 
delivery, provided such defects have manifested tlieniselves within eiglitcen months after 
i 
delivery. 
ART. 152. O~!Qntions ofthe Chaiteier. -The charterer is obliged: 
(a) To pay the charter hire according to the term slipulated; 
(b) To maintain the vessel, her machinery, boilers, appurtenances and spare parts in a 
good state of repair, in efficient operating condition, aid in accordance with good coiiimercial 
iiiaiiiteiiance practice; 
(c) To inan, provide victuals, aid to operate, navigate, supply and fuel the vessel at his 
own expense. 
(d) To male no structural changes in the vessel or in the inacliineiy, boilers, 
appurtenances or spare parts, without, in each instance, first securing the owmr’s approval 
thereoc 
(e) To bring to the knowledge of tlie owner, v,7itliin the shortest possible tinie, eveiy 
usurpation or untowad act wliicli any third person may have committed or may be openly 
preparing to carry out upon vessel; 
(0 
To redeliver tlie vessel, all its outfit, equipment, and appliances in the same or as good 
structure, state, condition, and class as that in which it was delivered, save ordinary wear aiid 
iear. 
Sectiori Five - Vohne Contract ofAffreightrtret 
ART. 153. ~I.filzitioiz. - A volume contract of arfieiglitiiient is a c~iarter party for ilie 
carriage of a large quantily of cargo ai an agreed scliedule of sliipi~ieiils over a long period of 
time. 
45 


ART. 154. Obligatioii o f h  Owner. - The owner undertakes to carry on vessels owned 
or chai-tered by him a specified quantity of cargo during a specified period of time, in lots of 
specified iniiiiinuni and inaxinnun weight or volume, at the option or either the owner or 
charterer, to specified ports or xeashf loading and unloading. 
ART. 155. Period of Contract. - The period of the contract shall be expressly provided, 
indicating the first layday for llie initial vessel and the canceling date for the final vessel. 
ART. 156. Schedule a~id Quantioi ofSh@nitnt, - (1) The parties shall agree on the 
! 
schedule of shipments and iioinination of tonnage. 
I 
(2) The total quaitily to be shipped shall state the miiiiinuni and inaxiinuin weight or 
volume, giving the charterer the option to increase tlie same, subject to the deterinination by the 
shipowner ofthe exact quantity to be carried. 
(3) The shipowner shall not be bound to cany any shipment, which is less than the 
miniinuin quantity agreed upon in the contract. 
ART. 157. Failure lo Give Program ofSh@~?7cnl. 
- 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 iioiniiiate vessels with detailed 
specifications, depeiiding on the type of transpoitation 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 Nominafe Toiznage. - Unless otherwise agreed upon by the parties, 
should the owner fail to noininate 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 the charlerer has rehsed tonnage validly 
nominated in due time, the shipowiier shall have the option to postpone the sliipmenl within the 
period of the contract or to cancel the agreement. 
46 


ART, 161. DeJiiiitions. - (1) A ‘tfreiglit forrvnrrler” is a person who, for compensation, 
without being a coinnioii carrier, holds himself out to the general public, to procure 
traiisportatioii of goods, assemble and consolidate shipinents of such goods, perforni or provide 
for the perforinaiice of break-bulk and distribution with respect to such consolidated shipments. 
i 
(2) A “Nori-Vessel-~~e,erattng-Criz~zoli-~n~,erier” 
or NVOCC is a freight forwarder who 
assumes responsibility for the transportatioii of such goods from the point of receipt to the point 
of destination, utilizing for such transpoitation, the services of coininoii carriers. 
ART. 162. Isszmzce of Bill of Lading und iMmij%est. - The NVOCC shall prepare an 
accurate bill of lading for each shipment coiisigiied for transpoitation to a coniiiiun carrier, and a 
copy thereof furnished the consignor and consignee of such shipment. 
~ 
He shall also prepare an accurate manifest, showing eveiy individual shipment iiicluded 
in each consolidated shipment coiisigiied for transporlatioii to a coiiiinoii carrier. 
ART. 163. LiabiliQ. - The NVOCC assumes the liability of a coimnoii carrier with 
respect to the shipper, but in relation to the coninion carrier, the NVOCC is the shipper. 
ART. 164. Optioiis. - The NVOCC may accept a particular shipnieiit as an agent of the 
shipper or as the agent of a conimoii carrier, in the event that a volume of fi-eight adequate to 
permit a consolidated shipment camot be assenibled. 
Chapter § - Towage 
ART. 165. Dejiiition of Terms. - The following term used in this Chapter shall have 
these meaning, unless the context or usage of the term indicates otherwise: 
(a) “Tow” is a& vessel that is the object of towage. 
(b) “Towage” or “totoirzg” is the hiring of a vessel in connection with the holding, 
pushing, pulling, moving, escorting or guiding of a vessel owned by another, not coiistitutiiig a 
salvage operation. 
(c) “firg” is any vessel designed for towage. 
ART. 166. HflTboT Towage. - In harbor towage, navigation and iiiaiieuverirlg are 
conducted under the direclioii and responsibility of the tow owi7er or the hirer. 
41 
! 


ART. 167. Linbiliiy offhe Tow. - Tlie tow owner 
hirer shall iiidenniify the tug owiier 
agaiiist any claim by any person not A party to the contract of towage for any loss, damage, delay, 
personal iiijuiy or death, unless tlie cause is due to the negligence of the tug. 
Tlie tug owner shall not be dribble to the tow owner for any loss, dfuiiage or delay suffered 
by the tow or for any personal injuiy or loss of life suffered by any person on tlie tow, unless the 
cause is due to the negligence of the crew of the tug. 
ART. 168. Termination of Contract. - If the tow is in serious danger of being lost or 
damaged, and tlie cause thereof is not due to any breach of the contract by the tug owner, tlie 
contract of towage shall be terminated, and tlie relationship between the tug and tlie tow shall be 
governed by the law on salvage. If the danger is due to a breach of coutract of towage on tlie 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 
I 
Chapter 1 -Scope arid Coverrrge of bfflririe Ii~sr~rmice 
ART. 169. Marine iizstirance de$ized - A contract of marine insurance is a contract 
wliereby the insurer undertakes to indeiniiify the assured in iiiaimer and to the extent thereby 
agreed, against inariiie losses, Le: losses incident to marine adventure. 
ART. 170. Mixed sen und land risks. - (1) A contract of marine insurance may, by its 
express terms, or by usage of trade, be extended so as to protect tlie assured against losses on 
inland waters or on any land rislc 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 sliall alter or affect m y  law applicable to a contract of insurance other tliali niarine 
insuraiice, 
ART. 171. Marine adventure defined. - (1) Subject to this Title, every lawful lnarilie 
adventure may be the subject of a contract of niariiie insurance. 
4s 


(2) In particular there is a marine adventure where - 
(a) any ship, equipment on ships, cargo, cargo containers or other movables are exposed 
to marine perils, Such property is referred to as “insurable property”; 
(b) tlie earning or actpisitid1 of any fieiglil, wages, passage money, commission, profit, 
or other pecuniaiy benefit, or the security for any advances, loan, or disburseinents is endangered 
by the exposure of insurable property to niarine perils; 
(c) auy liability to a third party niay be iilcurred by the ownei‘ of, or other person 
interested in or responsible for, iiislirable property, by reason of marine perils. 
ART. 172. Marine perils dejned. - “Marine perils” niean perils consequent on, or 
incidental to, the navigation or the sea, that is to say, perils of tlie 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 niay be designated by 
the policy. 
Chapter 2 - Insiwnble Interest niid Imtrnble Vnliie 
ART. 173. Wagering 01’ gacirizing contracts. - (1) Every contract o l  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) wliere the policy is made “interest or 110 interest”, or “without fLirther proof of interest 
than the policy itself”, or “without benefit of salvage to the insurer”,. or subject to any oilier like 
them: Provided, that where there is no possibility of salvqe, a policy may be effected without 
benefit or salvage to the insurer. 
ART. 174. liihrable inferest dejbzetl. - (1) Subject to the provisions of this Title, every 
person has an insurable interest who is interested in a marine adventure. 
(2) In particular a person is interested in a iuarine adventure where he stands in ally legal 
or equitable relation to tlie adventure or to any insurable propel9 at risk therein, in consequence 
49 


of which lie may benefit by the safety or due arrival of insurable property, or 111ay be prejudked 
by its loss, or by damage thereto, or by tlie detention thereof, or may incur liability iii respect 
tliereoi. 
Art. 175. PJJhen irileresl riidt atlach. - (1) Tlie assured must be interested in tlie subject 
matter insured at the time of the loss though lie need iiot be interested wlien tlie iiisuraiice is 
effected: Provided that where die subject-matter is insured “lost or not lost”, the assured may 
recover for loss occurring during the period covered by tlie insurance, iiotwithstaiiding that the 
loss occurred before the contmct of insurance was concluded unless at the time o f  effecting Ilie 
contract of insuraiice the assured was aware of tlie loss, and the insurer was not. 
(2) Where tlie assured has no interest at the time of the loss, he cannot acquire iiilerest by 
any act or election after he is aware of the loss. 
ART. 176. Defeasible OY coniingent iizlerest. - (I) A defeasibk iiiterest is insurable, as 
also is a coiitingeut interest. 
(2) In particular, where the buyer of goods has insured them, lie has an insurable interest, 
notwi~hstandi~ig 
that lie might, at liis election, have rejected tlie goods, or have treated them as at 
the seller’s risk, by reason of the latter’s delay in iiialciiig delivery OT otherwise. 
ART. 177. Who hns Insurable Interest. - (a) Re-insurance. - The insurer uiider a contract 
of marine iiisurance has an iiisurable interest in liis risk, aid may re-insure in respect of it. Unless 
the policy otherwise provides, the original assured has no right or interest in respect of such re- 
insurance. 
(b) Dottoiizrj~. - Tlie lender of iiioiiey on bottomry or respondeiitia has an insuable 
interest in respect of tlie loan. 
(c) Masiei+’s and seainen’s iwges. - Tlie master or any member of the crew of a ship llas 
an insurable interest in respect of liis wages. 
(d) Advnncefieiglzt. - In the case of advance freight; the person adva~icing the freight has 
ail iiisurable interest, insofar as such freight is iiot repayable in case of loss. 
(e) Ciznr,ges ofinszlrnme. - Tlie assured has ail insorable interest in the charges of ally 
iiisuraiice that lie iiiay effect. 
50 


(f) Mortgngedpropevly. -. Where the subject-matter insured is mortgaged, the niortgagor 
has an iiisurable interest in the full value thereof, and the mortgagee has an insurable iiiterest in 
respect of any sum due or to become due under the mortgage. A mortgagee, coiisignee, or other 
person having an interest in the subj&t matter insured may insure on behalf and for the benefit of 
other persons interested as well as for liis own benefit. 
(9) The owner of insurable property has an insurable iiiterest in respect of the full value 
thereof, notwithstanding that some third person may have agreed, or be liable, to indeiiniify him 
in case of loss. 
ART. 178. Meastire of instivable value. - Subject to any express provision or valuation in 
the policy, the insurable value ofthe subject-inalter insured must be ascertained as follows: 
(a) in insurance on ship, the insurable value is the value, at the coiiiinenceinent of the 
risk, of the ship, including her outfit, provisions and stores for the officers and crew, inoney 
advauced for seamen’s wages, and other disburseinelits incurred to make the ship fit for the 
voyage or adventure coiiteniplated by the policy, plus tlie charges of insurance upon the whole. 
The insurable value, in the case of a steamship, includes also the inachineiy, boilers, and coals 
and engiiie 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, wliether paid in advance or otherwise, the insurable value is 
the gross amount of the fieight exclusive of primage at the risk of the assured, pius the charges of 
insurance; 
(c) in insurance 011 goods or merchandise, the insurable value is the actual cost to the 
assured or its market value at the t h e  and place of lading of the prolierty insured, plus the 
expeiises of and in incidental to shipping and the charges of insurance upon the xv11ole; 
(d) in insurance on any other subject-matter, the insurable value is the amount at the risk 
orthe assured when tlie policy attaches, plus tlie charges of insurance. 
51 


Chapter 3 -Disclosure arid Repeserztations 
ART. 179. General Principle. - A contract of marine insurallce is based upon the utmost 
good faith, and, if the utmost good faith be not observed by either party, the contract inay be 
avoided by the other party. 
i 
.ART. 180. Disclostire by asszaed - Subject to the provisions of the following Article, the 
assured inust disclose to the insurer, before the contract is concluded, every inalerial 
circumstance that is known to the assured. The assured is deemed to lcnow every circumstance 
which, in the ordinary course of business, ought to be lmown by him. If the assured fails to inalce 
such discloswe, tlie inswer inay avoid tbe contract. 
ART. 181. t h a t  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 “circumsta1ice” includes any colnmunication made to, or 
information received by the assured. 
(2) In the absence of inquiry, the following circumstaiices need not be disclosed, namely: 
(a) aiiy circunistaiice which diiniiiislies the risk; 
(b) any circumstance which is known or presumed to be known to the insurer. The 
irisurer is presumed to h o w  matters of coiniiioii notoriety or knowledge, and matters which an 
insurer in the ordiiiaiy course of his business ought to Iuiow; 
(c) aiiy circuinstaiice as to which information is waived by the insurer; 
(d) any circumstance which it is superfluous to disclose by reason of any express or 
implied warranty. 
ART. 182. Disclosure by agent esfecting insuucmce. - Subject to the provisions of the 
preceding Article, where an insuance is effected for the assued by an agent, the agent must 
disclose to the insure; - 
(a) every inaterial circunistaiice which is luiowi~ to himself. An agent to insure is deemed 
to know every circumstance which in tlie ordinary course of business ought io be lu~own by, or to 
have been coiiiiiiunicakd to, him; and 
52 


(b) every material circumstance which the assured is bound to disclose, unless it conies to 
his knowledge too late to coiniiiunicate it to the agent. 
ART. 183. Representations pending negotiation of contract. - (1) Eveiy material 
represeiiiation 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, the insurer may avoid 
the contract. 
(2) A representation is material, which would influence the judgment of a prudent insurer 
in fixing the premium, or determining whether lie will take ilie risk. 
(3) A representation may be either a representation as to a matter offact, or as to a matter 
of expeciation or belief. 
(4) A representation as lo a matter of fact is true, if it be substantially coli-ect; 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 expectaiion or belief is true if it be made in good 
faith. 
(6) A representation may be withdrawn or coirected before the contract is concluded. 
(7) Whether a particular representation be material or not is, in each case, a question of 
fact. 
ART. 184. Assessed Inszirable Value. - Where the insurable value by agreement between 
tlie parties has been fixed at a definite amount, the assessment is not binding on the insurer if the 
person affecting the insurance has given niisleading information concerning those particulars o f  
the subject-inatter insured, which were of impoitance for the insurer to know for tlie purpose of 
the valuation. 
ART. 185. Over-Insurance. - Where the sum iiisured exceeds the insurable vaIue, 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 011 
the insurer. Fraudulent intent is presumed when the assured had lmowledge that the property was 
grossly over-insured at the time of effecting the insurance. 
53 


Chapter 4 - Perfection of Contract 
ART, 186. TYl?en cor7tract is deemed to be concluded. - A contract of marine 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 of showing when the proposal was accepted, 
reference inay be made to the slip or covering note or other customary memorandum of the 
contract. 
ART. 187. Whei? premizm payable. -Unless otherwise agreed, the duty of the assured or 
his agent to pay the premiuni, and the duty of the insurer to issue the policy to the assured or his 
agent, are coilcurrent conditions, and the insurer is not bound to issue the policy until payment or 
tender of the premium. 
ART. 188. Policy eflecred through bvoker. - (1) Unless otlierwise agreed, where a marine 
policy is effected on behalf of the assured by a broker, the broker is directly responsible to the 
insurer for the premium, and the insurer is directly responsible to the assured €or the amount 
which may be payable in respect of losses, or in respect of returnable premium. 
(2) Unless otherwise agreed, the broker has, as against the assured, a lien upon the policy 
for the amount of the'premiuni and his charges in respect of effecting the policy; and, where he 
has acted as broker for a person who purports to be the assured, he has also a lien on the policy in 
respect of any balance on any insurmce account which may be due to him from such person, 
unless when the debt was incuiied, he had reason to believe that such person was only an agent 
o f  the owner of the insured property. 
ART. 189. Efect of receipt on policy. - Where a marine policy effected on behalf of the 
assured by a broker acknowledges the receipt of the premium, such acknowledgment 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. Coiztract intist be embodied iM 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 inay be executed and 
issued either at the time wlieii the contract is concluded, or afterwards. 
ART. 191, Khatpolicy musf specify. -A marine policy must specify: 
(a) the naiiie of the assured, 6r of the person who effects the insurance on his behalf; 
(b) the identity 01- nature of the subject-matter insured; 
(c). tlie risks insured against; 
(d) the amount of premium; 
(e) the sum insured or the maximum aiiiouiit for which the insurer may be liable under tlie 
contract; 
(4 the interest of the assured in the properiy insured, if he is not the absolute owner 
thereto; and 
(g) the period during wliich the insurance is tu 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 requiriiig tlre subscription of a corporation to be 
under seal. 
(2) Where a policy is subscribed by or on behalr o€ two or more insurers, each 
subscription, unless the contrary be expressed, constitutes a distinct coiitract with the assured. 
ART, 193. Voynge and tiinepolicies. -Where the contract is to insure the subject inalter 
“at and from”, or froin one place to auother or others, the policy is called a “voyage policy”, and 
where the coiitract 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 niaiter. - (1) The subject niatler insured must be 
designated in a inarine policy with reasonable certainty. 
(2) The nature and extent oftlie interest oCtk assuked in the subject matter insured need 
not be specified in the policy. 
(3) Where the policy designates the subject matter insured in general terms, it sl~all be 
coilstrued to apply to the interest intended by the assured to be covered. 
55 


(4) In the application of this Article, regard shall be had to any usage regulating the 
designation of the subject matter insured. 
~ 
ART: 195. Vczluedpolicy. - (1) A policy may be either valued or unvalued. 
(2) A valued policy is a &licy that specifies tlie 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 
the policy is, as between the insurer and assured, conclusive of the insurable value of the subject 
intended to be insured, whether the loss be total or partial. 
(4) Unless the policy otherwise provides, the value iixed by the policy is not conclusive 
for the purpose of determining whether there has been a constructive total loss. 
ART. 196. Unvaltredpolicy. - An unvalued policy is a policy which does not specify the 
value of the subject matter insured, but, subject to tlie limit of the sum insured, leaves the 
iiisurable value to be subsequently ascertained, in the manner herein before specified. 
ART. 197. Floating policy by ship or ships. - (1) A floating policy is a policy which 
describes the insurance in general term, and leaves the 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 the policy, 
or in other custoinaiy manner. 
( 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, coinprise all consignments within the 
ternis of the policy, aild the value of tlie goods or other property must be honestly stated, but an 
omission or erroneous declaration 'nay 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 lllade until 
after notice of loss or anival, the policy must be treated as an unvalued policy as regards the 
subject-matter of that declaration. 
56 


ART, 198. Premitinz lo be amvzged. - (1) Where an insurance is effected at a preiiiiLIiii 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 .Affected on the terms that an additional premium is to be 
arranged in a giveii event, and that event happens but no arrangement is made, then a reasonable 
additional premium, as determined by reference lo the main iiisuranee market, is payable. 
Chapter 6 - CVai.r.nnfies 
ART. 199. Nature of warranty. - (1) A wai-ranty, as used in this Chapter, means a 
promissory warranty; that is, a warranty by which the assured undertakes that soiiie parlicular 
thing shall or shall not be done, or that some coiiditioii shall be fulfilled, or whereby he affirms or 
negates the existence ofa particular state of facts. 
(2) A warranty is a coiiditioii which innst be exactly coinplied with, whether it be material 
to the risk or not. If it be not so complied with, then, subject to any 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. P%en breach o~wnrran@ excused - (1) Non-compliance with a warraiity is 
excused when, by reason of a ciiaige of circumstances, the warranty ceases to be applicable to 
the circumstaiices of the contract, or when compliance with the warranty is 1-eiidered uiilawful by 
any subsequent law. 
(2) Where a warranty is broken, the assured can avail himself of die 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. Express ivarmifies. - (1) An express warraaty may be in any form of words 
from which the iiitentioii to warrant is to be inferred. 
(2) An express warranty must be iiicluded in, or written upon, the policy or lnust be 
contained in soine document incorporated by rererence illto the policy, 


(3) An express waraiity does not exclude ai implied warranty, unless it be inconsistent 
therecvitli. 
ART. 202. JVarranty ofneutralify. - (1) Where insurable property, whether ship or goods, 
is expressly warranted neutral, thert! is an implied conditiou that the property shall have a neutral 
character at the coniiiieiicenieiit of the risk, and that, so far as the assured can control the matter, 
its neu~al character shall be preserved during the risk. 
(2) Where a ship is expressly waxrailled “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 though breach of this condition, the iiisurer may avoid the contract. 
ART. 203. No inzplied warranty ofnatioizalify. - There is no implied wzranty as to the 
nationality of a ship, or that its nationality shall not be changed during the risk. 
ART. 204. war ran^ oygood safely. - Where t k  subject matter insured is cvarranted 
“well” or “in good safety” on a particular day, it is sufficient if it be safe at my time during that 
day. 
ART. 205. Warranty of seaworthiness ofsliir). - (1) In a voyage policy, there is an 
iinplied warranty that at the coiiiiiienceiiient of the voyage tlie ship shall be seaworthy for the 
purpose of the particular adventure insured. 
(2) Where the policy attaches while the ship is in pod, there is also aii implied warranty 
that it shall, at the cominenceineiit 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 
\vliicli the ship requires different ltinds of or further preparation or equipment, there is an implied 
warranty that at the coinineiiceiiient of each stage, the ship is seaworthy in respect OF such 
prepxation or equipment for the purposes of that stage. 
(4) A,ship is deemed to be seaworthy \vlieii it is reasonably fit in all respecls to n~counter 
the ordinary perils of the seas of tlie adventure insured. 


(5) In a tiine policy, there is no iiiiplied warranty that the ship shall be seaworthy at any 
stage of the adventure, but where, with the privity of the assured, the ship is sent lo sea in an 
uiiseawoithy state, the insurer is iiot liable for any loss attributable to unseawoithiness. 
ART. 206. No iniplied ~m&nry tliar goods are seawortl?y. - (1) In a policy on goods or 
other movables there is no implied warranty that the goods or movables are seaworthy. 
(2) In a voyage policy oil goods or other movables, there is an implied warranty that at the 
coinmencement of the voyage, the ship is not only seaworthy as a ship, but also that it is 
reasoilably fit to cany the goods or other movables to the destination contemplated by the policy. 
ART. 207. Warranty of legality. -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 inanner. 
Chapter 7 - The Voynge 
ART, 208. Implied condition as to comniencenzent ofrisk. - (1) Where the subject matter 
is insured by a voyage policy “at aid from” or “from” a paiticular 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 the adventure shall be commenced within a reasonable time, and that i€ the adventure be not 
so commenced, the insurer niay avoid the contract. 
(2) The implied condition may be negatived by showing that the delay was caused by 
circuins~ances luiown to the iiisurer before the coatiact was concluded, or by showing that he 
waived the condition. 
ART. 209. Alteration ofporl ofdeparture. - Where the place of departure is specified by 
the policy, and tlie ship, instead of sailing from that place, sails from auy other place, the risk 
does not attach. 
ART. 210. Sfliling f o i  dijeele7zt deslinalion. - Where the destination is specified in the 
policy, and the ship, instead of sailing for that destination, sails for any other destination, tlie risk 
does iiot attach. 
59 


ART. 21 1, Change of llOJ/trge. - (1) Where, after the corninencemeiit of the risk, the 
destiiiation of tlie ship is voluntwily 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 fronl the time of clmige; that is, as from the time when the 
determination to change it is manifested. 
ART. 212. Deviation. - (1) Where a ship, without lawful excuse, deviates from the 
voyage contemplated by the policy, the insurer is discharged €rom liability as fioin the time of 
deviation. 
(2) There is a deviation froin the voyage contemplated by tlie policy - 
(a) where the course of the voyage is specifically designated by the policy, and that course 
is departed fiom; or 
(b) where the course of the voyage is not specifically designated by the policy, but the 
usual and customaiy course is departed from. 
(3) The iiiteiitioii 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 coiitraiy, it must proceed to them, or such of them as it goes to, in 
tlie order designated by tlie policy. If it does not, there is a deviation. 
(2) Where tlie policy is lo “poi-ts of discharge”, within a given area, which are not naiied, 
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 
he prosecuted tluougliout 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 uiueasoiiable. 
GO 


ART, 215. Excuses for deviation OT deluy. - (1) Deviation or delay in prosecuting the 
voyage coiiteniplated by tlie policy is excused - 
(a) where authorized by any special term in the policy; 
(b) where caused by circundances beyond the control of the master and his employer; 
(c) where reasonably necessary in order to comply with an express or implied warranty; 
(d) where reasonably necessary €or the safety of the ship or subjectmatter insured; 
(e) for the pnrpose of saving human life, or aiding a ship in distress where human life may 
be in danger; 
(0 
where reasonably iiecessaiy for the purpose of obtaining medical or surgical aid for 
any person on board the ship; or 
(g) where caused by tlie banatrous conduct of the master or crew, ifbarratiy be one of the 
perils insured against. 
(2) When the cause excusing the deviation or delay ceases to operate, the ship innst 
resume its course, and prosecute its voyage, with reasonable dispatch. 
Chapter 8 -Assigrznlent of Policy 
ART: 216. W h n  and how policy is assignable. - (1) A inarine policy is assignable unless 
it contains term expressly prohibiting assigiment. It m y  be assigned either before or aAer 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 elititled to 
inalte if the action had been brought in the name of the person by or on behalf of whom the 
policy was effected. 
(3) A iiiariiie policy iiiay be assigned by indorsement thereon or in other customary 
niaiuier. 
ART. 217. ifssigmeizt of Interest. - Where the assured assigns or otherwise parts with 
his interest in the subjectmatter insured, he does not thereby transfer to the assignee his rights 
61 


I 
! 
under the policy, unless there be ail express or implied agreement with the assignee to that effect. 
This provision does not affect a transmission of interest by operation of law. 
ART. 215. Assured who has no interest caiznot assign. - Where ihe assured has parted 
with or lost his interest in the subject-matter insured, and has not, before or ai the time of so 
doing, expressly or impliedly agreed to assign the policy, any subsequent assigimieiit of the 
policy is inoperative. 
Nothing in this Article aflects the assigiunent of a policy after loss. 
Clrapter 9 -Loss arzrlAbnnrloizi~ieiit 
ART. 219. Included and excluded losses. - (1) Subject to the provisions of this Title, and 
unless tlie policy otherwise provides, the insurer is liable for any loss proxiinately caused by a 
peril insured against. 
(2) In particular, - 
(a) the insurer is not liable for any loss atlributable to the willful misconduct of the 
assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by 
a peril insured against, even though the loss would not have happened but for the misconduct or 
iiegligence of the master or crew; 
(b) unless the policy otherwise provides, the iiisurer on ship or goods is not liable for any 
loss proximately caused by delay, although tlie delay be caused by a peril insured against; 
(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear aid 
tear, ordinary leakage and breakage, iilhereiit vice or nature of the subject-matter insured, or for 
any loss proximately caused by rats or vermin, or for any injuiy to macliinery not proximately 
caused by maritime perils. 
Art. 220. Wil2fUl inisconduct dej%ed. - Willful misconduct is the personal act or olr~ission 
or the assured with intent to cause the loss, or with recklessness and knowledge that such loss 
would probably result. 
62 


ART. 221. Ir?herent vice dejned. - Iidierent vice is the natural propensity or tendency 
found in all property,of tlie same kind as the iiisured property to suffer danage or deterioration 
witliiii the same period. 
ART. 222. Combinalion ofderils. -Where the loss has been caused by a conibinatioi~ of 
different perils aid one or more of these perils are not covered by the insurance, the loss shall be 
apportioned proportionally over the several perils according to the influence which each of them 
must be assumed to have had 011 the occurrence and extent ofthe loss, and the insurer shall only 
liable for that part of the loss which is attributed to the perils covered by the insurance. 
ART. 223. Combination ofrnarine and warperils. - Where the loss has been caused by a 
combination of inarine and war perils, the whole loss shall be deemed to be caused either by the 
inarine or war perils, whichever is considered dominant. Where neither the m a i m  nor the war 
perils can be considered dominant, both shall be deeiiied 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 domiiiaiit cause ofi 
(a) loss attributable to the ship being damaged Lhrough the use of other iiiipleineiits of war 
for war purposes, or in the course of militaiy maneuvers in times of peace or during armed 
neulrality; 
(b) loss attributable to the ship, in consequence of war 01' warlike conditions, having an 
alien crew placed aboard, depriving the Master, wholly or partly, of his free coininand of tlie 
ship; 
(c) loss of or damage to a life-boat attributable to its having been swung out owing to war 
perils, and damage to the ship caused by such boat. 
ART. 225. Loss attributable either to marine or to warperils. - If it is evident that a loss 
is occasioned either by iliarille perils or by war perils but impossible to identify either inariiie or 
war perils as tlie more probable cause, both shall be deemed to have had equal influellce on the 
occurrence and extent of the loss. 
63 


ART, 226. Kinds of loss. - (1) A loss niay be either total or partial. Any loss other than a 
total loss, as'liereinailer defined, is a partial loss. 
(2) A total loss may be either an actual total loss, or a constructive total loss. 
(3) Unless a different inleidon appears from the terms of the policy, an insurance agaiust 
, 
total loss includes a constructive, as well as an actual, total loss 
I 
(4) Where the assured briugs an action for a total loss and the evidence proves only a 
partial loss, lie 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 any, is partial, and not total. 
ART. 227. ilctual total loss de$ned. - (1) Where tlie 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 ai actual total loss. 
(2) In tlie 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 tlie lapse of a reasonable time, no news of it has been received, an actual total loss may be 
presumed. 
ART. 229. E@ct ofrransshipment, etc. - Where, by a peril insured against, tlie voyage is 
intenvpted at an iutermediate port or place, under such circumstances as, apart from any special 
stipulation in the contract of affreightment, to justify tlie master in landing aud re-shipping the 
goods or other movables, or in transshipping them, and sending them on to their destination, the 
liability of Lhe insurer continues, notwithstanding the landing or transshipment. 
ART. 230. Conshzictive total loss defined. - (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 llot be 
preserved from actual total loss without an expenditire, which would exceed its value when tile 
expenditure had been incurred. 
(2) In particular, there is a consbuctive total loss - 
64 


(i) wlieere the assured is deprived o f  the possession of his ship or goods by a peril insured 
against, and (a) it is uiililtely 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 their value wlien 
recovered; or 
i 
(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 the value of the ship when repaired. 
In estimating the cost of repairs, 110 deductioii 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 contributions to which tlie 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 their destination would exceed their value on ari+val; or 
(iv) the conteiiiplated adveiiture is frustrated by reason of loss of or damage to the ship or 
physical destruction of ports, in case of cargo insured. 
ART. 23 1. EJfect of constmcfive told loss. - Where there is a coiislructive total loss, the 
assured may either treat the loss as a partial loss, or abandon the subject matter insured to the 
insurer and treat the loss as if it were an actual total loss. 
ART. 232. Notice ofabcmdoizment. - (1) Subject to the provisions of this Article, where 
the assured elects to abandon the subject matter insured to the insurer, lie must give notice of 
abandonment. If lie fails to do so, the loss can oiily be treated as a partial loss. 
(2) Notice of abandoiuiient may be given orally or in writing, within a reasonable time 
after receipt by the assured of reliable inforniation of the loss. If notice was given orally, a 
written notice shall be given within seven days from such oral notice. 
(3) Notice of abandonment inust be explicit, specifying tlie cause of the abandoimient and 
indicating the intention of the assured to abandon his interest in the subject niatter 
unconditionally to the insurer. 
(4) Where notice of abandoiuiient is properly given, the rights of the assured are llot 
prejudiced by the fact that the insurer refuses to accept tlie abandoiuiient, in which case, the 


insurer shall be liable as upon an actual total loss, deduciing from the amount any proceeds of the 
thing iiisured which may have been received by the assured. 
(5) The acceptance of an abandonment may be either express or implied rrom the conduct 
of the insurer. The mere silence d€ the insurer for an unreasonable length of time after notice 
shall be construed as an acceptance. 
(6) Where notice of abandoiuiient is accepted, the abandoimient is irrevocable, unless the 
ground ~ipon which it was made proves to be unfounded. The acceptruice of the notice 
concl~~siveIy 
admits liability for the loss and the sufficiency of the notice. 
(7) Notice of abaiidoimeiit is uiuiecessaiy where at the time when the assured receives 
iidoriiiation of the loss, there would be no possibility of benefit to the iiisuser il‘iiotice were given 
to him. 
(8) Notice of abandonment may be waived by the insurer. 
(9) Where an insurer has re-insured his risk, 110 notice of abandonment need be given by 
him. 
ART. 233. Eflect ofnbandonment. - (I) Where there is a valid abandoiuiieiit, the insurer 
is entitled to take over the interest of the assured in whatever may remain of the subject matte1 
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 which is earned subsequent to the casualty causing the loss, less the 
expenses of earning it incurred after the casualty; and, where the ship is carrying the owner’s 
goods, the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to 
the casualty causing the loss. 
Chapter 10 -Mensure of Indemnity 
ART. 234. D&:Jii?ilions. - (1) “Particular 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) “Pnrticztlnr clzrirges” 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 


charges. They include the expenses of services in the nature of salvage reudered 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 pailicular charges or as a 
general average loss, accordiug to tlie circumstaiices under which they were iiicurred. 
i 
(3) “Gerzeral average loss” is a loss caused by or directly consequeutial on a general 
average act. It iiicludes a general average expenditure as well as a general average sacrifice. 
There is a general average act where any extraordinary sacrifice or expenditure is voluiitarily and 
reasonably made or incurred in lime of peril for the purpose of preserving the property imperiled 
in the coiiiiiioii adventure. 
(4) “Salvage clzarges” mealis tlie charges recoverable by a salvor indepeiideiitly of 
contract. Subject to auy 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 liability of insurey 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 uiivalued policy 
to the full extent of the insurable value, or, in the case of a valued policy to the full extent of the 
value fixed by the policy, is called the measure of indemnity. 
(2) Where there is a loss recoverable under the policy, the insurer, or each insurer if there 
be more than one, is liable for such proportion of the measure of indemnity as the arnouiil of his 
subscription bears to the value fixed by the policy in the case of a valued policy, or to the 
iusurable value in the case of an unvalued policy. 
ART. 236. Total loss. - Subject to the provisions of this Title aid to any express 
provision in the policy, where there is a total loss of the subject matter insured - 
(a) if the policy be a valued policy, the measure of indemnity is the sum fixed by the 
policy; 
(b) if the policy be an unvalued policy, tlie iiieasure of iadeniiiity is tlie iiisurable value of 
the subject matter insured. 
ART. 237. Partial loss of ship. - Where a ship is damaged, but is not totally lost, the 
measure of indemnity, subject to any express provision it1 the policy, is as follows: 


(a) where Ihe ship has been repaired, the assured is entitled to tlie reasonable cost of the 
repairs, less customary deductions, but not exceeding tlie sum insured in respect o f  any oiie 
casualty; 
(b) where the ship has bken only paitially repaired, tlie assured is entitled to tlie 
reasonable cost of such repairs, computed as above, and also to be indeiniiified for the reasonable 
depreciation, if any, arising from the uixepaired damage, provided that the aggregated aniouiit 
shall not exceed the cost of repairing tlie whole damage, computed as above; 
(c) where tlie ship has not been repaired, and has not been sold in her damaged state 
during the risk, the assured is entitled to be indeinnified for the reasonable depreciation arising 
from the uiirepaired damage, but not exceeding the reasonable cost of repairing such damage, 
computed as above. 
ART. 238. Partial loss offieiglzt. - Subject to any express provision in the policy, where 
is a partial loss of fieight, the measure of indemnity is such proportion of the suin fixed by the 
policy in the case of a valued policy, or of the insurable value in tlie case of an unvalued policy, 
as the proportion of fieiglit lost by the assured bears to the whole freight at the risk of the assured 
uuder the policy. 
ART. 239. Partial loss of goods, merchandise, etc. - Where there is a partial loss of 
goods, merchandise, or other movables, the ineasure of indemnity, subject to my express 
provision in the policy, is as follows: 
(a) where part of the goods, merchandise or otlier movables insured by a valued policy is 
totally lost, tlie measure of indemnity is a propoitionate part of tlie suin fixed by the policy; 
(b) where part of tlie goods, merchandise, or otlier movables insured by an unvalued 
policy is totally lost, the measure o f  indemnity is the insurable value of the part lost; 
(c) where the,whole or any part of tlie goods or inerchandise insured has been delivered 
damaged at its destination, the measure of indemnity is tlie propoitionate palt of tlle sulli fixed by 
the policy in the case of a valued policy, or of tlie insurable value in the case of an unvalued 
policy based 011 tlie value wliich the market price at that port, of the thing so dailaged, bears to 
the market price it would have brought if sound. 
68 


ART. 240. Appor.lioiznwzl of valunliorz. - (1) Where different species of properly are 
iiisured 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 tlie total insured val lf e of tlie same as tlie insurable value of tlie part bears to the 
insurable value of the whole. 
(2) Where a valuation has to be apportioned, and parliculars of the prime cost of each 
separate species, quality, or description of goods cannot be ascertained, tlie division of the 
valuation iiiay be made over the net arrived sound values of the different species, qualities, or 
descriptions of goods. 
ART. 
241, Liabr'lily of 1iwrer.for Geneml Average. - (1) Where there is geiieral average 
loss, the party on whom it falls is eiititled, subject to the conditions imposed by this Code, to a 
ratable contribution from other parties interested, aiid such contribution is called a general 
average contribution. 
(2) Subject to any express provision in the policy, where the assured lias incurred a 
geiieral average expenditure, he may recover €rom the insurer in respect of the proportion of the 
loss which falls upon him; aiid, in the case of a general average sacrifice, he may recover from 
tlie iiisurer in respect of the whole loss, without having enforced his right of contribution fioni 
tlie other parties liable to contribute. 
(3) Subject to any express provision in the policy, where the assured lias paid, or is liable 
to pay, a geiieral average coiltribution in respect of the subject insured, lie may recover therefor 
fro111 the insurer. 
(4) In the absence of express stipulation, the iiisurcr is not liable for ally general average 
loss or contribution where tlie loss was not iiicurred for tlie purpose o€ avoiding, or in coluiectioll 
with the avoidance ot, a peril iiisured against. 
(5) Where ship, fieight, aiid cargo, or any two of those interests, are owned by the sallie 
assured, the liability of the insurer in respect of gelieral average losses or contributiolis is to be 
deteriniiied as if those subjects were owned by different persons. 
69 


ART. 242. Apporlioiiinelzl of general average contributions nfrd snlvnge charges. - (1) 
Subject to any express provision in the policy, where the assured has paid, or is liable for, any 
general average contr&utioii, the measure of indemnity is tlie full miouiit of such contribution, if 
the subject iiiatter liable to contri ution 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 insured, tlie 
indeiiiiiity payable by the insurer must be reduced in proportion to the under-insurance, and 
where there has been a pai-ticular average loss which coiistitutes a deduction from the 
contributoiy value, and for which the insurer is liable, Illat amount must be deducted from the 
insured value in order to ascertain what the insurer is liable LO contribute. 
d .  
(2) Where the insurer is liable for salvage charges the extent of his liability must be 
deteriiiiiied on the same principle. 
ART. 243. Liabilities lo thirdparties. - Where the assured has effected an insurance in 
cxpress ternis agaiust any liability to a third party, the iiieasure of indemnity, subject to any 
express provision in tlie policy, is the ainouiit paid or payable by him to such third party in 
respect of such liability. 
ART. 244. All other losses. - (1) Where there has been a loss in respect of any subject 
matter not expressly provided €or in the foregoing provisions, the measure of iiideiniiity shall be 
ascertained, as nearly as may be, in accordance with those provisions, in so far as applicable to 
the particular case. 
(2) Nothing in the provisions of this Chapter relating to the measure of iiideiniiity shall 
affect tlie rules relating to double insurance, or prohibit the insurer from disproving interest 
wholly or in part, or from showing that at the time of the loss, the whole or any pait of the subject 
matter insured was not at risk under tlie policy, 
ART. 245. Pnrticzilar civerage imrranties. - (1) Where the subject matter insured is 
warranted fiee fiom particular average, the assured cannot recover for a loss of pat, other tl1a11 a 
loss incurred by a general average sacrifice, unless the contract contained in tlle policy be 
appoltionable; but, if the contract be apportioimble, the assured may recover for a total loss of 
any apportionable part. 
70 


(2) Where the subject matter insured in warranted free from particular average, either 
wholly or under a certain percentage, the insuer is nevertheless liable for salvage charges, and 
for particular charges and other expenses properly iiicurred pursuant to the provisions of the 
suing and laboring clause in order td avert a loss insured against. 
! 
(3) Unless thelpolicy 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 make up the specified percentage. 
~ 
I 
(4) For tlie 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 ascertaining and proving the loss mist be excluded. 
ART. 246. Successive losses. - (1) Unless the policy otherwise provides, and subject to 
the provisions of this Title, tlie insurer is liable for successive losses, even though the total 
amount of such losses may exceed the sum insured. 
(2) Where, under tlie same policy, a partial loss, wliicli 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 tlie insurer under the suing and 
laboring clause. 
ART. 247. Suing and laboring clause. - (1) Where the policy contains a suing and 
laboring clause, the engagement tliereby entered into is deemed to be supplementary to the 
contract of insurance, and the assured niay recover from tlie insurer any expenses properly and 
reasonably incurred pursuant to the clause, notwithstanding that the insurer may have paid for a 
total loss, or that the subject iiiatter may have been warranted free froin particular average, either 
wholly or under a certain percentage. 
(2) General ?verage losses and contributions and salvage charges are not recoverable 
under llie suing aid laboring clause, but expenses or services in the nature of salvage rendered by 
the assured or his agents, or any person employed by them, for the pulpose of avertilig a peril 
iiisured against, are recoverable under this clause. 
71 


(3) Expenses incurred for the purpose of averting or diminishing any loss not covered by 
the policy are not recoverable under the suing and laboring clause. 
(4) It is tlie duty of the assured and his agents, in all cases, to take such measures as niay 
be reasonable for the purpose of czv ltmg 01 ~nmimlzing a oss, and to tale any rights of recourse 
against third parties in respect oftlie 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. 
4.' 
. ' .  " 
1 
1 
Chapter 11 -Rights of Insurer on Pnynzertt 
ART. 245. Right of subrogation. - Where the insurer pays €or a total loss, either of the 
whole, or ill the case of goods ol" any apportionable part, of the subject matter insured, he 
thereupon becomes entitled to take over the interest of the assured in whatever niay remain of the 
subject matter so paid for, and lie is thereby subrogated to all the rights and remedies of the 
assured in and in respect of that subject matter as from the lipe oftlie casualty causing the loss. 
Subject to the foregoing provisions, where the insurer pays for a partial loss, he acquires 
no title to tlie 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 aiid in respect of tlie subject matter insured 
as from the time of the casualty causing the loss, in so far as tlie assured has been indemnified, by 
such payinelit for the loss. 
ART. 249. Double iiisurnnce. - (1) Where two or more policies are effected by or on 
behalf of the assured on tlie same adventure and interest or any part thereof, aiid the s~uns insured 
exceed the indemnity allowed by this Title, tlie 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, may claim payment from the 
insurers in such order; as he may think fit, provided that he is not entitled to receive any su~n in 
excess of the indemnity allowed by this Title; 
72 


(b) where tlie policy under which tlie assured claims is a valued policy, the assured must 
give credit as against the valuatioii €or any sum received by him under any other policy, without 
regard to tlie actual value ofthe subject matter insured; 
(c) where the policy under Ivhich 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 the assured receives any sum in excess of tlie indemnity allowed by this Title, 
he is deemed to hold such sum in trust for the insurers, according to their right of contribution 
among themselves. 
ART. 250. Right of conlributioii. - (I) Wliere rlie assured is over-insured by double 
insurance, each insurer is bound, as between himself and the other insurers, to contribute ratably 
to the loss in proportion to tlie ;linount for which he is liable under his contract. 
(2) If any insurer pays more than his proportion of tlie 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 inore than his proportion of the debt. 
ART. 251. Effect oft[nder-injzrrnnce. - Where tlie assured is insured for an amount less 
tliau the insurable value or, in the case of a valued policy, for ail amount less than tlie policy 
valuation, he is deemed to be his own insurer in respcct of (he uninsured balance. 
Chapter 12 - Relrirre of Preniiuitt 
ART. 252. Enforceiiient of return. - Where the premium or a proportionate part therefore 
is, by this Title, declared to be returnable, - 
(a) if already paid, it may be recovered by the assured froiii the insurer; and 
(b) if unpaid, it may be retaiiied by the assured or his agent. 
ART. 253. Reluriz by ngreenzeizt. - Where the policy contains a stipulation for the return 
of tlie premium, or a proportionate part thereof, 011 the happening of a certain event, and tliat 
event happens, the premium, or, as the case may be, the proportionate part thereof, is thereupon 
returnable to tlie assured. 
73 


ART. 254. Relz~n 
for fcliZur2 of considei..rifion. - (I) Where the consideration for the 
payineiit of the premium totally fails, and there has been no fraud or illegality ou the part o€ the 
assured or his agents, the premium is thereupon returuablc to the assured. 
i 
(2) Where the consideration for the payinelit of the premium is apportionable and there is 
a total failure of auy apportionable part of tlie consideration, a proportionate part of the premium 
is, under the like conditions, thereupon returnable to the assured. 
( 3 )  In particular - 
(a) where the policy is void, or is avoided by the insurer as froin the coinmeiiceinent of 
the risk, the premium is returiiable, provided that there has been no fraud or illegality on the’ part 
of the assured; but if the risk is iiot apportionable, aiid has ouce attached, the preiiiium is not 
returnable; 
(b) where the subject matter, or part thereof, has never been imperiled, the premium, or as 
the case may be, a proportioilate part thereof, is returuable; Provided, that where the subject 
matter has been insured “lost or not lost” aiid has arrived in safety at the time when the contract 
is concluded, the premium is iiot returnable unless, at such time, the insurer knew of the safe 
arrival. 
(c) where the assured has 110 iiisurable interest throughout the currency or the risk, the 
preinium is returnable, provided that this rule does iiot 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 
the risk, the premium is iiot returnable; 
(e) where the assured has over-insured uuder an unvalued policy, a proportionate part or 
the premium is returnable; 
(0 subject to, the foregoing provisions, where the assured has over-insured by double 
insurance, a proportionate p a t  of the several premiuixs is returnable, uiiless the double insurance 
is effected luiowingly by the assured; for this purpose, the persou effectiug the insurance is 
entitled to deiiiaiid a proportionate reduction of the sum insured as so011 as he becollles aware 
that the total sums insured will exceed tlie indemnity allowed by this title. The reductio11 takes 
14 


effect fiom the moiiient the deiiii~nd reaches the insurer, Provided, however, that if the policies 
are ef€ected at different times, and any earlier policy has at any time borne tlie entire risk, or if 
claim has been paid on the policy in respect of the full sum insured thereby, no premium is 
retnr~iable in respect of that polic)’. 
TITLE V - MARITIME F M  UD 
ART. 255. Declaration ofpolicy. -It is the policy ofthe State to consider maritime baud 
as inimical to tlie 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 occuiTeiice of 
fraud and other deceits in maritime commerce. 
ART. 256. Extraferritorial application. - This Title shall apply lo maritime fraud, which 
sliall be coininitted not only within Philippine territory but also outside its jurisdiction, in any of 
tlie 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 iiiotioii within the Pliilippines; 
(c) Where it affects tlie nationai interest of the State; 
(d) Where the injured party is a political subdivision, instrumentality or agency of tlie 
Philippine government, iiicludiiig governmelit-owned or controlled corporation or a national of 
the Philippines; 
(e) Where a Philippine flag vessel is used as an iiistruiiient of the offense; 
(0 
Where the offender is on board a vessel or airship, which docked or landed a1 or on 
Philippi~ze territory. 
ART. 257. d4arilinze docunienls dejilzed. - For purposes of this Title, the term ‘‘nzaritime 
clociments” shall iiidlude bills of lading, cliarter party, iiiariiie insurance, coiiiiiiercial letters of 
credit aid oilier similar documents used in niaitime cornmerce. 
ART. 258. Maritimefiaud. - The penalty of iinprisoiuneiit for not less than six years nor 
more than twelve years or a fine not less than the ainount of the actual danage 11or more than 


tlxee times oftlie 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, coimnodity sales contract or 
other maritime document to misre&.esent tlie quality, quantity, description or existence of goods 
for shipment or shall luiowingly use, negotiate, or trader the same for value to the prejudice of 
another; 
(b) print, photograpli, or in any manner reproduce any maritime docunient or a colorable 
“imitation” thereof, and shall use or allow the use of such document; 
(c) affix, aiuiex, or use in connection with any goods for maritime transport or services, or 
any container or containers for goods, a false desiguation 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 sliipowner the hire under the charter party, resulting in tlie retention o f  tlie cargo 
shipped by the sub-charterer, to aiiswer for the hire or freight under tlie charter party; or 
(e) being tlie sliipowner, sliip operator or assured, either as principal or agent, in order to 
collect the insurance 011 tlie vessel and/or cargo, scuttle or sink tlie vessel to conceal the theft of 
cargo, or the fact of its noli-existence or the fact of deviation of tlie vessel, or to make it appear 
that the loss was due to marine peril. 
TITLE VI -ACCIDENTS AT SEA 
Chapter 1 -Arrivals tirider Stress 
ART. 259. When Necessary. - The sliip may head for tlie nearest and most convenient 
port if during tlie voyage or trip, tlie ship cannot continue to tlie port o f  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 Arrivul. - The expenses of arrival ulider stress shall always be for 
the accouiit of the carrier, uiiless 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 Arriviil Noi Legitimate. - An arrival shall not be considered legitilllate 
in the following cases: 
(a) If the lack of provisions should arise fioni the failure to take the necessary provisions 
for the voyage or trip according to $age aid custom or if they should have been rendered useless 
or lost through bad stowage or negligelice in their care. 
(b) Ifthe risk of enemies or pirates should not have been well luiowii, niaiiifest, and based 
on positive and provable facts. 
(c) If tlie defect of tlie vessel should have arisen from the fact that it was not repaired, 
rigged, equipped, and prepared in a iiianner suitable for the voyage or trip, and 
(d) Whenever malice, negligence, want of foresight or lack of skill 011 tlie part of the 
master exists in the act causing tlie damage. 
ART. 262. Unloading ofCargo. - (1) If in order to nialce repairs on the vessel, it should 
be iiecessary to uiiload soiiie or all of tlie cargo, tlie expenses of unloading aid reloading shall be 
for the account of the carrier unless they coiistitute general average. 
(2) If there is danger that tlie cargo may suffer damage, aiid it should be iiecessary to 
uiiload them, the expenses sliall be for tlie account of [he owners of tlie cargo. 
(3) If the unloading is necessary for both purposes, the expenses shall be borne by the 
carrier and tlie cargo owners, in proportion to the value of the ship and the cargo. 
ART. 263. Danzaged Cargo. - If tlie entire cargo or part thereof should appear to be 
damaged, or there should be iiniiiiiieiit danger thereof, the master shall notify the shipper and the 
consignee of such fact and await instructions. In default of instructions, the master niay proceed 
to sell perishable goods at a public sale and hold the proceeds in trust for tlie owiier of tlie goods, 
after deducting tlie expenses of the sale. 
Chapter 2 - Genemlilvemge 
ART. 264. Kinds of Average. - Averages maj’ be either particular or general. 
ART. 265. Pariicular Averages DeJiiied. - Particula averages shall include all the 
expenses, damages, aiid losses incurred or caused to the ship or to the cargo which have not 


c 
inured to coinnioii benefit of all the persons interested in the ship aiid the cargo, and sliall be 
borne by their respective owners, without prejudice to the right ofihe aggrieved party to recover 
the coi~esponding iiideiniiity from the party at fault. 
i 
ART. 266. General Averages Dejned. - There is general average when and only when 
any extraordinary s a c h c e  or expenditure is iiiteiitioiially and reasonably made or incurred for 
the comiiioii.safety, for the purpose of preserving fiom peril the property involved in a iiiaritiiiie 
voyage aiid iiiore particularly aiiy of the following: 
, 
(a) The effects jettisoned to lighten the ship whether they pertain to tlie cargo, ship or 
crew, where such effects are carried in accordance wiiii maritime custom; 
(b) Damage done to the ship or cargo, or either of them, by or in coiisequeiice of a 
sacrifice made for the coininon safety, and by water entering through the opening of the ship’s 
hatches or other opening made for the purpose of mdiing a jettison for the coininoii safety; 
(c) Damage dolie to the ship or cargo by iiiteiitioiially stranding for the coiiiinoii 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 to lighten the 
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 circuinstances which render such act iiecessaiy for the co~iuiioii safety, or to enable 
damage to the ship caused by sacrifice or accident to be repaired, including tlie wages and 
iiiaiiiteiiaiice of the officers and crew, fuel and provisions coiisuiiied during the period of 
detention until the ship shall be ready to proceed upon its voyage or trip, and the cost of 
uiiloadiiig and reloading the cargo aiid storage charges when such uiiloadiiig is necessary to 
enable such repairs tq be made for the safe prosecution of the voyage; 
(0 
The expenses caused in order to float a ship iiitentioiially stranded for the purpose of 
saving it; 
(g) Damage caused to aiiy machinery or boilers of the stranded ship which was in a 
position of peril in the effort 10 refloat it for the coininoll safety; 
7s 


(11) Expenditure on account of salvage, to the extent that the salvage operations were 
u~idertalten for the purpose of preserving from peril the property iiivolved in maritime adventure, 
aiid 
i 
(i) Expenses of the liquidation of the average. 
ART. 267. Contrihlioiz. - In order to satisfy the amount of geiieral averages, all the 
persolis having an interest iu the ship and cargo at the tiiiie of the occurreiice of the average shall 
contribute: Provided, however, that there can be 110 geiieral average conlributioii when the peril 
arose tl~~ougli 
tlie fault of oiie of tlie parties to the iiiaritime voyage or when the sacrifice or 
expenditure was riot useful or beiieficial to the party called upon to contribute. 
The burden of proof is on the iiiaster to show that the loss or expense claiined is properly 
allowable as geiieral average. 
ART. 268. Requisites for Jetfisoned Goods as Geizeral Average. -In order that the goods 
jettisoiied may be included in the general average and the owiiers tliereof be entitled to 
indemnity, it shall be iiecessaiy insofar as the cargo is coiiceriied that their existeiice on board be 
proven by iiieaiis of the hill of lading, aid with regads lo those belonging to tlie ship, by nieaiis 
of the iiiveiitoiy prepared before departure. 
ART. 269. Proof and Liquidation of Avercfges. - Those interested in the proof aiid 
liquidation of al'erages inay iiiutually agree aiid bind tlieiiiselves at any tiiiie with regard to tlie 
liability, liquidation, and payiiieiit thereof. In the absence of such aii agreement, the provisions of 
this Chapter shall apply. 
ART. 270. Venue. - The veiiue for proving the average shall be in the port where the 
repairs are made, should aiy be necessary, or in the poit of unloading. The liquidation shall be in 
the port of arrival, of unloading, or iii the port of destination at the option or the master. 
ART. 271. Procedure. - (1) At the instance of the iiiaster, the acljustli1eilt, liquidation, and 
distribution of general averages inay be held extra-judicially, with the consent of all tlie interested 
pities. Within seventy-two (72) liours following the axrival of the sllip at the port \&re 
liquidation is to be held, the iiiaster shall coiiveiie all h e  persolis interested in order lo decide 011 
79 


wlietlier tlie adjustment or liquidation of the genexal average is to be ixade by experls, and 
liquidators appointed by them. 
(2) Ifthey cannot agree the master, the ship agent or any of the shippers sfiall apply to tlie 
court in the port where liquidation i& to be held. 
ART. 272. VuJzialioiz of Objectsfor Contuibiilioiz. - (1) Merchandise saved which are to 
contribiite to the payiiient of general average shall be valued at the current price at the port of 
unloading, deducting tlie freightage, customs duties, and expenses of unloading, without 
considering tlie value appearing in the bill of lading, unless there is an agreeineiit to tlie contrary. 
If tlie liquidation is to be made in the port of departure, the value of tlie merchandise loaded shall 
be determined by the purchase price, including the expenses incurred until they are placed on 
board, the iiisurance premium excluded. 
(2) Damaged mercliandise shall be appraised at their actual value. 
(3) Tlie net proceeds of merchandise sold in a foreign port, as a result of a general 
average, shall be taken as tlie contributing capital. 
(4) Tlie ship shall be appraised at its actual value in the condition in which it is found. 
( 5 )  Fifty percent of the freightage shall represent the contributing capital. For this 
purpose, merchandise jettisoned for the coiiimoii safety and mercliandise seized by pirates or 
enemies shall not pay freightage, bul merchandise sold by tlie master IO pay for necessary repairs 
to the ship or for uiiavoidable and urgent needs shall pay freiglitage. 
ART. 273. Vulziuliorz of Objects Constitziling GeizeruI Average. - (1) Merchandise lost, 
which constitute general average, shall be appraised at the value which merclmidise of the same 
ltiud may have in tlie port of unloading, provided the kind and quality appeared in the bill of 
lading; should they not appear, the value sliall be that stated in the invoices of purchase issued in 
tlie port of sliipment, adding thereto the expenses and freightage subseqt~ently iiicurred: Provided, 
hoiiwer, that goods which were wrongfully declared at a value lower than their real value, shall 
he contributed for at the declared value. 
(2) Equipmeiit reiidered useless for the purpose oP saving the ship shall be appraised at 
the current value, deducting reasonable depreciation except as to anchors alld chains. 
80 


(3) Freightage lost, as a result of a general avcrage act, shall exclude the charges that have 
not been incuixd by tlie ship-owner to earn such freightage. 
(4) If repairs were made on the ship, tlie 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, reasoiiable depreciation sliall be allowed, not exceeding the estimated cost of 
repairs. 
(5) The cost of temporay repairs on the ship at a port for tlie coiiiiiioii safety or to repair 
the damage caused by geiieral average sacrifice shall also be admitted as general average. 
ART. 274. Object Not Eiililled to li&nzizity. - (1) Merchandise loaded on tlie upper deck 
of the ship shall contribute to the general average should hey be saved, but there shall be 110 right 
to indemnity if they should be jettisoned for coniinoii safety, except when marine ordinances or 
iiiaritiuie custom allow their shipment in this maimer. 
In aiiy case, tlie shipowner aid the master shall be liable to the shippers for tlie damages 
from the jettison if tlie storage on the upper deck was iiiade without the coiisent of tlie latter. 
(2) Goods willfully misdescribed at tlie time of shipment, sliall iiot be allowed as genera! 
average, but such goods, if saved, shall remain liable to contribute upon their actual value. 
ART. 275. Objects Not Botiiid to CoiitTibzite. - (1) Provisions aiid persoual effects of tlie 
master, officers and crew shall iiot contribute to the geiieral avemge. 
(2) Passengers' luggage and personal effects iiot 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 tlie merchaiidise saved iii a different aid subsequent risk. 
ART. 276. Apportioment ofthe General Avercge. - (1) After deterniiniiig the aiiioiuit of 
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 rala among all persons having 
an interest in tlie ship and cargo at the time of tlie occuxeiice ofthe average. 
(2) The insurers of the ship, of the fieightage aiid of the cargo shall be obliged to pay for 
tlie general average insofar as is required of each respectively. 
81 


(3) The apportionment of tlie general average shall not be filial until it has been agreed to 
or uiitil approved by the court after couducting a hearing for such purpose. 
ART. 277. Collection of Coiztribution. - (1) After the liquidation has been approved, it 
shall be the duty of tlie master to collect the amount of the cputributions, aud lie shall be liable to 
the owners of the goods averaged for tlie damages they may suffer through his delay or 
negligence. 
(2) If the persons interested in receiviiig the goods saved should not give security 
sufficient to answer for the amount corresponding to tlie general average, the master may defer 
delivery thereof until payment has been made. 
(3) If tlie persons liable to contribute should not pay the amount of the coutribution at the 
end of the third day after having been required to do so, the goods saved shall be sold at the 
instance of tlie inaster and the proceeds applied to the payment of tlie contribution. 
Chapter 3 - Collision 
.ART. 278. Dejnitioizs. -For purposes of this Chapter, the term: 
(a) “Cotlisiorz” not only includes physical contact betweeu ships but also a physical 
maneuver by one ship causing damage to aiiotlier, like excessive speed, causing another ship to 
break its anchor. 
(b) “,Shil,s” include floatiiig platforiiis constructed for the purpose of exploring or 
exploiting tlie natural resources of the sea bed or its subsoil wheu in the process of moving froin 
one place to another, or vessels Constructed for or adapted to and engaged in drilling or dredgiug 
at sea, but not warships or ships operated by any State for non-commercial purposes. 
ART. 279. Liabiliry in case of collision. - The liability of the parties shall be governed by 
the following rules: 
(a) In case of collision betweeii ships tl~rougli the fault of one, tlie owner of the ship at 
h l t  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 the total loss and damage suffered by both ships and their cargo, 
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i 
unless otherwise deterinined by the court, taking into consideration the degree of fault of each 
ship. With respect to damages resulting from death or personal iiijuuies, the owners of both ships 
at fault shall be solidarily liable therdor, without prejudice to tlie right of the shipowner inalting 
the payineiit to obtaiii reimburseiiidiit from the o'vvncr of the 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 tofovce majeure, each ship and cargo shall bear its own loss or 
damage . 
ART. 280. Condition Piecedeizt to RecoveTy, - 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 sooii as possible before the competent authority of the iiearest port where the 
collision took place or of tlie first port of arrival 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 shall not be a bar to an action for recovery of damages. 
ART. 281. Invesfigalion 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 coiisul of the Philippines in said port shall hold a suiiiinary investigation of the 
collision which iuay be held beliiiid closed doors, at the petition of the shipowner or master, and 
forward a report thereof to the proper maritime authority. 
ART. 282. Limitation ofilction. - All claims arising out of this Chapter shall be brought 
within €our years froin tlie time the collisioiis occuixd. 
Chapter 4 - Sdvtage 
Section One -Pure Saivnge 
ART. 283. De$nition. - Pure salvage is service voluntarily rendered on the occasion of a 
shipwreck, when the ship aiid its cargo are beyond the con~.ol of or have been abandoned by the 
crew, by those under no obligation to do so aiid who conveyed the ship and its cargo to a safe 
place. 
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ART. 284. EfSect of Opposition. - If the master of the ship or tlie person acting in his 
stead is present, no one shall take from the sea or from the shores or coasts, merchandise or 
effects proceeding fro'ni a shipwreck or proceed to the salvage of the vessel, without the consent 
of such master or person acting in his stead. 
ART. 285. Obligation of the Salvor. - He who shall save or pick up a vessel 0: 
merchandise at sea, in tlie absence of the master of the ship, owner or a representative of either of 
them, if they are unknown, shall convey and deliver such vessel or merchandise, as soon as 
possible, to the nearest Coast Guard District, and give the particulars of tlie salvage operation, a 
list of merchandise saved, tlie name and registry of the vesstl, 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 on the thing salvaged or its value. 
(2) The proper reward of a salvor is one half(%) of the value ofthe ship or things saved. 
(3) After the salvage is accomplished, the owner or his represeutative shall have the 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 agreement, shall be determined by the court or by 
arbitration. 
ART. 287. Procedure afler Salvage. - The District Coast Guard Commander, to whom a 
salvage is reported, shall: 
(a) Cause the things saved to be safeguarded and inventoried; 
(b) Ascertain the identity ofthe vessel and the persons involved in the salvage operation; 
(c) Coordinate with the Bureau of Customs wliich shall sell at public auction tlie things 
saved which may be in danger of iinmediate loss or those whose conservation is evidently 
prejudicial to the interests ofthe owiicr, when no objection is made to such sale; 
(d) Cause the advertisenient within thirty days subsequent to the salvage in a newspaper 
of general circulation, of the details of the disaster, nitli a statement of the marks aild liulnber of 
the effects, and notifying all interested persons to file their daims; aiid 
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(e) Recoiiiiiieiid to the Coiiiinaiidaiit or tlie Coast Guard the issuance of a periiiit to 
qualified salvors if further salvage operation is necessary to save the vessel from ruurllier 
destruction. 
i 
ART. 288. Cloinz by rhe Odner. - 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 owiier.or his representative upon p a p e n t  of the expenses and tlie proper rewad 
or delivery of a bond from a reputable bonding compaiip to sectire the payiiieiil of the expense 
and the proper reward, and there is no controversy ov& their value; otherwise, delivery shall not 
be made until the iiiatter is decided by the court, by arbitration, or by agreeinelit with the salvor. 
ART. 289. Effect of no claiin. - No claiiii having been presented by the owner or his 
representative within thee 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 tlie National Treasury. If tlme years shnll elapse 
without anyone claiming it, one-half of the deposit shall be adjudged lo liiiii who saved the 
things, aiid the other half to the National Goveriuiienl. 
ART. 290. Salvors who ore not eiztilled io reivord. - The following shall have no right to 
ii reward for salvage: 
(a) The crew oftlie ship shipwreclced or which was in danger of shipwreck; 
(b) He who shall have coiiiiiieiiced the salvage notwitlistaiding the express aid 
reasonable prohibition of the master or of his representative; and 
(c) He who shall have failed to coiiiply wilh the provisions of Article 285. 
ART. 291. Dedzictions. - From the proceeds OF the sale of tlie things saved sliall be 
deducted first: the expenses of their custody, conservation, adveitisemeiit, aiid auctions, as well 
as whatever taxes or,duties iiiiposable on them; then, tlie expenses of salvage, and fiom the liet 
amount reiiiaining, shall be taken the reward for the salvage which shall not exceed fifty percent 
(50%) of the remainder. 


ART. 292. Apportionnzeizt oflhe Rewamd. - (1) If in the salvage, different persons shall 
have intervened, the reward shall be divided among them in proportion to tlie services which 
each may have rendered, aiid in case of doubt, in equal parts. 
Those who, in order to savk 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 rewad for salvage shall be divided among 
the owner, the master, aid the crew of the ship, so as to give the owner a half, the master a fourth 
aiid tlie remainder of,the crew the other fourth of the reward, in propoition to their respective 
salaries, in the absence of an agreement to the contrary. 
ART. 293. Measures in Preventing Damage to Marine Environmeizl. - Notwithstanding 
failure to save an oil-laden tanlcer, the efforts of the salvors in minilnizing or preventing damage 
to the eiiviromneiit shall be rewarded by the owner or charterer of the tanlcer. Such reward shall 
include expenses reasonably incurred by the salvor in the 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 would be payable if the tanker were saved. 
Section Two - Assistmice 01' Conf1'nct Sdvuge 
ART. 294. De$nilioiz. - Assistance or contract salvage is an agreement for the purpose of 
saving a distressed ship or its cargo or both fi-om an impending peril at sea whereby, for 
compensation, service will be rendered by a person duly liceiised by tlie proper goveriment 
authority to engage in the business of salvage. 
ART. 295. Duty of the SaZvor. - The salvor shall endeavor to prevent or minimize 
damage to the marine eiiviroiunent. He shall accept the intervention of other salvors when 
requested to do so by the owner or master of the ship: Provided, however, that tlie amount of his 
reward shall not be reduced, should it be found that such intervention was umecessaiy. 
ART. 296. E@ct of Salvor 's Misconduct. -A salvor may be deprived of the whole or part 
of the compelisation to the extent that the salvage operations have become unnecessary or more 
difficult due to the fault, neglect or fraud on the p a t  ofthe salvor. 
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ART. 297. Anzoziril of Reward. - If, during tlie danger, an agreement is entered into 
concerning the aiiiount of thc reward for assistaiice, the amount, if excessive, iiiay be reduced by 
the court, after taking into coiisideratioii the [actors as follows: 
(a) The value of tlie propert$ saved; 
(b) Tlie nature and degree of danger hoiii which tlie property was rescued; 
(c) Tlie efforts of the salvors in rendering the salvage service, including the time, 
expenses, and losses incurred by them; 
(d) The promptitude, skill, energy displayed in reiidering tlie service aiid saving tlie 
property; 
(e) Tlie value of tlie properly employed by tlie salvors in rendering the service, and tlie 
danger to wliicli such property was exposed; 
(f) The risk incurred by tlie salvors in securing the property from the iiiipeiidiiig peril; mid 
(g) The skill aiid efforts of the salvors in preventing or niiiiiiiiiziiig a i y  damage to tlie 
iiiariiie eiiviroixiieiit, wliicli may be caused by, oil spillage, explosion or coiitaiiiiriation. 
Tlie same factors shall also be taken into consideration by tlie court if tlie parties have iiot 
fixed the ainouit ofilie reward. 
ART. 298. Renzovnl ofIVi.eck. -The owiier of a vessel which was shipwrecked i s  obliged 
to remove the same if it would obstruct iiavigatioii or, if it occurred without liis radt or that of 
the iiiaster or crew, lie may abandon the wreck in favor ofilie salvor. 
TITLE VPI -LIMITATION OFSfIIPOIWERS’ LIABILITY 
Chapter 1 - Generm‘Provisioiis 
ART. 299. Scope ofilpplicabilily. - This Title shall apply to the liability of shipowiiers 
arising out of claims arising fioiii coiltracts of transport under Title 111 and from cases arisiiig out 
of coliisioii under Title VI, Cliapter I11 of this Code, except for loss or dmiage resultilig f1-01ii 
their personal act or omission done with intent to cause such damage, or recklessly aiid with 
lciiowledge that such loss or damage would probably result. 
ART. 300. Dej?~zitioi?s. -For purposes orthis Title, the following terms shall meaIi.11: 
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(a) “S/ti(,orurter” iiicludes the owner, charterer, iiialiager and operator of iuiy ship, 
whether engaged in doiiiestic or international transportation; 
(b) ‘‘Shif does not iiicliide ships constructed for or adapted to and engaged in drilling at 
sea, noatiiig platforins coiistructeid for the purpose of exploring or exploiting tlie natural 
resources of the sea-bed or its subsoil, or to air-cushioned vehicles. 
(c) ‘‘Units ofAccormP’ shall have tlie same meaning as defined in Article 84(h) of this 
Code. 
ART. 301. ESfect of loss ofslzip. - The loss of the ship as a result of collision or siilltiiig 
does not relieve tlie shipowner from liability uiider this Code, although liis liability shall be 
liniited to an amount of the value of tlie ship at the time of tlie occui-reiice giving rise to liis 
liability or in accordance with tlie following Articles, whichever amount is lower. 
Chapter 2 -Lintits of Lidility 
ART, 302. Aggrega/ioiz of Claiiiis. - (1) The limits of liability provided in the following 
Articles apply to tlie aggregate of all claim arising on a distinct occasioii or event against the 
shipowner and any person lor whose act, neglect or default he is responsible. 
(2) Such claims include loss of life or personal iiijui-y or loss of or damage to property 
occurring on board or in direct coiiiiection with tlie operation of tlie ship or loss resulting from 
delay in tlie carriage by sea of cargo, passengers or their luggage. 
ART. 303. Limit for passenger clainzs. - In respect of claims arising on any distinct 
occasion for loss of life or personal injuiy to passengers of a ship, tlie limit of liability of tlie 
shipowner thereof shall be in the amount of46,666 Units of Account multiplied by tlie number of 
passengers which tlie ship is authorized to cany, but not exceeding 25 million Units of Acc0~1lil 
for all such aggregate claims. The term “passengers” shall have tlie same meailing as defilied in 
Article M(c) of this Code. 
ART. 304. Limitsfor all other claiiizs. - (1) The limits of liability for all clainls oilier thali 
those mentioned in tlie preceding Article arising on any distinct occasioa, shall be calculated as 
follows: 
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(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 Units of Accouiit for a ship with a toimage from 300 tons but not 
exceeding 500 tons; j 
(iii)for a ship with tonnage in excess thereof, the following amount in addition to that 
nientioned in (i): for each ton froni 501 to 3,000 tons, 500 Units of AmoLlnt; for 
each ton froni 3, 001 to 30,000 tons, 333 Units of Account; for each ton from 
30,001 to 70,000 tons, 167 Units or Account; and, for each ton in excess ol‘ 
70,000 tons, 167 Units of Account; 
(b) in respect to any other claims: 
(i) 83,333 Units of Acco~iit for a ship with a tonnage ofless lliaii 300 ton; 
(ii) 167,000 Units of Accounts for a sliip with tonnage fioni 300 tons but not 
exceeding 500 tons; 
(iii)for a ship wiih a tonnage in excess thereof, the following amount in addition to 
that mentioned in (ii): for each ton froni 501 to 30,000 tons, 167 Units of 
Account; for each ton from 30,001 to 70,000 tons, 125 Uniis of Account; and for 
eachloii 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 aniouiit calculated in accordance with 
paragraph (1) (b) above shall be available for payiiieiil of the unpaid balance of claims under 
paragraph (1) (a) and such unpaid balance shall rank ratably with claims iiieiitioiied 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 tonuage ineasureiiieiit rules contained in Annex I of the 
International Convention on Tonnage Measurement of Ships, 1969. 
TITLE VlII - ARBIT&ITIBN 
Chapter 1 - I3forcenieizi arid Validity of Agreemeizts lo Arbitrate 
s9 


ART: 305. ~ 0 1 7 7 1  ofAgreemei7ls io ifibitwle. - (1) Any dispute between the parties 
arising out of this Code, except under Titles I and 11, may be settled by arbitration. 
(2) A written provision in any maritime transaction to settle by arbitration a controversy 
thereafter arising out of sucli transaiction, or tlie refusal to perform tlie wlioie or any p a t  tliereof, 
or an agreenient iu writing to subiiiit to arbitration an existing controversy arising out such 
transaction sliall be valid and enforceable, except upon grounds for annulineiit or invalidity or 
contracts. 
(3) Tlie term “ngrcem~eiit in ivriting” sliall include an arbitral clause in a contract or an 
arbitration agreement signed by tlie parties or contained in an exchange of lctters or 
communications. 
(4) Tlie term “ntnrifiriie trnrtsnctiort” iiieaiis charter parties, bills of lading of water 
carriers, supplies hrnislied vessels, repairs to vessels, collisions, salvage or other matters relating 
to admirally. 
(5) Where a charter party contains an abitral 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 inay not iiivolce such arbitral clause as 
against a holder who acquires the bill of lading in good faith. 
ART. 306. Frri1zo.e bo Arbiimte. - Unless otherwise provided in tlie agreement between 
tlie parties or the arbitration rules referred to therein, any party aggrieved by the failure, ueglect 
or refusal ofanother to arbitrate under a written agreement for arbitration, may apply in court for 
an order directing that such arbitration proceed in the maimer provided in such agreement. Five 
days’ notice in writing of such application shall be served on the party in default. Tlie court shall 
suiiiniarily hear tlie issues and direct the parties to proceed with tlie arbitration if the finding is 
that such agreement was made and tliere is default in tlie proceeding thereunder. 
ART. 307. Smnzary Proceeding. - Any proceeding filed in court relatillg to arbitratio11 
sliall be summary in nature. The court shall decide all applications in tlie same iiiaiuier as 
iiiotions within ten (1 0) days after hearing, except petitions for the confirinatioll, vacating, 
modification or correction of filial awards of arbiters. 
90 


ART, 305. Stay of Cocirt Proceedings. - (1) If any suit or proceeding is brought in court 
upon aiy issue referable to arbitration uiider an agreement in writing for such arbitration, the 
court, upou being satisfied that the issue is referable lo arbitration, shall, on application ol' my of 
the pa-ties to the agreement, stay die trial of the aciioii until such arbitration has been held in 
accordance with the terms of their agreemeut. 
(2) Where the issue involved in the suit is that tlie arbitratiou agreement is null and void 
or iuoperative or incapable of being performed or that there is in fact no dispute referable to 
arbitration, tlie court shall proceed summarily to the determination of such issues. 
Chapter 2 - Appoirztnteizt rnitdPowers ofAibitrators 
ART, 309. Appoinrmeiit ofArbirral0r.s. - (1) 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 aid aiiy 
party thereto shall fail to avail hiinself of such method or if for aiiy other reasou there shall be a 
default in tlie naming of an arbitrator or arbitrators or umpire, or in filling a vacaiicy, then, upon 
application of auy party to tlie controversy, the court shall designate or appoint an arbitrator or 
arbitrators 01 umpire, as the case may require, who shall act uiider said agreement with the sane 
effect as if lie or they had been specifically named therein. 
(2) Unless otherwise provided in tlie 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 iiiaritiine commerce. 
(3) Arbitrators appoiuted shall either accept or decline their appointinent. 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 ro Disclose. - (1) Each arbitrator shall nialte a full and detailed 
disclosure on record at the commencement of the hearing any relatioilship witl1iii the fourth civil 
degree of coiisaiiguiiiity or affinity, any business relationship or dealings lie has had, if any, wit11 
a party to tlie arbitration or with any of their counsel. 
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4 
(2) A party may challenge in writing the qualification or partiality of an arbitrator.who 
shall determine whether to withdraw tlierefioni or proceed with the hearing. His decision to 
proceed with tlie hearing shall not be reviewed by the court until after a filial award is rendered. 
ART. 3 1 I .  Polwi, to Issue dibpoeim and SzilJpoetza Duces Tecum. - (1) The arbitrator or 
arbitrators, or a majority of tliem, may suiiiinon in writing aiiy person to attend before theill as a 
witness, and, in a proier case, to bring with him any book, record, docuineiit or paper which may 
be deemed iiiaterial as evidence in the case. The fees for such attendance shall be the same as 
kes of witnesses before courts. 
(2) Said suiiiinoiis shall issue in the naine of the arbitrator or arbitrators, or a majority of 
them, and shall be signed by said persons. If aiiy person so sumiiioiied shall refLiuse or neglect to 
obey said suiiiinoiis, the arbitrators may petition the court to compel the attendance of said person 
before them or to punish said person to coiiteiiipt in the same iiiamier provided by law for neglect 
or refusal to attend in court. 
ART. 3 12. Arrest of Vessel. - Notwithstanding an agreement lo arbitrate, tlie 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 oftlie award. 
ART. 313. Powers ofilrbilrnlors. - (1) The arbitrator or arbitrators, or a majority of 
them, shall be the sole judge of the relevancy aiid materiality of the evidence orfered or produced 
before them, and shall not be bound by the teclruical rules of evidence. 
(2) They may grant my remedy or relief which they deem just aiid equilable and within 
the scope of the agreement of the paities. They shall have the power to decide oiily those matters 
that have been subiiiitted to them. The ternis of the award shall be confiiied to such disputes. 
(3) All proceedings before the arbitrator or arbitrators shall be duly recorded. 
ART. 3 14. DisqtinlrJcntioiz of Arbitrators. - An arbitrator shall not act as cliaiiipion or 
advocate tlie cause of aiiy party to the controversy. No arbitrator shall act as a lnediator in the 
settleiiieiit of the dispute before him. All iiegotiatioiis towards settlement of the dispute liiust talce 
place without the presence of arbitrators. 
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Chapter 3 - FiiinlAr6iTrrtlAion~~ 
ART. 3 15. Co~firinutiorz of A w u d  - (1) If the parties agreed tliat the award shall be 
colifirliied by the court, any party tothe arbitration may apply to the court for an order confirming 
the award. The petition shall be accoiiipaiiied by (a) the original agreement to arbitrate or cluly 
ceitifiecl copy thereot 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 froiii the filing of the application. 
1 
(2) The court shall coiiliriii the award unless vacated, modified or corrected 011 grounds 
provided in the succeeding Articles. The judgmeiit confirming the award may be eiirorced in the 
same iiiaiuier as judgiiieiit of the court rendered in actions brought before it. 
ART. 3 16. Grourzdsfor Vacating Award. - (1) Within thirty (30) days from the rendition 
of the award, auy party to tlie arbitration may apply to the court to vacate the award, on m y  of the 
following grounds: 
(a) Where tlie award was procured by corruption, fraud or undue means; 
(b) Where there was evideiit partiality or corruption of any of the arbitrators; 
(c) Where the party against whoiii the award is rendered was not given proper notice of 
the appointinelit of the arbitrator or of the arbitration proceedings or was otherwise unable to 
preseut his evidence; or 
(d) Where the arbitrators exceeded their powers or so imperfectly executed them that a 
mutual, Glial, and definite award on the dispute submitted was not made; or 
(e) Where the enforceinelit of the award would be coiitraiy to public policy. 
(2) Where an award is vacated, aud the time within which the agreement required the 
award to be made has not expired, the court, may in its discretion, direct a reliearilig by tlle 
arbitrators or the rea;poiutmeiit of new arbitrators. 
ART. 317. A/lod$cnfiorz or Coireclion ofilward. - (1) In any of tlic following cases, the 
court iiiay tale an order modifying or correcting the award, on applicatioli of ally party to the 
arbitration: 
93 


, , F, 
(a) Where there was an evident niaterial iniscalculation of figures or an evident inaterial 
mistalte .in tlie description of any person, thing, or property referred to in the award; 
(b) Where the arbitrators have awarded upoii a matter iiot submitted to them, unless it is a 
matter not affecting the merits of tlid decision upon the matter submitted; 01' 
(c) Where the award is imperfect in inatter of form, not affecting tlie inerits of the 
coiilroversy. 
(2) The order inay modify and correct the award so as to elfect tlie iiitcnt thereof and 
promote justice between tlie parties. 
TITLE IX - FINAL PR0VISIONS 
ART. 3 18. Repealing Clause and Corzseqzieiziial hendmenfs. - (1) The provisions oftlie 
Civil Code oil Coininon Carriers shall not apply to coliinion carriers by water. 
(2) The provisions of Republic Act No. 876 (Arbitration Law) shall iiot apply to 
arbitrations in iiiaritiine disputes. 
(3) The provisions of tlie Revised Penal Cock (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) I'residential Decrees Nos. 214 and 1521; 
(c) Coiiiiiioiiwealth Act No. 65; 
(d) Articles 580 to 584 inclusive and Articles 5 and 7, 652 to 869 iiiclusive oftlie Code of 
Commerce; 
(e) Act No. 2616 or tlie Salvage Law; 
(Q Any other' law, decree, executive order, letters of instruction, rules alld regulations 
which are incoiisistent with this Code. 
(9) Section 99 to 166 (inclusive) of the Insurance Code, Presidelltial Decree 612. 
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ART. 3 19. Sepa7.ubilily 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 m y  person, gro~ip 
or circuiiistaiices i s  declared invalid or unconstitulioiial, the remainder of this Act or the 
application 
such section, pi-disioii or poition thereof to other persons, groups or 
circuiiistaiices shall coiitiiiue to be in full force and efkct. 
ART. 320. Date of Eflectivity. - This Code shall tale effect one (1) year after its 
publication in at least two (2) newspapers of general circulation or the Official Gazette. 
Approved. 
95