CARRIAGE OF GOODS BY SEA ACT

(Commonwealth Act No. 65; Public Act No. 521, 74th US Congress)
By: Michelle C. Arias

1 October 2010
Transportation & Public Utilities Law
Prof. Dan Calica

I. BACKGROUND OF THE ACT

The Carriage of Goods by Sea Act (hereinafter referred to as COGSA) is a United

States statute (Public Act No. 521, approved in 1936) governing the rights and
responsibilities between shippers of cargo and ship-owners regarding ocean
shipments to and from the United States. It is the US enactment of the International
Convention Regarding Bills of Lading, commonly known as the Hague Rules. 1

It governs the acts that a carrier is responsible for and defines the terms used in
shipping. It also provides that the shipowners liability will be limited to $500 per
shipping package, and it stipulates a one-year limit for filing suit against the carrier.
This Act automatically applies to international ocean movements but not to domestic
ocean transits unless the carrier agrees to be bound by it. 2

When said Act was enacted by the United States Congress, the political status of the
Philippines was then a Commonwealth Government and, therefore, was a territory
of the United States. In view of the particular relations then existing between the
United States and the Philippines, Congress gave the latter the choice of making or
not making the provisions of said Act applicable to transportation to or form ports of
the Philippines by inserting in Section 13 thereof a proviso to the effect that the
Philippine Legislature may, by law, exclude its application to transportation to or
form ports of the Philippine Islands. The Commonwealth Government, however,
elected to accept and make applicable to the Philippines said Act through
Commonwealth Act No. 65 approved on April 22, 1936, wherein it was provided
(Section 1) that the provisions of the Carriage of Goods by Sea Act are hereby
accepted to be made applicable to all contracts for the carriage of goods by sea to
and from Philippine ports in foreign trade.: Provided, That nothing in this Act shall
be construed as repealing any existing provision of the Code of Commerce which is
now in force, or as limiting its application. (Chua Kuy v. Everett Steamship
Corporation, G.R. No. L-5554, May 27, 1953)

TIMELINE:
1
Wikipedia, the Free Encyclopedia available at: http://en.wikipedia.org/wiki/Carriage_of_Goods_by_Sea_Act
2
The Lectric Law Library available at: http://www.lectlaw.com/def/c011.htm
 April 16, 1936
Public Act No. 521 aka COGSA was approved by the 74th US Congress

October 22, 1936

COGSA was made applicable to the Philippines upon the election and approval of
Commonwealth Act No. 55 by the National Assembly of the Commonwealth
Government

1936-1950
COGSA governed contracts of carriage of goods by sea from the US to Philippine
ports.

August 30, 1950

the New Civil Code of 1949 (RA 386) came into effect

II. EFFECTS OF CODE OF COMMERCE AND NEW CIVIL CODE

A. Effect to the Code of Commerce

The Carriage of Goods by Sea Act is a special law which by virtue of Section 1
thereof cannot be construed as repealing or limiting any provision of the Code of
Commerce, then in force. It may operate only as suppletory law to the Code of
Commerce, supplying the deficiencies of the latter relating to contract of carriage
of goods by sea in foreign trade.

B. Effect to the New Civil Code

Under Article 17533, contracts for the carriage of goods by sea from the
Philippines to a foreign port shall be governed by the laws of such country. As to
contracts for the carriage of goods by sea from a foreign port to the Philippines,
the provisions of the Civil Code on common carriers shall primarily govern under
the authority of Article 17664. Where the Civil Code does not provide, the
provisions of the Code of Commerce and special laws, such as the COGS shall
govern suppletorily. In case of any conflict between the provisions of the Code of
Commerce and the COGSA, under Section 1 of said Act, the former shall prevail.

C. Effect of Bill of Lading Provisions

When the matter involved is a bill of lading for the carriage of goods by sea to
and from Philippine ports in foreign trade, the Code of Commerce provisions
must give way to those of the COGSA. This is in consonance with the rule of
construction that in case of conflict between a special law and a general law, the
3
Article 1753. The law of the country to which the goods are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.
4
Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and special laws.
 special law shall prevail. But even when such a bill of lading is involved, if there
are no applicable provisions in the COGSA, the pertinent provisions in the Code
of Commerce will apply, because it is not in any way repealed.

III. APPLICABILITY OF THE COGSA

A. Requisites
1. There must be a contract of carriage between the shipowner or its agent and
the shipper;
2. The contract must be for the carriage of goods;
3. For transportation by sea; and
4. In foreign trade, UNLESS expressly agreed upon by the parties to apply in
domestic shipping.

B. Governing Law
1. Private Carrier coming to the Philippines
a) First: COGSA
b) Second: Code of Commerce
c) Third: Civil Code as to provisions for damages, torts, and contracts

2. Common Carrier coming to the Philippines

a) First: Civil Code provisions on common carriers
b) Second: COGSA
c) Third: Code of Commerce

3. Private or Common Carrier going to a foreign country

a) General Rule: Law of the country of destination as provided by Art. 1753
of the Civil Code
b) Exception: Expressly agreed upon by the parties

IV. RISKS

Under Section 2 of the COGSA, the General Rule is that under every contract of
carriage of goods by sea, the carrier in relation to the loading, handling, stowage,
carriage, custody, care and discharge of such goods, shall be subject to the
responsibilities and liabilities in Section 3 and entitled to the rights and immunities in
Section 4.

The Exception is provided in Section 6 (Special Conditions) which provides that a

carrier, master or agent of the carrier and a shipper may enter into any agreement in
any terms as to:

(1) the responsibility and liability of the carrier for such goods, and as to the rights
and immunities of the carrier in respect of such goods; or
(2) his obligation as to seaworthiness in so far as not contrary to public policy; or
 (3) the care or diligence of his servants or agents in regard to the loading, handling,
stowage, carriage, custody, care and discharge of goods carried by sea.

HOWEVER, the foregoing shall apply only where no bill of lading has been or shall be
issued AND that the terms agreed shall be embodied in a receipt which shall be a
non-negotiable document and shall be marked as such.

Such agreement shall have full legal effect. However, it will NOT apply to ordinary
commercial shipments made in the ordinary course of trade but only to other
shipments where the character or condition of the property to be carried or the
circumstance, terms and condition under which the carriage is to be performed are
such as reasonably to justify a special agreement.

V. RESPONSIBILITY AND LIABILITIES

Requisites and Essentials of Seaworthiness:

A vessel is seaworthy if it is reasonably fit to encounter the ordinary perils to be
expected during her voyage, to receive and discharge cargo, and to carry safely the
particular cargo on the voyage undertaken. (58 C.J 445-446) Absolute perfection is
not required in the vessel, it being sufficient that she have that degree of fitness
which an ordinarily careful and prudent owner would require his vessel to have at
the commencement of her voyage having regard to all the probable circumstances of
it. (The Silvia, 68 Fed. 230)

A vessel must also be provided with a crew adequate in number and competent for
their duty with reference to all the exigencies of the intended rout, and with a
competent and skillful master, of sound judgment and discretion, and with sufficient
knowledge of the route and experience in navigation to be able to perform in a
proper manner all the ordinary duties required of him as master of the vessel.
(Germania Insurance Co. vs. The Lady Pike, 21 US 1, 22 L. ed., 499)

The carrier is under obligation to properly stow cargo. A vessel, in herself

seaworthy, may be rendered unseaworthy by improper loading of cargo. (The City of
Lincoln vs. Smith, [1904] A.C. 250) Bad storage. Which endangers the safety of the
ship and cannot readily be cured on the voyages, is unseaworthiness. (Ingram &
Royle, Ltd. vs. Services Martimes du Treport, 1 K.B. 541)

Time When Seaworthiness Must Exist:

The vessel must be seaworthy at the beginning of the voyage, or, at the time she
sails, or, when she breaks ground. (58 CJ 450) No degree of seaworthiness for the
voyage at any time anterior to the commencement of the risk will be of any avail
unless that seaworthiness existed at the time of sailing from the port of loading.
(Cohn vs. Davidson, 2 Q.B.D. 455)
 VI. BILL OF LADING

What is a Bill of Lading?5

It is a document issued by a carrier to a shipper, acknowledging that specified goods
have been received on board as cargo for conveyance to a named place for delivery
to the consignee who is usually identified. (Wikipedia)

A document signed by a carrier (a transporter of goods) or the carrier's

representative and issued to a consignor (the shipper of goods) that evidences the
receipt of goods for shipment to a specified designation and person. (The Legal
Dictionary)6

It is evidence that a valid contract of carriage, or a chartering contract, exists,

and it may incorporate the full terms of the contract between the consignor and
the carrier by reference (i.e. the short form simply refers to the main contract as
an existing document, whereas the long form of a bill of lading (connaissement
intgral) issued by the carrier sets out all the terms of the contract of carriage);

It is a receipt signed by the carrier confirming whether goods matching the

contract description have been received in good condition (a bill will be
described as clean if the goods have been received on board in apparent good
condition and stowed ready for transport); and

It is also a document of transfer, being freely transferable and may be endorsed

affecting ownership of the goods actually being carried.

What does a Bill of Lading contain?

(a) The leading marks necessary for identification of the goods
(b) Either the number of packages or pieces, or the quantity or weight,
(c) The apparent order and condition of the goods [Sec.3 (3)]

Other information contained in a bill of lading:

Name of the shipping company
Flag of nationality
Shippers name
Order and notify party

Who issues a Bill of Lading?

- The carrier, or the master or agent of the carrier

When is a Bill of Lading issued?

5
Wikipedie, the Free Encyclopedia available at: http://en.wikipedia.org/wiki/Bill_of_lading
6
The Legal Dictionary available at: http://legal-dictionary.thefreedictionary.com/Bill+of+lading
 - after receipt by the carrier of the goods for shipping

To whom is a Bill of Lading issued?

- To the shipper, upon his demand

What is the purpose of a Bill of Lading?

- It is the prima facie evidence of the receipt by the carrier of the goods as therein
described. [Sec. 3 (4)]
- It guarantees the accuracy of the mark, number, quantity and weight of the goods
as furnished by the shipper. [Sec. 3 (5)]
- Effect of Inaccuracy: shipper liable for indemnity to the carrier. [Sec. 3 (5)]

VII. LIMITED LIABILITY CONTAINED IN A BILL OF LADING

Section 4(5). Neither the carrier nor the ship shall in any event be or become liable
for any loss or damage to or in connection with the transportation of goods in an
amount exceeding $500 per package lawful money of the United States, or in case of
goods not shipped in packages, per customary freight unit, or the equivalent of that
sum in other currency, unless the nature and value of such goods have been
declared by the shipper before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall
not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper
another maximum amount than that mentioned in this paragraph may be fixed:
Provided, That such maximum shall not be less than the figure above named. In no
event shall the carrier be liable for more than the amount of damage actually
sustained.

Neither the carrier nor the ship shall be responsible in any event for loss or damage
to or in connection with the transportation of the goods if the nature or value
thereof has been knowingly and fraudulently misstated by the shipper in the bill of
lading.

In the case of Eastern Shipping Lines, Inc. v. IAC (150 SCRA 463, 473-474), the
Supreme Court held that the Civil Code does not of itself limit the liability of the
common carrier to a fixed amount per package although the Code expressly permits
a stipulation limiting such liability (Art. 1749 7). Thus, the COGSA, which is suppletory
to the provisions of the Civil Code, steps in and supplements the Code by
establishing a statutory provision limiting the carrier's liability in the absence of a
declaration of a higher value of the goods by the shipper in the bill of lading. The
provisions of the Carriage of Goods by Sea Act on limited liability are as much a
7
Article 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater value is binding.
 part of a bill of lading as though physically in it and as much a part thereof as
though placed therein by agreement of the parties.

Since there is no stipulation in the respective bills of lading, limiting the carriers
liability for the loss or destruction of the goods, nor is there a declaration of a higher
value of the goods, then the provisions of the Civil Code (Arts. 1739 8 & 17509) do not
apply. Hence, the carriers liability will be under the COGSA, as suppletory law, and
will not exceed US$500 per package or its peso equivalent, at the time of payment of
the value of goods lost, but in no case more than the amount of damage actually
sustained.

What do you mean by Package?

Package refers to cartons or the individual packaging of the goods and not to
containers.

Sec. 4(5) provides that if the shipper did not declare a higher valuation for the
goods to be carried by sea under a contract of carriage, the maximum liability of
the carrier or ship in case of loss or damage shall be limited to $500 per package.
Ex. If the package was valued at $800, and the limitation on liability was
agreed to be at $500, the shipper can recover only $500.

If the shipper declared a higher valuation and paid the proper adjustment fees,
the shipper may recover the value of the lost or damaged goods at the time
payment is to be made.
Ex. If the package was valued at $800 is so declared, with payment of
corresponding charges, the shipper may recover $800 notwithstanding the
limitation on liability of the shipowner.

But where the value of the goods lost or damaged does not exceed the maximum
liability, the shipowner is liable only for the actual value of the goods lost or
damaged.
Ex. If the package was valued at $400, and the limitation on liability was
agreed to be at $500, the shipper may recover only $400 as the actual value
of the goods lost or damaged.

8
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to
prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order
that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods.
The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article
1734, No. 2.
9
Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and
freely agreed upon.
 However, by providing that $500 per package is the maximum liability, the law
does not disallow an agreement for liability at a lesser amount.

The proviso in the second paragraph of Sec. 4 (5), to wit:

By agreement between the carrier, master, or agent of the carrier, and the
shipper another maximum amount than that mentioned in this paragraph may
be fixed: Provided, That such maximum shall not be less than the figure above
named, refers to a situation where there is an agreement other than set forth
in the Bill of Lading providing for a maximum higher than $500 per package.
(Eastern and Australian Steamship Co. Ltd. vs. Great American Ins. Co., 108 SCRA
248)

Ex. If the package was valued at $500, and the limitation on liability was
agreed to be at $400, the shipper may recover only $400, notwithstanding
the provision in the COGSA that the maximum liability shall be $500 per
package.

Section 3(8). Any clause, covenant, or agreement in a contract of carriage relieving

the carrier or the ship from liability for loss or damage to or in connection with the
goods, arising from negligence, fault, or failure in the duties and obligations
provided in this section, or lessening such liability otherwise than as provided in this
Act, shall be null and void and of no effect. A benefit of insurance in favor of the
carrier, or similar clause, shall be deemed to be a clause relieving the carrier from
liability.

VIII. PRESCRIPTIVE PERIOD

A. Prescriptive Period
1. Delivery and Non-Delivery of Goods
General Rule: The carrier and the agent shall be discharged from liability in
respect of loss or damage to the goods carried by sea unless suit is brought
within one (1) year:
a) In case of damaged goods:
- after delivery was made
b) In case of non-delivery of goods (i.e. lost)
- after the date when the goods should have been delivered (or
the date when the ship left the port of destination).

The one-year period of limitation is designed to meet the exigencies of

maritime hazards. The rationale behind the 3-day notice and relatively short
prescriptive period is to provide the carrier an opportunity to look for the lost
goods, to discover who was at fault, and in case of transshipment, to
determine, when and where the damage occurred.
 An action for recovery of loss or damage in connection with certain cargo
can only be brought against the carrier within one year after delivery of said
cargo, or the date when the goods should have been delivered. (Chua Kuy
vs. Everett Steamship Corporation, GR No. L-5554, May 27, 1953)

How to Compute:
Exclude the first day, include the last day.
Ex. The ship left the port on Sept. 30, 2010. The prescriptive period
commenced to run on Oct. 1, 2010 and expired on Sept. 30, 2011.

When is there Delivery:

Delivery within the meaning of Section 3(6) of the COGSA means delivery to
the arrastre operator and NOT to the consignee. That delivery is evidenced by
tally sheets which show whether the goods were landed in good order or in
bad order, a fact which the consignee or shipper can easily ascertain through
the customs broker. To use as basis for computing the one-year period the
delivery to the consignee would be unrealistic and might generate confusion
between the loss or damage sustained by the goods while in the carriers
custody and the loss or damage caused to the goods while in the arrastre
operators possession. (Union Carbide Phils., Inc. vs. Manila Railroad Co., 77
SCRA 359)

Carrier is liable over goods discharged by it in bad order condition, and the
arrastre operator for goods damaged under its custody.(Metro Port service,
Inc. vs. CA, 131 SCRA 365)

When is there Loss:

As defined in Article 1169 of the New Civil Code and as applied to paragraph
4, Section 3(6) of the COGSA, loss contemplates merely a situation where
no delivery at all was made by the shipper of the goods because the same (1)
had perished, (2) gone out of commerce, or (3) disappeared in such a way
that their existence is unknown or they cannot be recovered. It does not
include a situation where there was indeed delivery but delivery to the wrong
person, or a misdelivery. Non-delivery should be distinguished from
misdelivery. (Ang vs American Steamship Agencies, Inc., 19 SCRA 123)

2. Misdelivery or Conversion of Goods

The one-year prescriptive period in Section 3(6) applies only when there is
loss or damage. In case of misdelivery (as when the good is delivered to the
wrong person) or conversion, the rules on prescription found in the Civil Code
shall apply:

a) Breach of a Written Contract

 - Ten (10) years from the time the right of action accrues (Art. 1144
NCC)
b) Quasi-Delict
- Four (4) years from the time the right of action accrues (Art. 1146
NCC)

Where the imported goods were delivered to the wrong person, the one-
year time bar in par.4, sec.3 (6) of the COGSA, which refers to loss or
damage, does NOT apply. Said one-year period of limitation is designed to
meet the exigencies of maritime hazards. In a case where the goods shipped
were neither lost nor damaged in transit but were, on the contrary, delivered
in part to someone who claimed to be entitled thereto, the situation is
different, and the special need for the short period of limitation in cases of
loss or damage caused by maritime perils does not obtain.
x x x x x
For suits not predicated upon loss or damaged but on alleged misdelivery or
conversion of the goods, the applicable rule on prescription is that found in
the New civil Code, i.e., either ten years for Breach of a written contract or
four years for quasi-delict (Arts. 1144, 1146, Civil Code), and not the rule on
prescription in the COGSA. (Ang vs. American Steamship Agencies, Inc., 1
9SCRA 123)

B. COGSA may still apply to a transshipment of cargo via inter-island vessel

In the case of American Insurance Co. vs. Compania Maritima (21 SCRA 998), a
contract for carriage from New York, USA with final destination in Cebu City,
Philippines was entered into. From US to Manila the shipment was on board M/S
TOREADOR; and from Manila to Cebu the shipment was loaded on S/S SIQUIJOR.
The transshipment of the cargo from Manila to Cebu was not a separate
transaction from that originally entered into by Macondray, as general agent for
the M/S Toreador. It was part of Macondrays obligation under the contract of
carriage and the fact that the transshipment as made via an interisland vessel did
not operate to remove the transaction from the operation of the COGSA.

C. Other Notes on Prescription

1. Extrajudicial demand for loss or damage does NOT interrupt the period of
prescription. (Dole Phils., Inc. vs. Maritime Co. of the Philippines, 148 SCRA
118)

2. Pendency of an extrajudicial claim for damages (include arbitration,

negotiations, amicable settlement) filed with the carrier does NOT suspend
the running of the prescriptive period, unless there is an express agreement
to the contrary. (Chua Kuy vs. Everett Steamship Corporation, G.R. No. L-
5554, May 27, 1953)
 3. Prescription of actions is interrupted when they are filed before the court
(Art. 1155 NCC). Also Section 49 of Act No. 190 provides that if, in an action
commenced in due time, the plaintiff fails otherwise than upon the merits,
and the time limited for the commencement of such action has, at the date
of such failure, expired, the plaintiff may commence a new action within one
year after such date. (F.H. Stevens & Co., Inc. vs. Norddeuscher Llyod, 6 SCRA
182-183)

4. Persons who can give notice to, and bring suit against the carrier: (a) the
shipper, or (b) the consignee, or (c) any legal holder of the bill of lading, like
the indorsee or the subrogee, (Chua Kuy vs. Everett Steamship Corporation,
G.R. No. L-5554, May 27, 1953) such as an insurer whether it has or has not
yet paid the shipper or consignee. (Filipino Merchants Insurance Co., vs.
Alejandro, 145 SCRA 42)

5. Provisions in the bill of lading contrary to prescription periods of the COGSA

are null and void. (E.E. Elser, Inc. vs. CA, et al., GR No. L-6517, Nov. 29, 1954).

Note that the COGSA is only applicable in (1) contracts of carriage of (2) goods (3)
by sea in (4) foreign trade. However, the parties to a domestic maritime trade
may, by express stipulation, validly agree to incorporate the provisions of the
COGSA in their contract of carriage, in which case said Act is applicable; provided
that a contractual clause in the bill of lading limiting the liability of the Carrier in
a manner contrary to the provisions of the COGSA shall be null and void.

6. If the goods are lost or damaged by reason of an unjustified delay in

transportation, the carrier is liable therefor; and the action must be filed
within the prescriptive period provided by the COGSA. (Tan Liao vs. American
President Lines, Ltd., GR No. L-7280, Jan. 20, 1956)

7. Suit against an arrastre operator is not within the coverage of the COGSA, the
ordinary periods of prescription will apply. (Insurance Co. of North America
vs. Phil. Ports Terminal, Inc. GR No. L-6420, July 18, 1955)

IX. RIGHTS AND IMMUNITIES

What constitutes due diligence in making vessel seaworthy?

Due diligence requires such watchful caution and foresight as the circumstance of
the particular service demand. It must be adequate to the occasion. It must be due
diligence in the work itself, and not merely in the selection of agents to do the work;
otherwise, shipowner might escape all responsibility merely by selecting agents of
 good reputation and would be relieved whether such agents exercised due care or
not to make their vessel seaworthy, and any responsibility would be fritted away.
(Nord-Deutscher Lloyd vs. Insurance Co. of North America, 110 Fed. 421)

What does dangers of the sea mean?

The phrase dangers of the sea has been construed as equivalent to perils of the
sea. (Baxter vs. Leland, 2 F. Cas. 1, 123) Dangers of the sea is somewhat of an
equivocal expression. It may, without any violation of its natural import, be
interpreted to mean dangers that arise upon the sea, which would include every
hazard and danger, from the beginning to the end of the voyage, of whatever kind or
with equal propriety, it may mean only those which arise directly and exclusively
from the sea and of which it is the efficient cause. Sometimes it is taken in one sense
and sometimes in the another. (Merril vs. Arey. 17 F. Cas. No. 9, 468)

What is the meaning of the term act of God?

The most comprehensive definition of the term is any accident, due directly and
exclusively to natural causes without human intervention, which no amount of
foresight, pains or care, reasonably to have been expected, could have prevented. (1
CJ 1174) There is an unanimous concurrence in the authorities that an occurrence
which is produced wholly or partially by the intervention of human agencies is not an
act of God within the meaning of the law. (Kirby vs. Wylie, 108 Md. 501, 70 Atl. 213)
All the cases agree in requiring the entire exclusions of human agency form the
cause of the injury or loss. (Michaels vs. New York Cent. R. Co., 30 NY 564, 86 Am. D.
415)

X. SURRENDER OF RIGHT AND IMMUNITIES AND INCREASE OF RESPONSIBILITIES AND

LIABILITIES

Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of

his rights and immunities or to increase any of his responsibilities and liabilities
under this Act, provided such surrender or increase shall be embodied in the bill of
lading issued to the shipper.

The provisions of this Act shall not be applicable to charter parties; but if bills of
lading are issued in the case of a ship under charter party, they shall comply with the
terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of
lading of any lawful provision regarding general average.

XI. CASES
A. Ang v. American Steamship Agencies (19 SCRA 123)

FACTS:
Yau Yue and Commercial Bank of Hong Kong agreed to sell galvanized sheets to
Hermino Teves. The purchase price was covered by a bank draft which Teves
 would pay in exchange for the bill of lading to be deposited in HSBC Manila.
Teves would then present the bill of lading to the carriers agent, American
Steamship which would issue a permit to Deliver Imported Articles to be
presented to Customs.
When the articles arrived in Manila, Teves failed to pay. The Bank returned the
bill of lading and the draft to Yau Yue which indorsed the bill to Domingo Ang.
Teves, however was able to obtain a bank guarantee in favor of American
Steamship. He was then able to get the permits and have the articles released to
him.
Ang claimed the articles but American Steamship said that they have been
delivered to Teves. So Ang instituted a suit against American Steamship. The trial
court dismissed the case on the ground of prescription.

ISSUE: Whether or not the action against the ship owner has prescribed under Sec.
3(6) par. 4 of the COGSA? NO. The loss as stated in COGSA must be read in relation
to the Civil Code, Article 1189.

RATIO:
As defined in Article 1169 of the New Civil Code and as applied to paragraph 4,
Section 3(6) of the COGSA, loss contemplates merely a situation where no delivery
at all was made by the shipper of the goods because the same had perished, gone
out of commerce, or disappeared in such a way that their existence is unknown or
they cannot be recovered.

It does not include a situation where there was indeed delivery but delivery was to
the wrong person, or a misdelivery. Non-delivery should be distinguished from
misdelivery.

Where the imported goods were delivered to the wrong person, the one-year time
bar in par.4, sec.3 (6) of the COGSA, which refers to loss or damage, does NOT
apply. Said one-year period of limitation is designed to meet the exigencies of
maritime hazards. In a case where the goods shipped were neither lost nor damaged
in transit but were, on the contrary, delivered in part to someone who claimed to be
entitled thereto, the situation is different, and the special need for the short period
of limitation in cases of loss or damage caused by maritime perils does not obtain.
x x x x x
For suits not predicated upon loss or damaged but on alleged misdelivery or
conversion of the goods, the applicable rule on prescription is that found in the New
civil Code, i.e., either ten years for Breach of a written contract or four years for
quasi-delict (Arts. 1144, 1146, Civil Code), and not the rule on prescription in the
COGSA.

B. F.H. Stevens v. Norddeuscher (6 SCRA 180)

 FACTS:
Stevens shipped from Hamburg, Germany to Manila, aboard the M/S
Schwabenstein, a vessel of Lloyd, 2,000 pieces of prismatical thermometers
valued at $650. Upon examination of the case containing the goods, it turned out
that 1,154 pieces of said thermometers valued at $342.74, were missing and/or
destroyed.
On May 21, 1959 notice of the delivery was given to Stevens
On April 27, 1960 action in the MTC of Manila was commenced against the
carrier to recover damages
On June 13, 1960 action in the MTC was dismissed on the ground of lack of
jurisdiction over the subject-matter, being an admiralty case
On June 24, 1960 action in the CFI of Manila was commenced
Norddeuscher moved to dismiss the case on the ground of prescription, the
action having been filed more than one year from May 21, 1959 when goods
were, or ought to be, delivered.

ISSUE: Whether or not the cause of action has prescribed? NO.

HELD: Prescription of actions is interrupted when they are filed before the court (Art.
1155 NCC). Also Section 49 of Act No. 190 provides that if, in an action commenced
in due time, the plaintiff fails otherwise than upon the merits, and the time limited
for the commencement of such action has, at the date of such failure, expired, the
plaintiff may commence a new action within one year after such date.

The action commenced by the plaintiff in the MTC of Manila, on April 27, 1960, was
dismissed on June 13, 1960, or over twenty (20) days after the expiration of the
period of one (1) year, beginning from May 21, 1959, within which plaintiffs action
could be brought, pursuant to CA 65, in relation to the COGSA. Under said section
49nof Act No. 190, the period within which plaintiff could initiate the present case
was renewed, therefore, for another year, beginning from June 24, 1960

XII. SOURCES
A. Martin, Teodorico C. Commentaries and Jurisprudence on the Philippine
Commercial Laws, Vol. 3. 1989 Revised Ed.
B. Agbayani, Aguedo F. Commentaries and Jurisprudence on the Commercial Laws
of the Philippines, Vol. IV. 1989 Ed.
C. Tolentino, Arturo M. Jurisprudence on the Commercial Laws of the Philippines,
Vol. 1. Sixth Ed. 1951.