I. Introduction and Governing Law. The primary law governing contracts for the carriage of goods by sea to and from Philippine ports is the Civil Code of the Philippines (Articles 1732-1763). However, where a bill of lading is issued in foreign trade (import/export), the Carriage of Goods by Sea Act (Commonwealth Act No. 65) applies compulsorily. COGSA, which incorporates the Hague Rules, sets forth the mandatory minimum responsibilities and liabilities of the carrier, as well as the rights and immunities it may invoke. For domestic shipment (coastwise trade), the Civil Code provisions on common carriers apply, though parties may contractually incorporate COGSA terms.
II. Application and Mandatory Nature. COGSA applies from the time the goods are loaded onto the ship until they are discharged from the ship (tackle-to-tackle period). Its provisions are compulsory and any clause in a bill of lading or agreement purporting to lessen the carrier’s liabilities below the COGSA standards is null and void. This mandatory character is designed to protect shippers and consignees from the superior bargaining power of carriers.
III. Duties and Responsibilities of the Carrier. Under Section 3(1) and (2) of COGSA, the carrier is bound, before and at the beginning of the voyage, to: (a) exercise due diligence to make the ship seaworthy; (b) properly man, equip, and supply the ship; and (c) make the holds, refrigerating and cooling chambers, and all other parts of the ship fit and safe for the reception, carriage, and preservation of the goods. Furthermore, the carrier must properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
IV. Liability Regime and Presumption of Fault. The carrier is presumed to be at fault for any loss or damage to the goods while in its custody. This presumption arises from Article 1735 of the Civil Code for domestic carriage and is embodied in the COGSA framework for international carriage. The burden of proof shifts to the carrier to show that the loss or damage was caused by an event falling within the “excepted perils” or that it exercised the required due diligence.
V. Excepted Perils (Carrier’s Defenses). Section 4(2) of COGSA provides a closed list of seventeen (17) defenses or “excepted perils” which, if proven by the carrier, exonerate it from liability. Key defenses include: Act of God; perils of the sea; act of public enemies; inherent defect, quality, or vice of the goods; insufficient packing; quarantine restrictions; and acts or omissions of the shipper or owner of the goods. The defense of “error in navigation or management of the ship” is particularly significant but is unavailable if the carrier failed its duty of seaworthiness.
VI. Package or Unit Limitation of Liability. A critical feature of COGSA is the financial cap on the carrier’s liability. Under Section 4(5), the carrier’s liability for any loss or damage shall not exceed the value of PHP 25,000.00 per package or customary freight unit, unless a higher value is declared by the shipper and inserted in the bill of lading, with additional freight paid if agreed. The definition of “package” is often contentious, especially with containerized cargo.
VII. Notice of Loss and Prescription of Action. The consignee must give written notice of loss or damage to the carrier at the port of discharge before or at the time of removal of the goods (for apparent damage) or within three days (for non-apparent damage). Failure to give notice is prima facie evidence of delivery in good condition. Importantly, any action for recovery against the carrier is absolutely barred unless suit is filed within one year from the date of delivery or the date when the goods should have been delivered. This one-year prescriptive period is peremptive and cannot be extended by agreement.
VIII. The Bill of Lading: Functions and Evidentiary Value. The bill of lading serves three key functions: (1) a receipt for the goods; (2) evidence of the contract of carriage; and (3) a document of title. Under COGSA, a bill of lading issued and signed by the carrier is prima facie evidence of receipt of the goods as described. To challenge this description, the carrier must prove that it had no reasonable means of checking the particulars (e.g., “said to contain,” “shipper’s load and count”).
IX. Practical Remedies. For shippers/consignees: (1) Declare Higher Value: For high-value shipments, declare the true nature and value on the bill of lading and pay the extra freight to avoid the PHP 25,000 limitation. (2) Document Meticulously: Upon receipt, photograph/video the unopened container seals and the unpacking process. Engage an independent surveyor immediately upon discovering damage. (3) Timely Notices: Serve the written notice of claim within the three-day period for hidden damage without fail. (4) File Suit Early: Calendar the one-year prescriptive period from delivery date and file the complaint well before its expiration; the period is strictly enforced. (5) Consider Insurance: Secure marine cargo insurance to cover risks beyond carrier liability limits and excepted perils. For carriers: (1) Clause Bills of Lading Carefully: Use precise language like “Shipper’s Load, Count, and Seal” for containerized cargo and accurately note any apparent defects. (2) Preserve Evidence: Maintain logs, weather reports, and records of due diligence in vessel maintenance to prove seaworthiness and excepted perils. (3) Invoke Prescription: Raise the one-year time-bar as an affirmative defense immediately upon service of a complaint filed beyond the period.
