December 1, 1888

CODE OF COMMERCE *
BOOK I
Merchants and Commerce in General
TITLE I
Merchants and Commercial Transactions
ARTICLE 1. The following are merchants for the purposes of this Code:
1. Those who, haing legal capacit! to trade, customaril! deote
themseles thereto. cdasia
". Commercial or industrial associations which are formed in accordance
with this Code.
ARTICLE ". Commercial transactions, #e the! performed #! merchants or not, whether
the! are specified in this Code or not, shall #e goerned #! the proisions contained in
the same$ in the a#sence of such proisions, #! the commercial customs generall!
o#sered in each place$ and in the a#sence of #oth, #! those of the common law. LET%&cd
Commercial transactions shall #e considered those enumerated in this Code and an!
others of a similar character. cd%&LET
ARTICLE '. The legal presumption of a customar! engagement in commerce e(ists from
the time the person who desires to trade gies notice through circulars, newspapers,
hand#ills, posters e(hi#ited to the pu#lic, or in an! other manner whatsoeer, of an
esta#lishment, the purpose of which is to conduct an! commercial transaction.
ARTICLE ). *ersons possessing the following conditions shall hae legal capacit! to
customaril! engage in commerce:
1. Those who hae reached the age of twent!+one !ears.
". Those who are not su#,ect to the authorit! of a father or mother nor to
marital authorit!.
'. Those who hae the free disposition of their propert!.
ARTICLE &. *ersons under twent!+one !ears of age and incapacitated persons ma!
continue, through their guardians, the commerce in which their parents or persons from
whom the right is deried ma! hae #een engaged. If the guardians do not hae legal
capacit! to trade, or hae some incompati#ilit!, the! shall #e under the o#ligation to
appoint one or more factors who possess the legal -ualifications, and who shall ta.e their
places in the #usiness.
ARTICLE /. A married woman, oer twent!+one !ears of age, ma! engage in commerce
with the authorit! of her hus#and, contained in a pu#lic instrument which shall #e
recorded in the commercial registr!.
ARTICLE 0. A married woman shall also #e presumed to #e authori1ed to engage in
commerce, if she does so with the .nowledge of her hus#and.
ARTICLE 2. The hus#and ma! freel! reo.e the permission e(pressl! or impliedl!
granted the wife to trade, stating the reocation in a pu#lic instrument, which shall also
#e recorded in the mercantile registr!, #esides #eing pu#lished in the official newspaper
of the town, should there #e an!, or otherwise in that of the proince, and announcing it
to her correspondents #! means of circulars.
This reocation can in no case pre,udice rights ac-uired #efore its pu#lication in the
official newspaper. aisadc
ARTICLE 3. A woman who at the time of contracting marriage is engaged in commerce
shall re-uire the permission of her hus#and to continue the same.
This permission shall #e considered as granted as long as the hus#and does not ma.e
.nown, in the manner prescri#ed in the foregoing article, the discontinuance of his wife4s
commercial actiit!.
ARTICLE 1%. If the woman should #e engaged in commerce in the cases mentioned in
Articles /, 0, and 3 of this Code, her dowr! and paraphernal propert! and all the
properties and rights that #oth spouses ma! possess in common or in the con,ugal
partnership, shall #e lia#le for the results of her commercial transactions, the wife #eing
a#le to alienate and mortgage her own priate propert! as well as that owned in common.
The hus#and4s priate propert! ma! also #e alienated or mortgaged #! the wife, should
the authorit! granted #! the former #e or hae #een e(tended to that effect.
ARTICLE 11. A married woman, who is oer twent!+one !ears of age, ma! also engage
in commerce in an! of the following cases:
1. If she is separated from her hus#and #! reason of a final decree of
diorce.
". If her hus#and is su#,ect to guardianship.
'. If her hus#and is a#sent, his residence un.nown, and his return not
e(pected.
). If her hus#and is sering a sentence of ciil interdiction.
ARTICLE 1". In the cases referred to in the preceding article onl! the priate propert! of
the wife and that owned in common or of the con,ugal partnership which has #een
ac-uired through commercial transactions, shall #e lia#le for the results thereof, the wife
#eing a#le to cone! or mortgage either.
After the a#sence of the hus#and has #een legall! declared, the wife shall moreoer hae
the rights granted her in such case #! the common law.
ARTICLE 1'. The following can not engage in commerce nor e(ercise an! direct
administratie or economic representation in commercial or industrial companies:
1. *ersons sentenced to ciil interdiction, until the! hae sered their
sentence or hae #een amnestied or pardoned.
". *ersons who hae #een declared #an.rupts, until the! hae o#tained
their discharge, or hae #een authori1ed, #! irtue of an agreement
accepted at a general meeting of creditors and approed #! the
,udicial authorit!, to continue at the head of their esta#lishments,
the discharge #eing considered in such cases as limited to the
proisions of the agreement.
'. Those who on account of laws or special proisions can not trade.
ARTICLE 1). The following can not engage in the commercial profession, either in
person or #! pro(!, nor can the! hold an! direct administratie or economic position in
commercial or industrial associations within the limits of the districts, proinces, or
towns in which the! discharge their duties:
1. Associate ,ustices, ,udges, and officials of the department of pu#lic
prosecution 5ministerio fiscal6 in actie serice.
This proision shall not #e applica#le to ma!ors 5alcaldes6, municipal ,udges, and
municipal prosecuting attorne!s, nor to those who #! chance are discharging ,udicial or
prosecuting functions.
". Administratie, economic, or militar! chiefs of districts, proinces, or
garrisons.
'. Emplo!ees engaged in the collection and administration of pu#lic funds
of the 7tate appointed #! the 8oernment.
*ersons who administer and collect temporaril! or their representaties are e(cepted.
). 9one! and commercial #ro.ers of an! class whatsoeer.
&. Those who #! irtue of laws or special proisions can not trade in
certain territor!.
ARTICLE 1&. :oreigners and companies created in a foreign countr! ma! engage in
commerce in the *hilippine Islands, su#,ect to the laws of their countr!, in so far as their
capacit! to contract is concerned$ and in all that refers to the creation of their
esta#lishments within the *hilippine territor!, their commercial transactions, and the
,urisdiction of the courts of this countr!, the proisions of this Code goern.
The proisions contained in this article shall #e construed without pre,udice to what ma!,
in particular cases, #e esta#lished #! treaties and conentions with other powers. cdtai
TITLE II
Commercial Registries
ARTICLE 1/. A mercantile registr! shall #e opened in all the capitals of proinces,
composed of two independent #oo.s, in which there shall #e recorded:
1. *riate merchants.
". Associations.
In the coast proinces, and in those of the interior where it is considered adisa#le on
account of the e(istence of a naigation serice, the registr! shall contain a third #oo. in
which to record essels.
ARTICLE 10. Registration in the mercantile registr! shall #e optional for priate
merchants and compulsor! for associations esta#lished in accordance with this Code or
with special laws, and for essels.
ARTICLE 12. A merchant who is not registered can not re-uest the registration of an!
document in the mercantile registr! nor ta.e adantage of its legal effects.
ARTICLE 13. The registrar shall .eep the #oo.s necessar! for the records, stamped and
folioed and with a memorandum on the page signed #! the ,ustice of the peace, stating
the num#er of pages each #oo. contains. "%%&cdasia
;here there are seeral ,ustices of the peace, an! one of them ma! sign the
memorandum.
ARTICLE "%. The registrar shall enter in chronological order in the registr! and general
inde(, all the merchants and associations which hae their names registered, giing each
sheet the proper correlatie num#er.
ARTICLE "1. <n the record sheet of each merchant or association there shall #e entered:
1. The name, firm name, or title. cd
". The .ind of commerce or transactions engaged in.
'. The date on which #usiness is to #egin or was #egun.
). The domicile, with a statement of the #ranches which ma! hae #een esta#lished,
without pre,udice to recording the #ranches in the registr! of the proince in which the!
are domiciled.
&. The articles constituting a commercial association, whateer ma! #e its o#,ect or class,
as well as instruments modif!ing, rescinding, or dissoling such associations.
/. The general powers of attorne! and the reocation of the same, should there #e an!,
gien to managing partners, factors, emplo!ees, and an! other agents.
0. The authori1ation of the hus#and for his wife to engage in commerce, and the legal or
,udicial authorit! of the wife to administer her propert! on account of the a#sence or
incapacit! of the hus#and.
2. The reocation of the permission granted the wife to engage in commerce.
3. =owr! instruments, marriage agreements, and the deeds which proe the ownership of
the paraphernal propert! of the wies of merchants.
1%. The issue of shares, certificates, and o#ligations of railroads and of all .inds of
associations, #e the! of pu#lic wor.s, credit, or others, stating the series and num#er of
the certificates of each issue, their interest, reenue, redemption, and premium, should
the! hae either, the total amount of the issue, and the propert!, wor.s, rights, or
mortgages, should there #e an!, #! which their pa!ment is secured.
There shall #e recorded, also in accordance with the proisions of the foregoing
paragraph, the issues made #! priate parties.
11. The issues of #an. notes, stating the date, class, series, -uantit!, and alue of each
issue.

1". The certificates of industrial propert!, patents, and trademar.s, in the form and
manner esta#lished #! law.
:oreign associations which desire to esta#lish themseles or create #ranches in 7pain
*

shall present and hae recorded in the registr!, #esides their #!+laws and the documents
prescri#ed for the 7panish
*
ones, the certificate issued #! the 7panish
*
consul stating
that such companies hae #een esta#lished and authori1ed according to the laws of the
respectie countr!.
ARTICLE "". In the registr! of essels there shall #e stated:
1. The name of the essel, .ind of e-uipment, s!stem or power of the
engines, if it is a steamer, stating whether the! are nominal or
indicated horsepower$ place of construction of the hull and
engines$ !ear thereof$ material of the hull, stating whether it is of
wood, iron, steel, or mi(ed$ principal dimensions of length, #readth
of #eam, and depth of hold$ the gross and net tonnage$ distinctie
signal which it #ears in the International Code of 7ignals$ finall!,
the names and domiciles of the owners or part owners of the same.
". The changes in the ownership of essels, in their name, or in an! of the
other conditions enumerated in the foregoing paragraph.
'. The imposition, modification or cancellation of liens of an! class
whatsoeer which encum#er essels.
ARTICLE "'. The record shall #e made, as a general rule, #! irtue of notarial copies of
the instrument presented #! the person interested. cdt
The record of notes, o#ligations, or instruments pa!a#le to order and to #earer, which do
not include mortgages of real estate, shall #e entered #! irtue of the certificate of the
instrument in which there appears the agreement of the person or persons who ma.e the
issue and the conditions, re-uisites, and guaranties of the same. "%%&letcd
;hen these guaranties consist of the mortgage of real estate, the proper instrument shall
#e presented for entr! in the mercantile registr!, after haing #een recorded in the registr!
of propert!.
ARTICLE "). Articles of associations not recorded shall #e #inding #etween the
mem#ers who e(ecute the same$ #ut the! shall not pre,udice third persons, who, howeer,
ma! ma.e use thereof in so far as adantageous.
ARTICLE "&. There shall also #e recorded in the registr! all resolutions or acts which
affect the increase or decrease in the capital of mercantile associations, whateer ma! #e
their denomination, and those which modif! or alter the conditions of the recorded
instruments.
The omission of this re-uisite shall produce the effects mentioned in the foregoing article.
ARTICLE "/. Recorded instruments shall hae legal effect to the detriment of third
persons onl! from the date of their record, and the! can not #e inalidated #! an!
preious or su#se-uent unrecorded instruments.
ARTICLE "0. =owr! propert! and paraphernal propert! of the wife of a merchant, not
recorded in the commercial registr!, shall not hae an! right of preference oer other
credits.
Real estate and real rights in the said propert! recorded in faor of the wife prior to the
origin of the concurrent credits are e(cepted.
ARTICLE "2. If a merchant should omit to enter in the registr! the dowr! propert! or
paraphernal propert! of his wife, the latter ma! do so, or it ma! #e done in her name #!
her parents, #rothers, or uncles #! consanguinit!, as well as #! those who are or hae
#een the guardian or curator of the wife, or who constitute or hae constituted the dowr!.
ARTICLE "3. >nrecorded powers of attorne! shall #e effectie #etween the principal and
agent$ #ut the! can not #e made use of to the pre,udice of a third person, who, howeer,
ma! #ase his claim on the same in so far as ma! #e faora#le to him.
ARTICLE '%. The mercantile registr! shall #e pu#lic. The registrar shall gie, to
whomsoeer re-uests it, an! data with reference to what appears in the record sheet of
each merchant, association, or ?essel@. Ae shall also issue true copies of the entire or of a
part of the sheet mentioned to an! person who re-uests it in writing. L*Ecd"%%&
ARTICLE '1. The commercial registrar shall hae under his charge, where there is an
e(change, copies of the dail! -uotations of the properties negotiated and the e(changes
fi(ed therein.
The copies shall sere as original instruments in all cases of inestigation and erification
of e(changes and -uotations on determined dates.
ARTICLE '". The office of commercial registrar shall #e filled #! the goernment after a
competitie e(amination.
TITLE III
Books and Bookkeeping of Commerce
ARTICLE ''. 9erchants shall necessaril! .eep:
1. A #oo. of inentories and #alances.
". A da!#oo..
'. A ledger.
). A cop!ing #oo. for letters and telegrams.
&. The other #oo.s re-uired #! special laws.
Associations and companies shall also .eep a #oo. or #oo.s of minutes, in which there
shall #e entered all the resolutions which refer to the progress and #usiness transactions
adopted at the general meetings and at those of #oards of directors. cdta
ARTICLE '). The! ma! furthermore .eep other #oo.s that the! consider adisa#le,
according to the s!stem of #oo..eeping adopted. iatdc"%%&
7uch #oo.s shall not #e su#,ected to the proisions of article '/$ #ut an! #oo.s which
ma! #e considered proper ma! #e legali1ed.
ARTICLE '&. 9erchants ma! .eep their #oo.s in person or hae them .ept #! a person
whom the! authori1e for the purpose.
If the merchant does not personall! .eep his #oo.s, it shall #e presumed that authorit!
has #een granted the person who does .eep them, unless there is proof to the contrar!. "%%&cda
ARTICLE '/. 9erchants shall present the #oo.s referred to in Article '' #ound, ruled,
and folioed, to the ,ustice of the peace of the municipalit! where the! hae their
commercial esta#lishments, in order that he ma! put on the first page of each one a
signed memorandum of the num#er of pages contained in the #oo..
The seal of the ,ustice of the peace which authenticates them shall, moreoer, #e stamped
on all the sheets of each #oo..
ARTICLE '0. The #oo. of inentories and #alances shall #egin with the inentor! which
must #e made #! the merchant at the time of commencing #usiness, and shall contain:
1. An e(act statement of the mone!, securities, credits, notes pa!a#le, real
or personal propert!, merchandise and goods of all .inds appraised
at their true alue, and which constitute his assets.
". A true statement of the de#ts and all .inds of pending o#ligations,
should there #e an!, and which form his lia#ilities.
'. Ae shall fi(, in such a case, the e(act difference #etween his assets and
lia#ilities, which will #e the capital with which to #egin #usiness.
The merchant shall, moreoer, ma.e annuall! and enter in the same #oo. the general
#alances of his #usiness, with the details mentioned in this article, and in accordance with
the entries in the da!#oo., without reseration or omission whatsoeer, signed #! him
and under his responsi#ilit!.
ARTICLE '2. The first entr! in the da!#oo. shall consist of the result of the inentor!
mentioned in the foregoing article, diided into one or seeral consecutie accounts,
according to the s!stem of #oo..eeping adopted.
There shall thereafter follow, da! #! da!, all their transactions, each entr! stating the
credit and de#it of the respectie accounts. aisadc
;hen the transactions are numerous, no matter of what importance the! ma! #e, or when
the! hae ta.en place outside of the domicile, those referring to each account which hae
ta.en place on one da! ma! #e included in the same entr!, #ut o#sering in the statement
of the same, when the! are detailed, the same order in which the! occurred.
There shall #e entered in the same manner, on the date on which the! are ta.en from
deposit, the amounts which the merchant uses for his domestic e(penses, which shall #e
placed in a special account to #e opened in the ledger for this purpose.
ARTICLE '3. The accounts referring to each o#,ect or person in particular shall,
moreoer, #e opened with a credit and de#it in the ledger, and the entries referring to
these accounts in the da!#oo. shall #e transferred to the former in strict order of dates.
ARTICLE )%. In the #oo. of minutes which shall #e .ept #! each association, there shall
#e entered verbatim all resolutions adopted at its meetings or at those of its managers,
stating the date of each, the mem#ers present at the same, the otes cast, and an!thing
else which will aid in arriing at an e(act .nowledge of what has #een decided, #eing
authenticated with the signatures of the managers, directors, or administrators who are in
charge of the management of the association or those who are designated #! the #!+laws
or other regulations which goern the said association.
ARTICLE )1. All letters which a merchant ma! write regarding his #usiness and the
telegrams he ma! send shall #e transferred to the cop!ing #oo., either #! hand or through
an! mechanical means, completel! and consecutiel!, #! order of dates, including the
su#scri#ing clause and signature.
ARTICLE )". 9erchants shall carefull! .eep in #undles and in proper order the letters
and telegraphic massages which the! ma! receie relating to their transactions.
ARTICLE )'. 9erchants, #esides compl!ing with and fulfilling the conditions and
formalities prescri#ed in this title, must .eep their #oo.s in a clear manner in order of
dates, without leaing #lan. spaces, interlineations, erasures, or #lots, and without
showing traces of haing #een altered #! su#stituting or tearing out folios, or in an! other
manner whatsoeer.
ARTICLE )). 9erchants shall correct at once the errors or omissions which the! ma!
incur in ma.ing entries in their #oo.s, immediatel! after the! notice them, clearl!
e(plaining in what the! consisted and writing the phrase as it should hae appeared.
7hould some time hae elapsed since the error was committed or since the occurrence of
the omission, the! shall ma.e the proper entr! of correction, adding at the margin of the
incorrect entr! a memorandum calling attention to the correction.

ARTICLE )&. Bo official in-uir! can #e instituted #! ,udges or courts, nor an! authorit!,
in order to ascertain if merchants .eep their #oo.s in accordance with the proisions of
this Code, nor an! general inestigation or e(amination of the #oo..eeping in the offices
or counting+houses of merchants. "%%&cdtai
ARTICLE )/. Beither can the general communication, delier!, nor inspection of the
#oo.s, correspondence, and other documents of merchants #e decreed at the instance of a
part!, e(cept in cases of li-uidation, uniersal heirship, or #an.ruptc!.
ARTICLE )0. ;ith the e(ception of the cases mentioned in the foregoing article, the
e(hi#ition of the #oo.s and documents of merchants can onl! #e decreed, at the instance
of a part!, or officiall!, when the person re-uesting it has an! interest or lia#ilit! in the
-uestion in which the e(hi#ition is to ta.e place. lpe"%%&cda
The inspection shall #e made in the office of the merchant, in his presence, or in that of
the person he ma! delegate, and shall #e limited e(clusiel! to the points which relate to
the matter in -uestion, said points #eing the onl! ones which ma! #e erified.
ARTICLE )2. In order to graduate the weight of eidence of #oo.s of merchants, the
following rules shall #e o#sered:
1. Coo.s of merchants shall #e eidence against themseles, ?no proof to
the contrar! #eing admitted@$ #ut the aderse part! can not accept
the entries which are faora#le to him and re,ect those which
pre,udice him$ #ut, haing admitted this means of eidence, he
shall a#ide #! the result which the! ma! show in their entiret!,
ta.ing into e-ual consideration all the entries relating to the matter
in litigation.
". If the entries of the #oo.s .ept #! two merchants should not conform,
and those of one of them hae #een .ept with all the formalities
mentioned in this title, and those of the other contain an! defects or
lac. the re-uisites prescri#ed #! this Code, the entries of the #oo.s
correctl! .ept shall #e admitted against those of the defectie ones,
unless the contrar! is demonstrated #! means of other proofs
legall! admissi#le. cdt
'. If one of the merchants should not present his #oo.s or should state that
he does not possess an!, those of his adersar!, .ept with all the
legal formalities, shall #e eidence against him, unless it is proen
that the lac. of said #oo.s is caused #! force ma,eure, and alwa!s
resering the eidence against the entries e(hi#ited, #! the other
means legall! admissi#le in suits.
). If the #oo.s of the merchants contain all the legal re-uisites and are
conflicting or contradictor! to each other, the ,udge or court shall
render ,udgment in accordance with other proofs adduced$
weighing them according to the general rules of law.
ARTICLE )3. 9erchants and their heirs or successors shall presere the #oo.s,
telegrams, and correspondence of their #usiness in general for the entire period which it
ma! continue in e(istence, and until fie !ears after the li-uidation of all their
commercial transactions and #usiness.
=ocuments which speciall! relate to certain acts or transactions ma! #e rendered useless
or destro!ed after the time of the limitation of the actions which could #e #rought #!
irtue thereof has elapsed, unless some -uestion referring to the same directl! or
indirectl! is pending, in which case the! must #e .ept until the conclusion thereof.
TITLE IV
General Provisions Relating to Commercial Contracts
ARTICLE &%. Commercial contracts in all that relates to their re-uisites, modifications,
e(ceptions, interpretations, and e(tinction and to the capacit! of the contracting parties
shall #e goerned, in all that is not e(pressl! esta#lished in this Code or in special laws,
#! the general rules of common law.
ARTICLE &1. Commercial contracts shall #e alid and create an o#ligation and cause of
action in suits, whateer ma! #e the form or in whateer language the! ma! #e e(ecuted,
the class to which the! correspond, and the amount inoled, proided their e(istence is
proed #! some of the means esta#lished #! the ciil law. Aoweer, the testimon! of
witnesses shall not in itself #e sufficient to proe the e(istence of a contract wherein the
amount inoled e(ceeds 1,&%% pesetas unless supported #! other eidence.
Telegraphic correspondence shall onl! #e the #asis of an o#ligation #etween contracting
parties who hae preiousl! admitted this medium in a written contract, and proided the
telegrams fulfill the conentional conditions or conentional signs which ma! hae #een
preiousl! fi(ed and agreed to #! the contracting parties.
ARTICLE &". :rom the proisions of the foregoing article the following are e(cepted:
1. Contracts which, in accordance with this Code or special laws, must #e
reduced to writing or for which certain methods or formalities are
necessar! to their alidit!. cdta
". Contracts e(ecuted in a foreign countr! in which the law re-uires
certain instruments, methods or formalities for their alidit!,
although not re-uired #! the 7panish law.
In either case contracts which do not fulfill the re-uisites respectiel! demanded can not
sere as the #asis for an! o#ligation or cause of action in suits.
ARTICLE &'. >nlawful agreements can not sere as the #asis for an! o#ligation or cause
of action, een where the! inole commercial transactions.
ARTICLE &). Contracts entered into through correspondence shall #e perfected from the
time an answer is made accepting the proposition or the conditions #! which the latter
ma! #e modified.
ARTICLE &&. Contracts in which an agent or #ro.er mediates shall #e perfected when
the contracting parties shall hae agreed to his offer.
ARTICLE &/. In a commercial contract containing an indemnification clause against the
person who fails to compl! therewith, the part! aggrieed ma! ta.e legal steps to demand
the fulfillment of the contract or the indemnit! stipulated$ #ut in resorting to either of
these two actions the other one shall #e annulled unless there is an agreement to the
contrar!. iatdclet
ARTICLE &0. Commercial contracts shall #e e(ecuted and complied with in good faith
according to the terms in which the! were made and drafted, without eading the honest,
proper, and usual meaning of written or spo.en words with ar#itrar! interpretations, nor
limiting the effects which are naturall! deried from the manner in which the contractors
ma! hae e(plained their wishes and contracted their o#ligations.
ARTICLE &2. 7hould an! difference appear #etween the copies of a contract presented
#! the contracting parties and an agent or #ro.er haing mediated in the e(ecution
thereof, what appears in the #oo.s of the latter shall goern, proided the! are .ept in
accordance with law.
ARTICLE &3. 7hould an! dou#ts arise which can not #e decided in accordance with the
proisions of Article " of this Code, the -uestion shall #e decided in faor of the de#tor.
ARTICLE /%. In all computations of da!s, months, and !ears, the following shall #e
understood. A da! shall comprise twent!+four hours$ the months according to the manner
the! are designated in the 8regorian calendar, and a !ear shall em#race three hundred and
si(t!+fie da!s.
Cills of e(change, promissor! notes, and loans are e(cepted, with regard to which the
special proisions esta#lished #! this Code shall #e o#sered.
ARTICLE /1. =a!s of grace, courtes!, and others, which under an! designation
whatsoeer defer the fulfillment of commercial o#ligations, shall not #e recogni1ed, #ut
onl! those which the parties ma! hae preiousl! fi(ed in the contract, or which are
founded on a definite proision of law.
ARTICLE /". <#ligations which do not hae a period preiousl! fi(ed #! the parties, or
#! the proisions of this Code, shall #e demanda#le ten da!s after haing #een
contracted, if the! can onl! #e the #asis for an ordinar! action, and on the ne(t da! if
e(ecution lies. cd
ARTICLE /'. The effects of default in the compliance with commercial o#ligations shall
#egin:
1. In contracts in which a da! is fi(ed for their compliance #! the will of
the parties or #! law, on the da! following the one the! fall due.
". In contracts in which no such da! is fi(ed, from the da! on which the
creditor legall! ma.es demand upon the de#tor or notifies him of
the protest of loss and damage made against him #efore a ,ustice,
notar!, or other pu#lic official authori1ed to admit the same.
TITLE V
Places and Buildings for Commercial Transactions
SECTION I
Commercial Exchanges
ARTICLE /). Legall! authori1ed pu#lic esta#lishments in which merchants and licensed
intermediar! agents usuall! assem#le to agree upon or carr! out the commercial
transactions mentioned in this section shall #e called commercial e(changes. cdasia"%%&
ARTICLE /&. The goernment ma! esta#lish or authori1e the creation of commercial
e(changes whereer it ma! deem it conenient. L*rE%&
Associations esta#lished in accordance with this Code ma! also create them, proided the
power to do so is one of the o#,ects thereof.
Botwithstanding this, in order that the -uotations of transactions effected and pu#lished
in this .ind of e(changes ma! hae an official character, it shall #e necessar! for the
8oernment to authori1e said transactions #efore #ecoming the su#,ect of the pu#lic
traffic, shown #! the -uotation. iatdc"%%&
The 8oernment ma! grant such authori1ation, after procuring the information which it
ma! consider necessar! regarding its pu#lic conenience.
ARTICLE //. E(isting commercial e(changes, as well as those newl! created, shall #e
goerned #! the proisions of this Code.
ARTICLE /0. The following shall #e the su#,ect of transactions on e(change:
1. *u#lic #onds and securities.
". Industrial and commercial securities issued #! priate parties or
associations or enterprises legall! constituted.
'. Cills of e(change, drafts, promissor! notes, and an! other commercial
papers.
). The sale of precious metals, in coin or #ullion.
&. 9erchandise of all .inds and warehouse receipts.
/. The insurance of commercial effects against land or marine ris.s.

0. Transportation and freightage, #ills of lading, and wa! #ills.
2. An! other transactions similar to those mentioned in the foregoing
su#diisions, proided the! are lawful.
The #onds and securities referred to in su#diisions 1 and " of this article shall onl! #e
included in the official -uotations when their negotiation is authori1ed, in accordance
with Article /&, in the e(changes of priate constitution, or which are declared negotia#le
on the e(changes officiall! esta#lished. *msaow
ARTICLE /2. In order to include them in the official -uotations treated of in the
foregoing article, under the designation of pu#lic securities shall #e understood:
1. Those which #! means of an issue represent credits against the 7tate,
proinces, or municipalities, and are legall! recogni1ed as
negotia#le on e(change.
". Those issued #! foreign nations, if their negotiation has #een dul!
authori1ed #! the goernment after a report of the #oard of
directors of the association of mone! #ro.ers.
ARTICLE /3. There ma! also #e included in the official -uotations, as a matter of traffic
on e(change, instruments of credit pa!a#le to #earer issued #! national esta#lishments,
companies, or enterprises in accordance with law and the #!+laws of the same, proided
that the resolution authori1ing their issue, with all the other re-uisites enumerated in
Article "1, are dul! recorded in the commercial registr!, as well as in those of propert!,
when on account of their nature, this should #e done, and proided that these details hae
#een preiousl! reported to the #oard of directors of the association of mone! #ro.ers.
ARTICLE 0%. In order to include in the official -uotations as a matter of traffic on
e(change, credit instruments pa!a#le to #earer of foreign enterprises esta#lished in
accordance with the laws of the 7tate in which said enterprises are situated, the preious
authori1ation of the #oard of directors of the association of mone! #ro.ers shall #e
necessar!, after it has #een proed that the issue has #een made in accordance with law
and the #!+laws of the compan! which issues the same, and that all the re-uisites
prescri#ed in the said proisions hae #een complied with, and proided there e(ist no
reasons of pu#lic interest which ma! ma.e them o#,ectiona#le.
ARTICLE 01. Instruments or securities issued #! priate parties can not #e included in
the official -uotations without the authorit! of the #oard of directors of the association of
mone! #ro.ers, which shall alwa!s #e granted when the! are mortgage #onds or are
sufficientl! guaranteed in their ,udgment and under their lia#ilit!.
ARTICLE 0". The following can not #e included in the official -uotations:
1. Instruments or securities issued #! companies or copartnerships not
recorded in the commercial registr!.
". Instruments or securities issued #! associations which, although
recorded in the commercial registr!, hae not made the issue in
accordance with this Code or with special laws.
ARTICLE 0'. The regulations shall fi( the da!s and hours on which the meetings of the
e(changes esta#lished #! the 8oernment or #! priate parties are to #e held, after the!
hae ac-uired an official character, and all that relates to their interior goernment and
police, which shall in each one of them #e in charge of the #oard of directors of the
association of mone! #ro.ers. The 8oernment shall fi( the schedule of the fees of the
#ro.ers.
SECTION II
Transactions on Exchange
ARTICLE 0). Eer! person, #e he a merchant or not, ma! ma.e contracts relating to
pu#lic instruments, or industrial or commercial securities, without the interention of a
licensed mone! #ro.er$ #ut said contracts shall hae no more alue than arises from their
form and which is granted them #! the common law.
ARTICLE 0&. Transactions which ta.e place on e(change shall #e complied with under
the conditions and in the manner and form agreed upon #! the contracting parties, and
can #e either for cash or on time, definite or optional, with or without #ro.erage, stating
at the time of announcing the same the conditions which ma! hae #een stipulated in
each transaction.
All these transactions ma! #e #inding and the #asis of actions #efore courts.
ARTICLE 0/. Transactions for cash made on e(change must #e consummated on the
same da! of their e(ecution, or at the utmost, in the time interening until the ne(t
meeting of the e(change.
The seller shall #e under the o#ligation to delier, without further dela!, the instruments
or securities sold and the purchaser to receie them, satisf!ing their price immediatel!.
Transactions on time and conditional ones shall #e consummated in the same manner at
the time agreed upon.
ARTICLE 00. If the transactions ta.e place through a licensed mone! #ro.er, the latter
#eing silent regarding the name of the principal, or #etween agents with the same
conditions, and the licensed agent, endor, or purchaser dela!s the fulfilment of the
agreement, the person pre,udiced #! the dela! ma! choose in the e(change itself #etween
a#andoning the contract, denouncing it to the #oard of directors, or demanding the
compliance of the same.
In the latter case it shall #e consummated through one of the mem#ers of the #oard of
directors #! purchasing or selling the pu#lic instruments agreed upon for account and ris.
of the tard! agent, without pre,udice to the suit of the latter against the principal.
The #oard of directors shall order the reali1ation of that part of the #ond of the tard!
agent necessar! to immediatel! satisf! these differences. LrnImm
In transactions inoling industrial and commercial instruments, metals, or merchandise,
the person who dela!s or refuses to consummate a contract shall #e compelled to compl!
therewith #! means of the actions which ma! #e proper according to the prescriptions of
this Code.
ARTICLE 02. ;heneer an! transaction which can #e -uoted has #een agreed upon, the
mone! #ro.er who ma! hae ta.en part therein shall ma.e a signed memorandum
thereof, deliering it immediatel! to the announcer, who, after reading it aloud, shall
transmit it to the #oard of directors.
ARTICLE 03. The transactions which ta.e place through a licensed #ro.er, inoling
#onds or pu#lic instrument, shall #e announced aloud immediatel! upon #eing agreed
upon, without pre,udice to transmitting the proper memorandum to the #oard of directors.
<ther contracts shall #e made .nown in the -uotation #ulletin, stating the ma(imum and
minimum price of the purchases of merchandise, transportation and freightage, the rate of
discount, and that of the e(changes for drafts and loans.
ARTICLE 2%. The #oards of directors shall meet after the e(change hours, and in iew of
the negotiations of pu#lic instruments which result from the memoranda deliered #! the
licensed #ro.ers, and with the notice of sales and other operations in which the same too.
part, it shall prepare the lists of -uotations, transmitting a certified cop! thereof to the
commercial registr!.
SECTION III
Other Public Places for Transactions !airs" Markets" and #hops
ARTICLE 21. The 8oernment, as well as commercial associations which fulfill the
conditions mentioned in article /& of this Code, ma! esta#lish e(changes or commercial
agencies.
ARTICLE 2". The competent authorit! shall announce the place and time of holding fairs
and the police regulations which are to #e o#sered in the same. LET%&cd
ARTICLE 2'. 7ale and resale contracts e(ecuted at fairs ma! #e for cash or on time$ the
former must #e complied with on the same da! of their e(ecution, or, at the utmost,
within the following twent!+four hours.
After this time has elapsed without either of the contracting parties haing demanded its
compliance, the! shall #e considered null, and the deposits or earnest+mone! which ma!
hae #een deliered shall #e forfeited to the person who receied the same.
ARTICLE 2). Duestions which ma! arise at fairs regarding contracts e(ecuted at the
same shall #e decided in an oral trial #! the municipal ,udge of the town in which the fair
is held, in accordance with the prescriptions of this Code, proided the alue of the article
in litigation does not e(ceed 1,&%% pesetas.
7hould there #e more than one municipal ,udge, the one selected #! the plaintiff shall #e
the one of complete ,urisdiction.
ARTICLE 2&. The purchase of merchandise from warehouses or shops open to the pu#lic
shall cause the forfeiture of the right in faor of the purchaser with regard to the
merchandise ac-uired, resering in a proper case the rights of the owner of the
merchandise sold to institute the ciil or criminal actions which ma! #e proper against the
person who sold the same without haing a right to do so.
:or the purposes of this forfeiture, as warehouses or shops open to the pu#lic shall #e
considered:
1. Those which ma! #e esta#lished #! recorded merchants.
". Those esta#lished #! merchants who are not recorded, proided the
warehouses or shops remain open to the pu#lic for a period of eight
consecutie da!s, or that the! hae #een announced #! means of
signs, cards, or posters, in the places themseles, or through
circulars distri#uted to the pu#lic or inserted in the newspapers of
the localit!.
ARTICLE 2/. The mone! in which the pa!ment of merchandise #ought for cash is
effected, in shops or pu#lic esta#lishments, shall not #e recoera#le.
ARTICLE 20. *urchases and sales which ta.e place in esta#lishments shall alwa!s #e
presumed as made for cash unless there is proof to the contrar!.
TITLE VI
Commercial $gents and Their Respective Obligations
SECTION I
General Provisions Common to Commercial $gents
ARTICLE 22. The following shall #e su#,ect to the commercial laws as commercial
agents:
1. 9one! and stoc. #ro.ers.
". Commercial #ro.ers.
'. 7hip+#ro.ing interpreters.
ARTICLE 23. The serices of stoc. #ro.ers or agents no matter what ma! #e their class,
ma! #e rendered #! 7paniards
*
and foreigners$ #ut licensed agents and #ro.ers onl! ma!
issue certifications.
The means of proing the e(istence and conditions of instruments or contracts in which
agents who are not licensed ta.e part shall #e those esta#lished #! the commercial or
common law to ,ustif! o#ligations.

ARTICLE 3%. In eer! commercial center there ma! #e esta#lished an association of
stoc. #ro.ers, another of commercial #ro.ers, and in maritime centers one of ship+
#ro.ing interpreters.
ARTICLE 31. The associations treated of in the foregoing article shall #e composed of
the indiiduals who ma! hae o#tained the proper certificate of possessing the
-ualifications re-uired #! this Code.
ARTICLE 3". At the head of each association there shall #e a #oard of directors elected
#! the mem#ers.
ARTICLE 3'. The licensed agents shall hae the character of notaries in all that refers to
the negotiation of pu#lic instruments, industrial and commercial securities, merchandise,
and the other commercial acts included in their office in the respectie center.
The! shall .eep a registr! #oo. in accordance with the prescriptions of Article '/,
entering therein in proper order, separatel! and dail!, all the transactions in which the!
ma! hae ta.en part, #eing moreoer permitted to .eep other #oo.s with the same
formalities.
The #oo.s and policies of licensed agents shall #e admitted as eidence in suits.
ARTICLE 3). In order to #ecome a mem#er of an! of the associations referred to in
Article 3%, it shall #e necessar!:
1. To #e a 7paniard or a naturali1ed foreigner.
". To hae capacit! to trade in accordance with this Code.
'. Bot to #e suffering an! correctional or punitie penalt!.
). To proe good moral conduct and well .nown honest! #! means of a
,udicial report of three recorded merchants.
&. To constitute in the depositor!, or in the 7panish *hilippine Can.
5Canco EspaEol :ilipino6, the #ond fi(ed #! the 8oernment.
/. To o#tain from the 8oernor+8eneral, after a report from the #oard of
directors, the proisional certificate, which shall #e presented in
the colonial department for the ro!al confirmation, which must #e
issued free of charge within the period of si( months from the date
on which it was e(ecuted.
ARTICLE 3&. It shall #e the o#ligation of licensed agents:
1. To assure themseles of the identit! and legal capacit! to trade of the
persons in whose affairs the! act, and, if proper, of the legitimac!
of the signatures of the contracting parties. cd%&LET
;hen the latter do not hae the free disposition of their propert!, agents can not
act without preiousl! o#taining the authori1ation prescri#ed #! law.
". To su#mit the transactions with e(actness, precision, and clearness,
a#staining from ma.ing suppositions which might lead the
contracting parties into error.
'. To presere secrec! in all that refers to the #usiness the! ma! transact
and not reeal the names of the persons who in trust the same to
them, unless it is otherwise re-uired #! law, or #! the character of
the transactions, or if the persons interested consent to their names
#eing made pu#lic.
). To issue at the e(pense of the persons interested, who ma! re-uest
them, certificates of the respectie entries of their contracts. "%%&cdasia
ARTICLE 3/. Licensed agents can not:
1. Trade for their own account.
". Constitute themseles underwriters of commercial ris.s.
'. Begotiate securities or merchandise for the account of indiiduals or
associations which hae suspended pa!ments, or which hae #een
declared in #an.ruptc! or insolent, unless the! hae o#tained
their discharge.
). Ac-uire for themseles the effects the negotiation of which was
intrusted to them, e(cept in case the agent is to answer for
noncompliance of the purchaser to the endor.
&. Issue certifications which do not directl! refer to facts which appear in
the entries on their #oo.s.
/. =ischarge the duties of cashiers, #oo..eepers, or emplo!ees of an!
merchant or commercial esta#lishment.
ARTICLE 30. The persons iolating the proisions of the preceding article shall #e
remoed from their office #! the 8oernment, after hearing the #oard of directors and the
interested part!, who ma! appeal from this decision through administratie litigation 5via
contenciosa administrativa6.
The! shall, moreoer, #e ciill! lia#le for the damage caused #! an! neglect of the
o#ligations of their office.
ARTICLE 32. The #onds of stoc. #ro.ers, commercial #ro.ers, and ship+#ro.ing
interpreters shall #e speciall! lia#le for the results of the #usiness of their office, the
persons pre,udiced haing a right of preferred real action against the same without
pre,udice to an! others which ma! #e proper according to law.
This #ond can not #e restored, notwithstanding that the agent ceases in the discharge of
his office, until the period fi(ed in Article 3)/ has elapsed, unless a claim has #een filed
within the same period.
The #ond shall onl! #e su#,ect to lia#ilities not connected with the office when those of
the latter are first full! secured.
If the #ond is diided #! the lia#ilities to which it is su#,ect, or its real alue is
diminished for an! reason whatsoeer, it must #e replaced #! the agent within the period
of twent! da!s.
ARTICLE 33. In case of disa#ilit!, incapacit!, or suspension from office of stoc. #ro.ers,
commercial #ro.ers, or ship+#ro.ing interpreters the #oo.s which the! are to .eep in
accordance with this Code shall #e deposited in the commercial registr!.
SECTION II
%icensed Mone& and #tock Brokers
ARTICLE 1%%. 9one! and stoc. #ro.ers shall #e authori1ed to:
1. Ta.e part priatel! in negotiations and transfers of all .inds of pu#lic
instruments or securities which can #e -uoted, defined in Article
/2.
". Ta.e part, in concurrence with commercial agents, in all other
e(change transactions and contracts, su#,ect to the lia#ilities
appertaining to these transactions.
ARTICLE 1%1. 7toc. agents who ta.e part in purchase or sale contracts or in other
transactions for cash or on time shall #e lia#le to the purchaser for the delier! of the
instruments or securities inoled in said transactions and to the endor for the pa!ment
of the price or indemnit! agreed upon.
ARTICLE 1%". 7toc. #ro.ers shall enter in their #oo.s, in correlatie numerical order
and #! dates, all the transactions in which the! ta.e part.
ARTICLE 1%'. 7toc. #ro.ers shall delier to each other a signed memorandum of eer!
transaction agreed upon, on the same da! on which it too. place. Another memorandum,
signed in the same manner, shall #e deliered to their constituents, and the latter shall
delier one to the agents, stating their ac-uiescence with the terms and conditions of the
transaction.
The memoranda or policies which agents delier to their constituents, and those which
the! mutuall! issue, shall #e eidence against the agent who su#scri#es them in all cases
of claims which ma! arise #! irtue thereof.
In order to determine the amount which can #e claimed, the #oard of directors shall issue
a certificate stating the difference in cash which appears against the constituents in iew
of the memoranda of the transaction.
The ac-uiescence of the constituents, after their signature has #een ac.nowledged in a
suit, shall include an e(ecution, proided the certificate of the #oard of directors
mentioned in the preceding paragraph is presented.
ARTICLE 1%). 7toc. agents, #esides the o#ligations common to all agents enumerated in
Articles 3&, 3/, 30, and 32, shall #e ciill! lia#le for the industrial or commercial
instruments or securities which the! ma! sell after the denunciation of said securities as
illegitimate has #een made pu#lic #! the #oard of directors.
ARTICLE 1%&. The president, or the person acting in his stead, and two mem#ers at least
of the #oard of directors shall alwa!s #e present at the meeting of the e(change in order
to decide what ma! #e proper in the cases which ma! arise.
The #oard of directors shall fi( the rate of the monthl! li-uidations in closing the
e(change on the last da! of each month, ta.ing as a #asis the aerage of the -uotations of
the same da!.
The same #oard shall #e in charge of receiing the partial li-uidations and preparing the
general one of the month.
SECTION III
%icensed Commercial Brokers
ARTICLE 1%/. Cesides the o#ligations common to all commercial agents enumerated in
Article 3&, licensed commercial #ro.ers shall #e under the o#ligation:
1. To answer legall! for the authenticit! of the signature of the last
cone!er in negotiations of #ills of e(change and other negotia#le
paper. L*Ecd"%%&
". To ta.e part and certif!, in contracts of purchase and sale, to the
delier! of the paper and to its pa!ment, if the persons interested
demand it.
'. To collect from the cone!er and delier to the #u!er the drafts or
negotia#le paper which ma! hae #een negotiated through him.
). To collect from the #u!er and delier to the cone!er the alue of the
#ills of e(change or negotia#le paper which is negotiated.
ARTICLE 1%0. Licensed #ro.ers shall enter in their #oo.s in separate entries all the
transactions in which the! ma! hae ta.en part, stating the names and the domiciles of
the contracting parties and the su#,ect and conditions of the contracts.
In sales the! shall state the -ualit!, amount, and price of the article sold, place and date of
the delier!, and the manner in which the price is to #e paid.
In negotiations of #ills of e(change, the! shall enter the dates, places of issue and
pa!ment, terms and due dates, names of the drawer, endorser and pa!er, those of the
cone!er and purchaser, and the e(change agreed upon.
In insurance there shall #e stated, with reference to the polic!, #esides the num#er and
date of the same, the names of the underwriter and of the insured, o#,ect of the insurance,
its alue according to the contracting parties, the premium agreed upon, and, in a proper
case, the place of loading and unloading, and a precise and e(act statement of the ship or
of the means of transportation.
ARTICLE 1%2. ;ithin the da! on which the contract is e(ecuted, the licensed #ro.ers
shall delier to each one of the contracting parties a signed memorandum containing all
that the latter ma! hae agreed to.
ARTICLE 1%3. In cases in which, on account of the conenience of the parties, a written
contract is e(ecuted, the #ro.er shall certif! at the foot of the duplicates and shall .eep
the originals.

ARTICLE 11%. Licensed #ro.ers ma!, in concurrence with the ship+#ro.ing interpreters,
discharge the duties of the latter su#,ecting themseles to the prescriptions of the
following section of this title.
ARTICLE 111. The association of #ro.ers, where there is not one of agents, shall issue on
each da! of negotiation a memorandum of the current e(changes and of the prices of
merchandise, for which purpose two mem#ers of the #oard of directors shall #e present at
the meeting of the e(change, a certified cop! of said memorandum #eing transmitted to
the commercial registr!.
SECTION IV
%icensed #hip'broking (nterpreters
ARTICLE 11". In order to discharge the duties of ship+#ro.ing interpreter, #esides
possessing the -ualifications re-uired of agents in Article 3), it shall #e necessar! to
proe, either #! e(amination or #! a certificate of a pu#lic esta#lishment, the .nowledge
of two modern foreign languages.
ARTICLE 11'. The o#ligations of ship+#ro.ing interpreters shall #e:
1. To ta.e part in charter contracts, marine insurance, and #ottomr! #onds,
when re-uested to do so.
". To assist captains and supercargoes of foreign essels and sere as
interpreters in the declarations, protests, and other #usiness which
ma! ta.e place in courts and pu#lic offices.
'. To translate the documents that the said foreign captains and
supercargoes are o#liged to present in the said offices, proided
there arises an! dou#t regarding their understanding, certif!ing that
the translations hae #een well and faithfull! made.
). To represent the same in suits when the!, the shipowner or consignee of
the essel, do not appear.
ARTICLE 11). It shall furthermore #e the o#ligation of ship+#ro.ing interpreters to .eep:
1. A cop!ing #oo. for the translations the! ma! ma.e, entering the same
literall!.
". A registr! of the names of the captains to whom the! render the
serices proper to their office, stating the flag, name, class, and
tonnage of the essels and the ports of departure and their
destination.
'. A da!#oo. of the contracts of charter in which the! ta.e part, stating in
each entr! the name of the essel, its flag, register, and tonnage$
those of the captain and of the charterer$ alue and destination of
the cargo$ mone! in which it is to #e paid$ adances on the same,
should there #e an!$ the goods of which the cargo consists$
conditions agreed upon #etween the charterer and captain
regarding demurrage, and the date preiousl! fi(ed on which to
commence and finish loading.
ARTICLE 11&. The ship+#ro.ing interpreter shall .eep one cop! of the contract or
contracts which ma! hae #een e(ecuted #etween the captain and the charterer.
BOOK II
#pecial Commercial Contracts
TITLE I
Commercial $ssociations
SECTION I
Manner of Establishing $ssociations and Their )inds
ARTICLE 11/. Articles of association #! which two or more persons o#ligate themseles
to place in a common fund an! propert!, industr!, or an! of these things, in order to
o#tain profit, shall #e commercial, no matter what its class ma! #e, proided it has #een
esta#lished in accordance with the proisions of this Code. "%%&letcd
After a commercial association has #een esta#lished, it shall hae legal representation in
all its acts and contracts.
ARTICLE 110. Articles of mercantile association, e(ecuted with the essential re-uisites
of law, shall #e alid and #inding #etween the parties thereto, no matter what form,
conditions, and com#inations, legal and honest, are included therein, proided the! are
not e(pressl! prohi#ited #! this Code.
The esta#lishment of land, agricultural, issuing, and discount #an.s, of loan and mortgage
loan associations, of concessionaires of pu#lic wor.s, manufacturing, general
warehouses, of mines, of the esta#lishment of principals and life annuities, of insurance
and other associations, the purpose of which is an! industrial or commercial enterprise
shall #e unrestricted.
ARTICLE 112. Contracts e(ecuted #etween commercial associations and an! other
persons capa#le of #inding themseles shall also #e alid and #inding, proided the same
are legal and honest, and that the re-uisites mentioned in the following article hae #een
complied with.
ARTICLE 113. Eer! commercial association, #efore #eginning its #usiness, must state
its articles, agreements, and conditions in a pu#lic instrument, which shall #e presented
for record in the mercantile registr!, in accordance with the proisions of Article 10.
Additional instruments which modif! or alter in an! manner whatsoeer the original
contracts of the association are su#,ect to the same formalities, in accordance with the
proisions of Article "&.
The mem#ers can not ma.e priate agreements, #ut all must appear in the articles of
association.
ARTICLE 1"%. The persons in charge of the management of the association who iolate
the proisions of the foregoing article shall #e responsi#le in solidum to the person not
mem#ers of the association with whom the! ma! hae transacted #usiness in the name of
the association.
ARTICLE 1"1. Commercial associations shall #e goerned #! the clauses and conditions
of their articles, and in all that is not determined and prescri#ed therein, #! the proisions
of this Code.
ARTICLE 1"". As a general rule, commercial associations shall #e esta#lished #! the
adoption of an! of the following forms:
1. The regular general copartnership in which all the partners, under a
collectie and commercial name, #ind themseles to participate, in
the proportion the! ma! esta#lish, in the same rights and
o#ligations.
". The limited copartnership to which one or more persons contri#ute a
specific amount of capital to a common fund, to #ecome lia#le for
the #usiness transactions of the firm e(ecuted e(clusiel! #! others
under a collectie name.
'. The corporation, in which the mem#ers form the common fund #!
means of specific parts or portions, represented #! shares or in an!
other un-uestiona#le manner, leaing its management to
remoa#le managers or administrators, who represent the compan!
under an appropriate denomination according to the purpose or
underta.ing for which funds are to #e emplo!ed.
ARTICLE 1"'. Commercial associations ma! #e, according to the character of their
operations:
Loan associations.
Can.s of issue and discount.
9ortgage loan associations.
9ining associations.
Agricultural #an.s.
Concessionaires of railroads, tramwa!s, and pu#lic wor.s.
8eneral warehouse companies.
And of other .inds, proided their agreements are legal, and industr! or
commerce is their o#,ect.
ARTICLE 1"). 9utual fire insurance companies, companies of tontine life com#inations
for help in old age, and companies, of an! other class, as well as co+operatie companies
of production, loan, or consumption, shall onl! #e considered commercial, and shall #e
su#,ect to the proisions of this Code when the! are engaged in commercial transactions
which are not mutual or when the! are conerted into associations charging a fi(ed
premium.
SECTION II
General Copartnerships
ARTICLE 1"&. The articles of general copartnership must state:
The names, surnames, and domiciles of the partners.
The firm name.
The names and surnames of the partners to whom the management of the firm and the use
of its signature is intrusted.
The capital which each partner contri#utes in cash, credits, or propert!, stating the alue
gien the latter or the #asis on which their appraisement is to #e made.
The duration of the copartnership.
The amounts which, in a proper case, are to #e gien to each managing partner annuall!
for his priate e(penses.
There ma! #e also included in the articles the other legal agreements and special
conditions which the partners ma! wish to ma.e.
ARTICLE 1"/. The general copartnership must transact #usiness under the name of all its
mem#ers, of seeral of them, or of one onl!, it #eing necessar! to add in the latter two
cases to the name or names gien the words Fand compan!.F
This collectie name shall constitute the firm name or signature, in which there shall
neer #e included the name of a person who is not at the time a partner in the association.
Those who not #eing mem#ers of the partnership, include their names in the firm name
shall #e su#,ect to ,oint lia#ilit!, without pre,udice to the penal lia#ilit! which ma! #e
proper. iatdc"%%&
ARTICLE 1"0. All the mem#ers of the general copartnership, #e the! or #e the! not
managing partners of the same, are lia#le personall! and in solidum with all their
propert! for the results of the transactions made in the name and for the account of the
partnership, under the signature of the latter, and #! a person authori1ed to ma.e use
thereof.
ARTICLE 1"2. The partners not dul! authori1ed to ma.e use of the firm signature shall
not ma.e the compan! lia#le through their acts and contracts, een though the! e(ecute
them in the name of the latter and under its signature.
The ciil or criminal lia#ilit! for these acts shall #e incurred e(clusiel! #! the authors
thereof.
ARTICLE 1"3. If the management of the general copartnerships has not #een limited #!
a special instrument to one of its mem#ers, all of them shall hae the right to ta.e part in
the direction and management of the common #usiness and the partners present shall
come to an agreement with regard to all contracts or o#ligations in which the compan!
ma! #e interested.
ARTICLE 1'%. Bo new o#ligation shall #e contracted against the will of one of the
managing partners, should he hae e(pressl! stated it$ #ut if, howeer, it should #e
contracted it shall not #e annulled for this reason, and shall hae its effects without
pre,udice to the lia#ilit! of the partner or partners who contracted it to reim#urse the firm
for an! loss occasioned #! reason thereof.
ARTICLE 1'1. 7hould there #e partners especiall! intrusted with the management, the
other partners can not oppose nor hinder the actions of the former nor preent their
effects. "%%&cda
ARTICLE 1'". ;hen the special power to manage and to use the signature of the
copartnership has #een conferred in an e(press condition of the articles of copartnership,
the person who o#tained the same can not #e depried thereof$ #ut should the latter ma.e
an improper use of said power, and his management cause serious damage to the common
capital, the rest of the partners ma! appoint from among themseles a comanager to ta.e
part in all transactions, or the! ma! re-uest the rescission of the articles #efore the ,udge
or court of competent ,urisdiction, who shall declare them annulled should such damage
#e proen. "%%&cdtai

ARTICLE 1''. In general copartnerships all the partners, #e the! managing or not, hae
a right to e(amine the condition of the administration and of the #oo..eeping and to
ma.e the o#,ections which the! ma! consider proper, in accordance with the agreements
contained in the articles of copartnership or in the general proisions of law.
ARTICLE 1'). Transactions made #! the partners in their own names and with their
priate funds shall not #e communicated to the compan! nor shall it #e lia#le therefor,
proided the! are of a .ind that partners ma! legall! ma.e for their own account and ris..
ARTICLE 1'&. The partners can not appl! the funds of the copartnership nor ma.e use of
the firm signature for #usiness for their own account$ and should the! do so, the! shall
lose to the #enefit of the compan! that part of the profit which in the transaction or
transactions made in this manner ma! #e due them, and the articles of copartnership in so
far as the! are concerned ma! #e annulled, without pre,udice to the return of the funds
the! ma! hae made use of, and to indemnif! the copartnership for all losses and
damages which it ma! hae suffered.
ARTICLE 1'/. In general copartnerships which do not transact #usiness in a specific
#ranch of commerce their mem#ers can not ma.e transactions for their own account
without the preious consent of the copartnership, which can not refuse it without
proing that it will suffer there#! manifest and pecuniar! damage.
*artners who do not compl! with this proision shall contri#ute to the common funds the
profit the! ma! derie from these transactions and the! shall indiiduall! suffer the losses
should there #e an!.
ARTICLE 1'0. If the copartnership should hae determined in its articles of
copartnership the #ranch of commerce in which it is to engage, the partners ma! legall!
transact an! commercial #usiness the! ma! desire, proided it does not #elong to the .ind
of transactions the copartnership of which the! are partners is engaged in, unless there is
a special agreement to the contrar!.
ARTICLE 1'2. An industrial partner 5socio industrial6 can not engage in an! .ind of
#usiness transactions whatsoeer, unless e(pressl! permitted to do so #! the compan!,
and should he do so the capitalist partners 5socios capitalistas6 ma!, at their option,
remoe them from the compan!, depriing them of the profits due them in the same, or
the! ma! en,o! the profits said partner ma! hae o#tained in iolation of this proision.
ARTICLE 1'3. In general or in limited copartnerships, no partner ma! remoe or diert
from the common funds a larger amount than that assigned to each one for his personal
e(penses$ should he do so, he ma! #e compelled to repa! it as if he had not completed the
portion of the capital which he #ound himself to contri#ute to the copartnership.
ARTICLE 1)%. 7hould there not hae #een stated in the articles of copartnership the
portion of the profits to #e receied #! each partner, said profits shall #e diided pro rata
in accordance with the interest each one ma! hae in the copartnership, the industrial
partners, if there are an!, should #e considered in the distri#ution of profits as among the
partners who hae contri#uted the smallest capital.
ARTICLE 1)1. Losses shall #e computed in the same proportion among the capitalist
partners without including the industrial partners, unless #! special agreement the latter
hae #een constituted as participants therein.
ARTICLE 1)". The copartnership must reim#urse the partners of the e(penses the! ma!
incur, and indemnif! them for the damages the! ma! suffer, when caused immediatel!
and directl! #! the #usiness which the former ma! intrust to them$ #ut it shall not #e
#ound to indemnif! for the losses the partners ma! incur #! their own fault, in an
accidental case, or on account of an! other reason, independent of the #usiness, during
the time the! were transacting the same.
ARTICLE 1)'. Bo partner can transfer to another person the interest he ma! hae in the
copartnership, nor can he su#stitute another person in his place for the discharge of the
wor. under his charge in the partnership administration, without the preious consent of
the partners.
ARTICLE 1)). The damage suffered #! the copartnership #! reason of malice, a#use of
powers, or serious negligence on the part of one of the partners, shall o#ligate the author
thereof to indemnif! it, should the other partners re-uest it, proided an e(press or irtual
approal or ratification of the act on which the claim is #ased can not #e deduced in an!
manner whatsoeer. lpe"%%&cda
SECTION III
%imited Copartnerships
ARTICLE 1)&. The same statements shall #e included in the articles of limited
partnerships which are re-uired for those of general copartnerships.
ARTICLE 1)/. Limited copartnerships must transact #usiness under the name of all the
general mem#ers thereof, of seeral of them, or of one onl!, it #eing necessar! to add in
the latter two cases to the name or names gien, the words Fand compan!F and in all
cases the words Flimited copartnershipF.
ARTICLE 1)0. This collectie name shall constitute the firm name, in which there ma!
neer #e included the names of limited partners.
7hould an! limited partner include his name or permit its inclusion in the firm name, he
shall #e su#,ect, with regard to persons not mem#ers of the copartnership, to the same
lia#ilities as the managing partners, without ac-uiring an! more rights than those
corresponding to his character of a limited partner.
ARTICLE 1)2. All the general mem#ers of the copartnership, #e the! or #e the! not
managing partners of the limited copartnership, shall #e lia#le personall! and in solidum
for the results of the transactions of the latter in the same manner and to the same e(tent
as in general copartnerships, as set forth in Article 1"0.
The! shall furthermore hae the same rights and o#ligations which are prescri#ed in the
foregoing sections for partners in general copartnerships.
The lia#ilit! of limited partners for the o#ligations and losses of the copartnership shall
#e limited to the funds which the! contri#uted or #ound themseles to contri#ute to the
limited copartnership, with the e(ception of the case mentioned in Article 1)0.
Limited partners can not ta.e an! part whatsoeer in the management of the interests of
the copartnership, not een in the capacit! of special agents of the managing partners.
ARTICLE 1)3. The proisions of Article 1)) shall #e applica#le to partners in limited
copartnerships.
ARTICLE 1&%. Limited partners can not e(amine the condition and situation of the
management of the partnership e(cept at the times and under the penalties prescri#ed in
the articles of copartnership or in additional ones.
7hould the articles not contain an! proision of this character the #alance of the
copartnership shall necessaril! #e communicated to the limited copartners at the end of
the !ear, e(hi#iting for a period which can not #e less than fifteen da!s the e(act data and
documents proing said #alance and permitting the transactions to #e understood.
SECTION IV
Corporations
ARTICLE 1&1. The articles of incorporation must include:
The names, surnames, and domiciles of the incorporators.
The name of the corporation.
The designation of the person or persons who are to direct the affairs of the same and the
manner of filling acancies.
The corporation capital, stating the alue at which propert!, not cash, contri#uted has
#een appraised, or the #asis on which the appraisement is to #e made.
The num#er of shares into which the corporation capital is diided and represented.
The period or periods within which the portion of the capital not su#scri#ed at the time of
incorporation is to #e contri#uted, otherwise stating the person or persons authori1ed to
determine the time and manner in which the assessments are to #e made.
The time the corporation is to continue in e(istence.
The transactions the capital is to #e emplo!ed in.
The periods and manner of calling and holding general ordinar! meetings of mem#ers,
and the cases and manner of calling and holding e(traordinar! ones.
The su#mission to the ote of the ma,orit! of the meeting of mem#ers, dul! called and
held, of such matters as ma! properl! #e #rought #efore the same.
The manner of counting and constituting the ma,orit!, in order to adopt #inding
resolutions, at ordinar! as well as at e(traordinar! meetings.
There ma! furthermore #e included in the articles all legal agreements and special
conditions the mem#ers ma! agree to.
ARTICLE 1&". The name of a corporation shall #e ade-uate to the purpose or purposes
of the #ranch of #usiness adopted.
Bo name can #e adopted identical with that of a pre+e(isting corporation.
ARTICLE 1&'. The lia#ilit! of the mem#ers of a corporation for the o#ligations and
losses of the same shall #e limited to the funds the! contri#uted or #ound themseles to
contri#ute to the corporate capital. iatdclet
ARTICLE 1&). The corporate capital, composed of the stoc. and of the accrued profits,
shall #e lia#le for the o#ligations contracted in its management and administration #! a
person legall! authori1ed thereto and in the manner prescri#ed in the articles of
incorporation, #!+laws, or regulations.
ARTICLE 1&&. The managers of corporations shall #e designated #! the mem#ers thereof
in the manner determined in the articles or incorporation, #!+laws, or regulations.
ARTICLE 1&/. The managers of a corporation are its agents, and during the time the!
o#sere the rules of the commission the! shall not #e su#,ect to personal nor to ,oint
lia#ilit! on account of the corporation #usiness$ and if #! reason of infraction of the laws
and the statutes of the corporation, or if #! acting in iolation of the legitimate resolutions
adopted at general meetings, the! should incur losses, and there should #e seeral persons
responsi#le therefor, each one of the latter shall answer pro rata.
ARTICLE 1&0. Corporations are under the o#ligation to pu#lish monthl! in the Gaceta
de Madrid detailed #alance of the #usiness, stating the rate at which the #alance on hand
in securities is calculated, as well as all .inds of propert!, the prices of which can #e
-uoted on e(change.

ARTICLE 1&2. The mem#ers or stoc.holders of corporations can not e(amine the
management thereof nor ma.e an! inestigation with regard thereto e(cept at the times
and in the manner prescri#ed #! their statutes and regulations.
ARTICLE 1&3. Corporations e(isting prior to the pu#lication of this Code, and which are
still goerned #! their regulations and #!+laws, ma! choose #etween continuing to #e
goerned there#! or #! the proisions of this Code.
SECTION V
#hares
ARTICLE 1/%. The common capital of limited copartnerships #elonging to the special
partners and that of corporations ma! #e represented #! shares or other e-uialent
certificates.
ARTICLE 1/1. The shares ma! #e pa!a#le to order or to #earer.
ARTICLE 1/". The shares pa!a#le to order must #e recorded in a #oo. which the
copartnership or corporations shall .eep for this purpose, and in which su#se-uent
transfers shall #e entered.
ARTICLE 1/'. The shares pa!a#le to #earer shall #e enumerated, and shall #e recorded
in stu# #oo.s. cdasia"%%&
ARTICLE 1/). In all certificates of shares, either pa!a#le to order or to #earer, there shall
alwa!s #e entered the sum which has #een paid on account of its nominal alue or that
the! are full! paid.
In shares pa!a#le to order, until the full alue thereof has #een paid, the first su#scri#er or
holder of the share, his assignee, and each person succeeding the latter, should the! #e
transferred, shall answer of the pa!ment of the portion not contri#uted, ,ointl! and at the
option of the directors of the corporations, against whose lia#ilit!, thus determined, no
agreement whatsoeer suppressing it can #e esta#lished.
After an action to enforce said lia#ilit! has #een instituted against an! of the persons
mentioned in the foregoing paragraph no new action against an! other of the holders or
assignees of the shares can #e instituted, e(cept when it is proed that the person who
was first or preiousl! proceeded against is insolent.
;hen shares not full! paid for are pa!a#le to #earer the persons who appear as the
holders thereof onl! shall #e lia#le for the pa!ment of their share. 7hould the! not appear,
ma.ing a personal claim impossi#le, the corporations or copartnerships ma! resole to
annul the certificates corresponding to the shares on which the re-uisite -uotas for the
full pa!ment of the alue of each one hae not #een satisfied. In such case the
copartnerships or corporations shall hae the right to issue duplicate certificates of the
same shares, in order to cone! them for and against the account of the defaulting holders
of the certificates annulled.
All shares shall #e pa!a#le to order until &% per cent of their nominal alue has #een paid
in. After said &% per cent has #een paid in the! ma! #e conerted into shares pa!a#le to
#earer, if it is thus resoled upon #! the copartnership or corporations in their #!+laws or
#! means of special acts su#se-uent to the same.
ARTICLE 1/&. Bew series of stoc. can not #e issued #efore the total pa!ment of the
series preiousl! issued has #een made. An! agreement to the contrar! included in the
articles of co+partnership or of corporation, in the #!+laws or regulations, or an!
resolution adopted at a general meeting of mem#ers in opposition to this precept shall #e
null and of no alue.
ARTICLE 1//. Corporations ma! onl! purchase their own shares with the profits of their
capital for the purpose of amorti1ation.
In case of a reduction in the corporate capital, when it is proper in accordance with the
proisions of this Code, there ma! also #e amorti1ation with a portion of said capital, the
legal measures which ma! #e considered adisa#le #eing emplo!ed.
ARTICLE 1/0. Corporations can neer gie guaranties #! pledging their own shares.
ARTICLE 1/2. Corporations sitting in a general meeting of stoc.holders preiousl!
called for the purpose shall hae the power to resole upon the reduction or increase of
the corporate capital.
In no case can these resolutions #e adopted at ordinar! meetings unless it was stated, in
the call or sufficient time in adance, that an increase or reduction of the capital would #e
discussed and oted upon.
The #!+laws of each corporation shall fi( the num#er of mem#ers and the amount of
capital which shall #e re-uired to #e present at meetings at which said capital is to #e
reduced or increased or in which the modification or dissolution of the corporation is to
#e treated of.
In no case shall it #e less than three+fourths of the num#er of the former and two+thirds of
the nominal alue of the latter.
The directors ma! immediatel! ta.e steps to carr! out the resolution of reduction adopted
legall! at a general meeting if the capital remaining after said reduction has #een made
e(ceeds 0& per cent of the amount of the de#ts and o#ligations of the corporation.
<therwise the reduction can not ta.e place until all the de#ts and o#ligations pending at
the date of the resolution hae #een li-uidated and paid, unless the copartnership or
corporation o#tains the preious consent of its creditors.
:or the e(ecution of this article the directors shall present to the ,udge or court an
inentor!, in which the stoc. held shall #e appraised at the aerage -uotation for the last
-uarter and the propert! #! a capitali1ation of the profits accruing there from according to
the legal rate of interest on mone!.
ARTICLE 1/3. :unds #elonging to foreigners inested in corporations shall not #e
su#,ect to reprisals in case of war.
SECTION VI
Rights and Obligations of Members
ARTICLE 10%. If within the period agreed upon an! mem#er does not contri#ute to the
common funds the amount of capital he has o#ligated himself to contri#ute, the
association ma! choose #etween proceeding to o#tain an e(ecution against his propert! to
recoer the portion of capital not contri#uted, or to rescind the contract with regard to the
mem#er in default, retaining the amounts which #elong to him in the common capital. L*rE%&
ARTICLE 101. A mem#er who, for an! reason whatsoeer, dela!s the full contri#ution of
his capital, after the period fi(ed in the articles of association has elapsed, or should said
period not hae #een fi(ed therein, from the time the fund is esta#lished, shall pa! into
the common funds the legal interest on the mone! he has not deliered at the proper time
and the amount of the damages and losses he ma! hae occasioned #! reason of him
default.
ARTICLE 10". ;hen the capital or the part thereof which a partner is to contri#ute
consists of propert!, the appraisement thereof shall #e made in the manner prescri#ed in
the articles of association, and should there #e no special agreement on the matter the
appraisement shall #e made #! e(perts selected #! #oth parties and according to current
prices, su#se-uent increases or reductions therein #eing for the account of the association.
In case of disagreement #etween the e(perts a third one shall #e designated, selected #!
lot from among persons of his class who appear as pa!ing the highest ta(es in the
localit!, in order that he ma! ad,ust said disagreement.
ARTICLE 10'. The managers or directors of commercial associations can not refuse to
permit partners or stoc.holders to e(amine all the ouchers of the #alances drawn up
showing the condition of the management, with the e(ception of the proisions of
Articles 1&% and 1&2.
ARTICLE 10). The creditors of a mem#er shall not hae, with regard to the association,
not een in the case of the failure of the same, an! further right than that of attaching and
collecting the amounts which ma! #e due the de#tor partner #! reason of profits or
li-uidation.
The proisions contained in the latter part of the foregoing paragraph shall not #e
applica#le to stoc. companies, e(cept when said stoc. is pa!a#le to order, or when the
legitimate owner thereof is esta#lished without -uestion, should it #e pa!a#le to #earer.
SECTION VII
#pecial Rules for %oan $ssociations
ARTICLE 10&. The following transactions are mainl! the #usiness of these associations:
1. To receie su#scriptions or contract loans for the goernment, and
proincial or municipal corporations.
". To ac-uire pu#lic funds and shares or securities of all .inds of
industrial underta.ings or of loan associations.
'. To create companies of railroads, canals, factories, mines, doc.s,
general warehouses, lighting, e(caations and #rea.ing of ground,
irrigation, drainage, and an! other industrial enterprises or those of
pu#lic utilit!.
). To effect the fusion or transformation of all .inds of commercial
associations, and ta.e charge of the issue of shares or securities of
the same.
&. To administer and lease all .inds of ta(es and pu#lic serices, and
e(ecute for their own account or assign, with the approal of the
8oernment, contracts su#scri#ed for the purpose.
/. To sell or gie as securit! all shares, #onds and securities ac-uired #!
the association, and e(change them when the! consider it
adisa#le.
0. To ma.e loans on pu#lic effects, shares or #onds, produce,
commodities, crops, estates, factories, essels and their cargoes
and other propert!, and open credits in account current, receiing
as a guarant! propert! of the same .ind.
2. To effect for the account of other associations or persons all .ind of
collections and pa!ments, and transact an! other #usiness for the
account of others.
3. To receie on deposit all .inds of negotia#le paper and cash, and .eep
current accounts with an! corporations, copartnerships, or persons.
1%. To draw and discount #ills of e(change and other e(change paper.
ARTICLE 10/. Loan associations ma! issue o#ligations for an amount e-ual to that
inested in, and which is represented #! securities on hand, in accordance with the
proisions of the title relating to the commercial registr!.
These o#ligations shall #e pa!a#le to order or to #earer at fi(ed period, which shall not #e
less than thirt! da!s in an! case, with the amorti1ation, should there #e an!, and the rate
of interest fi(ed.
SECTION VIII
Banks of (ssue and *iscount

ARTICLE 100. The following is the principal #usiness of these institutions:
=iscounts, deposits, current accounts, collections, loans, drafts, and contracts with the
8oernment or pu#lic corporations.
ARTICLE 102. Can.s can not ma.e transactions e(tending oer a period of more than
ninet! da!s.
Beither shall the! discount drafts, promissor! notes, or other commercial paper without
the guarant! of two responsi#le firms.
ARTICLE 103. Can.s ma! issue notes pa!a#le to #earer, #ut their admission in #usiness
transactions shall not #e compulsor!. This priilege of the issue of notes pa!a#le to #earer
shall continue in suspense, howeer, during the time the priilege actuall! en,o!ed #! the
7panish *hilippine Can. 5Banco Espa+ol !ilipino6, #! irtue of special laws, continues.
ARTICLE 12%. Can.s shall .eep in their aults in cash at least one+fourth of the amount
of the deposits and current cash accounts and of notes in circulation. iatdc"%%&
ARTICLE 121. Can.s are under the o#ligation to change their notes for cash upon their
presentation #! the #earer.
Boncompliance with this o#ligation shall gie rise to an action to secure a ,udgment in
faor of the #earer, after a demand for pa!ment, through a notar!.
ARTICLE 12". The alue of the notes in circulation, together with the sum represented
#! the deposits and current accounts, can not e(ceed, in an! case, the amount of the cash
resere and of the securities on hand which can #e reali1ed within the ma(imum period
of ninet! da!s.
ARTICLE 12'. Can.s of issue and discount shall pu#lish, at least once a month, and
under the lia#ilit! of their directors, statements of their condition in the 8aceta of 9anila
and in the official #ulletin, where there is one.
SECTION IX
Railroads and Other Public ,orks Companies
ARTICLE 12). The following are the principal transactions of these companies:
1. The construction of railroads and other pu#lic wor.s of an! .ind
whatsoeer.
". The operation thereof, either in perpetuit! or during the period of time
fi(ed in the concession.
ARTICLE 12&. The capital stoc. of the compan!, together with the su#sid!, should there
#e an!, shall represent at least half the amount of the total estimate of the wor..
The companies can not esta#lish themseles #efore half of the capital stoc. has #een
su#scri#ed to and "& per cent thereof has #een reali1ed.
ARTICLE 12/. Railroad companies and companies of other pu#lic wor.s ma! issue
#onds pa!a#le to #earer or to order unrestrictedl! and without further limitations than
those contained in this Code and those esta#lished in their respectie #!+laws.
These issues must #e recorded in the commercial registr! of the proince$ and if the
#onds are mortgage #onds, said issues shall furthermore #e recorded in the escribania or
receptoria in charge of the registr! of propert!.
The issues of prior dates shall hae preference oer su#se-uent ones for the pa!ment of
coupons and for the amorti1ation of the #onds, should there #e an!.
ARTICLE 120. The #onds issued #! companies shall #e su#,ect to amorti1ation or not, at
their option, and in accordance with the proisions of their #!+laws.
;heneer railroads or other pu#lic wor.s en,o!ing a su#sid! from the 7tate are in
-uestion, or for the construction of which a legislatie or administratie concession was
granted, if the concession is temporar!, the #onds issued #! the concessionaire compan!
shall #e withdrawn #! amorti1ation or e(tinguished within the period of said concession,
and the 7tate shall receie the wor. at the termination of this period free from all
incum#rances.
ARTICLE 122. Railroad companies and other pu#lic wor. companies ma! sell, assign,
and transfer their rights in the respectie underta.ings, and ma! also com#ine with other
similar companies.
In order that these transfers and fusions ma! #e effectual, it shall #e necessar! G
1. That the stoc.holders unanimousl! agree thereto, unless it is otherwise
prescri#ed in the #!+laws with relation to a change in the o#,ect of
the compan!.
". That all the creditors of said companies also agree thereto. This consent
shall not #e necessar! when the purchase or fusion ta.es place
without confounding the guaranties and mortgages and when the
creditors retain their respectie rights in full.
ARTICLE 123. :or the transfers and fusions of the companies referred to in the foregoing
article no authori1ation whatsoeer shall #e necessar! from the goernment, een though
the wor. has #een declared of pu#lic utilit! for the purpose of the right of the e(ercise of
eminent domain, unless the compan! en,o!s a direct su#sid! from the 7tate, or has #een
incorporated #! a law or other administratie proision.
ARTICLE 13%. The action to secure an e(ecution referred to in the law of ciil procedure
with regard to the due coupons of securities issued #! railroad companies and companies
of other pu#lic wor.s, as well as with relation to the #onds drawn #! lot for amorti1ation,
should there #e an!, can onl! #e #rought against the net receipts of the compan! and
against the other propert! owned #! the same, which is not a part of the road, or wor.,
nor necessar! for the operation. "%%&L*rE
ARTICLE 131. Railroad and other pu#lic wor. companies ma! emplo! the funds
remaining from the construction, operation, and pa!ment of credits when the! fall due, in
the manner the! ma! deem fit, in accordance with their #!+laws.
7aid surplus shall #e inested at such times, as not to leae in an! case the construction,
preseration, operation, and pa!ment of credits unattended to, under the lia#ilit! of the
directors.
ARTICLE 13". After the forfeiture of a concession has #een declared the creditors of a
compan! shall hae as a guarant!:
1. The net receipts of the compan!.
". ;hen said receipts are not sufficient the net proceeds from the wor.s
sold at pu#lic auction for the time still remaining of the concession.
'. The other propert! owned #! the compan!, if it does not constitute part
of the road or of the wor., or is not necessar! for its moement or
operation.
SECTION X
General ,arehouse $ssociations
ARTICLE 13'. The following are the principal transactions of the associations:
1. The deposit, preseration, and custod! of produce and merchandise
intrusted to them.
". The issue of receipts to order or to #earer.
ARTICLE 13). The receipts issued #! general warehouse associations for the produce
and merchandise the! accept to care for shall #e negotia#le, shall #e transferred #!
indorsement, assignment, or in an! other manner transferring ownership, according as to
whether the! are issued to order or to #earer, and shall hae the force and alue of
commercial #ills of lading.
These receipts must necessaril! state the class of goods, with the num#er or amount each
one represents.
ARTICLE 13&. The owner of the receipts is ested with the full ownership of the
commodities deposited in the warehouses of the association, and shall #e e(empted from
all lia#ilit! for claims #rought against the receier, the indorsers, or prior owners, e(cept
if said claims arise from the transportation, storage, and preseration of the merchandise.
ARTICLE 13/. If a creditor who has legal possession of a receipt as securit! should not
#e paid on the da! his claim falls due, he ma! re-uire the association to sell the goods on
deposit sufficient to coer his credit, and shall hae preference oer other de#ts of the
depositor, with the e(ception of those mentioned in the foregoing article, who shall en,o!
the preference.
ARTICLE 130. The sales referred to in the preceding article shall #e made in the
warehouse of the association, without the necessit! of a ,udicial decree, at a pu#lic
auction preiousl! announced, and through a licensed #ro.er, where there is an!, and
otherwise through a notar! or the person discharging his duties.
ARTICLE 132. 8eneral warehouse associations shall in all cases #e lia#le for the identit!
and preseration of the goods on deposit, according to law relating to deposits for which
compensation is agreed on.
SECTION XI
Mortgage %oan $ssociations or Banks
ARTICLE 133. The following shall #e the principal transactions of these associations or
#an.s:
1. To ma.e loans of real estate on time.
". To issue mortgage #onds and certificates.
ARTICLE "%%. Loans shall #e made on mortgages of real estate the ownership of which
is recorded in the registr! in the name of the person creating said mortgage, and shall #e
repaid in annual pa!ments.
ARTICLE "%1. These associations and #an.s can not issue #onds nor certificates to the
#earer during the time the priilege actuall! en,o!ed #! irtue of special laws #! the
9ortgage Can. of 7pain continues.
ARTICLE "%". Loans made to proinces and to towns are e(cepted from the mortgage
re-uired #! Article "%% when said proinces or towns are legall! authori1ed to contract
loans within the limit of said authori1ation, and proided the repa!ment of the capital
loaned, together with interest and e(penses, is assured #! reenues, ta(es, and capitals, or
surta(es or special imports.
Loans to the 7tate are also e(cepted which can #e made, furthermore, on promissor!
notes of purchasers of national propert!. L*rE%&cd
Loans to the 7tate, to proinces, or to towns ma! #e repaid within a period of less than
fie !ears.
ARTICLE "%'. In no case ma! loans e(ceed half the alues of the propert! on which the
mortgage is to #e created.
The #asis and manner of appraising the real propert! shall #e fi(ed e(actl! in the #!+laws
or regulations.
ARTICLE "%). The amount of the coupon and the rate of amorti1ation of mortgage
certificates, which are issued #! irtue of a loan, shall neer e(ceed the amount of the net
annual profits which the real estate offered and ta.en in mortgage as securit! for the said
loan produce on an aerage during fie !ears. The computation shall alwa!s #e made
with relation to the loan, the income of the propert! mortgaged, and the annual premium
of the certificates issued #! irtue of said mortgage. This annuit! ma! at an! time #e less
than the net income of the respectie real estate mortgaged as securit! for the loan and for
the issue of the certificates.

ARTICLE "%&. ;hen the real estate mortgaged diminishes in alue #! )% per cent, the
#an. ma! re-uest the increase of the mortgage in order to coer said depreciation, or the
annulment of the contract, and the de#tor shall choose #etween these two measures.
ARTICLE "%/. 9ortgage loan #an.s ma! issue mortgage certificates to an amount e-ual
to the total alue of the loans on real estate.
The! ma!, furthermore, issue special o#ligations for the amount of the loans to the 7tate,
to proinces, or to towns.
ARTICLE "%0. The mortgage certificates and special o#ligations treated of in the
foregoing article shall #e pa!a#le to order or to #earer, with or without amorti1ation, for
short or long periods, with or without premium.
These certificates and o#ligations, their coupons and the premiums, shall #e the #asis for
an e(ecution in the manner prescri#ed in the law of ciil procedure.
ARTICLE "%2. The mortgage certificates and special o#ligations, as well as their interest
and coupons, and the premiums assigned to them, shall #e secured, with preference oer
all other creditors or o#ligations, #! the credits and loans in faor of the #an. or
association which ma! hae issued the same and which represent said credits and loans,
#eing, therefore, ,ointl! and seerall! lia#le for the pa!ment thereof.
;ithout pre,udice to this special guarant!, the! shall en,o! the general guarant! of the
capital of the association$ also with preference in regard to the latter oer the credits
resulting from other transactions.
ARTICLE "%3. 9ortgage loan #an.s ma! also ma.e loans secured #! mortgage,
repa!a#le in a period of less than fie !ears.
These loans at short time shall #e without amorti1ation, and shall not authori1e the issue
of mortgage o#ligations or certificates, and must #e made from the capital of the common
funds and from the accrued profits.
ARTICLE "1%. 9ortgage loan #an.s ma! receie, with or without interest, capital on
deposit, and emplo! half thereof in ma.ing adances for a period not to e(ceed ninet!
da!s on their mortgage o#ligations and certificates, as well as on an! other deeds which
#an.s of issue and discount receie as securit!.
In case of default in pa!ment on the part of the person who secure the loan, the #an. ma!
demand the sale of the certificates or deeds gien as securit!, in accordance with the
proisions of Article '"'.
ARTICLE "11. All com#inations for mortgage loans, including mutual associations of
landowners, shall #e su#,ect, in so far as the issue of mortgage certificates and o#ligations
is concerned, to the rules contained in this section.
SECTION XII
#pecial Rules for $gricultural Banks and $ssociations
ARTICLE "1". The following shall #e the principal transactions of these associations:
1. To ma.e loans in cash or in .ind, for a period not to e(ceed three !ears,
on products, crops, cattle, or other special pledges or securities.
". To guarantee with their signature promissor! notes and paper
demanda#le within a period not to e(ceed ninet! da!s, in order to
facilitate its discount or negotiation to the owner or farmer.
'. <ther transactions, the purpose of which is to faor the #rea.ing or
improing of ground, draining of lands, and the deelopment of
agriculture and other industries related thereto.
ARTICLE "1'. Agricultural loan #an.s or associations ma! hae agents outside of their
domicile who ma! personall! answer for the solenc! of the landowners or tenants who
re-uest the assistance of the association, placing their signature on the promissor! note
which said association is to discount or indorse.
ARTICLE "1). The guarant! or indorsement placed #! these associations or their
representaties, or #! the agents referred to in the foregoing article, on the promissor!
notes of the landowner or farmer shall entitle the #earer thereof to demand their pa!ment
directl!, and to o#tain an e(ecution on the da! an! of the su#scriptions fall due.
ARTICLE "1&. The promissor! notes of the landowner or farmer, #e the! either held #!
the association or negotiated #! the same, shall when the! fall due gie rise to the
e(ecution which ma! #e proper, in accordance with the law of ciil procedure, against the
propert! of the landowner or farmer who ma! hae su#scri#ed them.
ARTICLE "1/. The interest and commission which the agricultural loan associations and
their agents or representaties are to receie shall #e unrestrictedl! stipulated within the
limits fi(ed #! the #!+laws.
ARTICLE "10. Agricultural loan associations can not deote to the transactions referred
to in paragraphs " and ' of Article "1" more than &% per cent of the common capital,
appl!ing the remaining &% per cent to the loans referred to in num#er 1 of the same
article.
SECTION XIII
Expiration and %i-uidation of Commercial $ssociations
ARTICLE "12. The partial rescission of the articles of general and limited commercial
copartnerships shall ta.e place in an! of the following causes:
1. ;hen a partner ma.es use of the common capital and of the firm name
for priate #usiness.
". ;hen a partner interferes in the management of the compan! who has
no right to do so, according to the conditions of the articles of
copartnership.
'. ;hen an! managing partner commits a fraud in the management or in
the #oo..eeping of the copartnership.
). ;hen an! partner fails to contri#ute to the common capital the amount
stipulated in the articles of copartnership, after haing #een
re-uested to do so.
&. ;hen a partner transacts commercial #usiness for his own account,
which is not lawful in accordance with the proisions of Articles
1'/, 1'0, and 1'2.
/. ;hen a partner who is under the o#ligation to render personal serices
to the copartnership a#sents himself, after haing #een re-uested to
return and compl! with his duties, and does not do so or does not
gie a good reason which temporaril! preents him from returning.
0. ;hen one or more partners fail to compl!, in an! manner whatsoeer,
with the o#ligations imposed in the articles of copartnership.
ARTICLE "13. The partial rescission of the copartnership will produce the annulment of
the articles in so far as the partner at fault is concerned, who shall #e considered as
e(cluded therefrom, re-uiring him to pa! the amount of the loss which ma! correspond to
him, should there #e an!, and the copartnership shall #e authori1ed to retain the funds he
ma! hae contri#uted to the common capital, until all the transactions pending at the time
of the rescission hae #een concluded and li-uidated, without allowing him to participate
in the profits nor giing him an! indemnification.
ARTICLE ""%. The lia#ilit! of the e(cluded partner as well as that of the copartnership to
third persons for all acts and o#ligations contracted in the name and for the account of the
latter, shall continue until the record of the partial rescission of the articles of
copartnership has #een made in the commercial registr!. cdasia
ARTICLE ""1. Associations of an! .ind whatsoeer shall #e completel! dissoled for
the following causes:
1. The termination of the period fi(ed in the articles of association or the
conclusion of the enterprise which constitutes its purpose.
". The entire loss of the capital.
'. The #an.ruptc! of the association.
ARTICLE """. 8eneral and limited copartnerships shall furthermore #e totall! dissoled
for the following causes:
1. The death of one of the general partners if the articles of copartnership
do not contain an e(press agreement that the heirs of the deceased
partner are to continue in the copartnership, or that said
copartnership will continue #etween the suriing partners.
". The insanit! of a managing partner or an! other cause which renders
him incapa#le of administering his propert!.
'. The #an.ruptc! of an! of the general partners.
ARTICLE ""'. Commercial associations shall not #e understood as e(tended #! the
implied or presumed will of the mem#ers after the period for which the! were constituted
has elapsed$ and if the mem#ers desire to continue in association the! shall draw up new
articles, su#,ect to all the formalities prescri#ed for their creation, according to the
proisions of Article 113.
ARTICLE ""). In general or limited copartnerships, created for an indefinite period, if
an! of the partners re-uests its dissolution, the other partners can not oppose it e(cept for
reasons of #ad faith on the part of the persons suggesting it.
It shall #e understood that a partner acts in #ad faith with regard to the dissolution of the
copartnership when he would there#! derie a priate profit which he would not receie
should the copartnership continue.
ARTICLE ""&. A mem#er who retires from a partnership on his own accord or who
suggests its dissolution can not preent pending transactions to #e concluded in the
manner most conenient to the common interests, and until said transactions are
concluded the diision of the propert! and assets of the copartnership shall not ta.e place.
cdasia
ARTICLE ""/. The dissolution of a commercial association, which proceeds from an!
other cause #ut the termination of the period for which it was constituted, shall not cause
an! pre,udice to third parties until it has #een recorded in the commercial registr!.
ARTICLE ""0. In the li-uidation and diision of the common assets the rules esta#lished
in the articles of association shall #e o#sered, and in their a#sence the rules contained in
the following articles.
ARTICLE ""2. :rom the time an association is declared in li-uidation the representation
of the managing mem#ers to ma.e new contracts and o#ligations shall cease, their
powers #eing limited as li-uidators to collecting the credits of the association, to
e(tinguishing the o#ligations preiousl! contracted as the! fall due, and to reali1ing
pending transactions. cdasia
ARTICLE ""3. In general or limited copartnerships, should there #e no opposition on the
part of an! of the partners, the person who managed the common funds shall continue in
charge of the li-uidation$ #ut should all the partners not agree thereto a general meeting
shall #e called without dela!, and the decision adopted at the same shall #e enforced with
regard to the appointment of li-uidators from among the mem#ers of the association or
not, as well as in all that refers to the form and proceedings of the li-uidation and the
management of the common funds.

ARTICLE "'%. >nder the penalt! of remoal the li-uidators shall G
1. =raw up and communicate to the mem#ers, within the period of twent!
da!s, an inentor! of the firm assets with a #alance of accounts of
the association in li-uidation, according to its #oo.s.
". Communicate in the same manner to the mem#ers eer! month the
condition of the li-uidation.
ARTICLE "'1. The li-uidators shall #e lia#le to the mem#ers for an! loss suffered #! the
common funds on account of fraud or serious negligence in the discharge of their dut!,
without there#! #eing understood as authori1ed to compromise or to su#mit to ar#itration
the common interests, unless the mem#ers hae e(pressl! granted them these priileges.
ARTICLE "'". At the conclusion of the li-uidation and when the time has come to ma.e
the diision of the common funds, according to the classifications made #! the
li-uidators, or #! the meeting of mem#ers, which an! of whom can re-uest to #e held for
this purpose, said li-uidators shall ma.e the diision within the period decided #! the
meeting.
ARTICLE "''. If an! of the mem#ers considers himself un,ustl! treated in the diision
made, he ma! ma.e use of his right #efore the ,udge or court of competent ,urisdiction.
ARTICLE "'). In the li-uidation of commercial associations in which minors or
incapacitated persons are interested, the fathers, mothers, or guardians of the latter shall
act, as ma! #e the case, with full powers, as though the #usiness were their own and all
the acts done and consented to #! said representaties for their principal shall #e alid
and irreoca#le without the right of restitution and without pre,udice to the lia#ilit! the
former ma! incur to the latter #! reason of their carelessness or negligence. cdasia
ARTICLE "'&. Bo mem#er can demand the delier! to him of the assets due him from
the common funds while all the de#ts and o#ligations of the association hae not !et #een
e(tinguished, or the amount thereof has not #een deposited, if the delier! can not at once
ta.e place.
ARTICLE "'/. There shall #e deducted from the first diisions made among the
mem#ers the sums the! ma! hae receied for personal e(penses or which hae #een
adanced them #! the compan! for an! other reason whatsoeer.
ARTICLE "'0. The priate propert! of the general partners which has not #een included
in the assets of the copartnership when it was formed can not #e sei1ed for the pa!ment
of the o#ligations contracted #! the copartnership until after the common assets hae
#een attached.
ARTICLE "'2. In corporations in li-uidation, the proisions of their #!+laws shall
continue to #e o#sered in so far as ordinar! or e(traordinar! general meetings are
concerned, as well as with relation to the accounts to #e gien of the progress of the
li-uidation, and to resole upon what ma! #e adisa#le for the common interests. cdasia
TITLE II
.oint $ccounts
ARTICLE "'3. 9erchants ma! hae an interest in the transactions of other merchants,
contri#uting thereto the amount of capital the! ma! agree upon, and participating in the
faora#le or unfaora#le results of said transactions in the proportion which the! ma! fi(.
ARTICLE ")%. Hoint accounts shall not #e su#,ect, with regard to their formation, to an!
formalit!, and ma! #e priatel! contracted orall! or in writing, and their e(istence ma! #e
proed #! an! of the means accepted in law, in accordance with the proisions of Article
&1.
ARTICLE ")1. In the transactions treated of in the two foregoing articles, no commercial
name common to all participants can #e adopted, nor can an! further direct credit #e
made use of e(cept that of the merchant who transacts and manages the #usiness in his
own name and under his indiidual lia#ilit!.
ARTICLE ")". *ersons transacting #usiness with the merchant carr!ing on the ,oint
#usiness shall onl! hae a right of action against the latter and not against the other
persons interested, and the latter, on the other hand, shall hae no right of action against
the third person who made the transaction with the manager unless said manager formall!
cedes his rights to them.
ARTICLE ")'. The li-uidation shall #e effected #! the manager, and after the
transactions hae #een concluded he shall render a proper account of its results.
TITLE III
Commercial Commissions
SECTION I
$gents
ARTICLE ")). A commercial commission shall #e considered that which inoles a
commercial act or transaction and in which the principal or the agent is a merchant or
commercial #ro.er.
ARTICLE ")&. The agents ma! discharge the commission, acting in his own name or in
that of the principal.
ARTICLE ")/. ;hen the agent transacts #usiness in his own name, it shall not #e
necessar! for him to state who is the principal and he shall #e directl! lia#le, as if the
#usiness were for his own account, to the persons with whom he transacts the same, said
persons not haing an! right of action against the principal, nor the latter against the
former, the lia#ilities of the principal and of the agent to each other alwa!s #eing
resered.
ARTICLE ")0. If the agent transacts #usiness in the name of the principal, he must state
that fact, and if the contract is in writing, he must state it therein or in the su#scri#ing
clause, giing the name, surname, and domicile of said principal.
In the case prescri#ed in the foregoing paragraph, the contract and the actions arising
therefrom shall #e effectie #etween the principal and the person or persons who ma!
hae transacted #usiness with the agent$ #ut the latter shall #e lia#le to the persons with
whom he transacted #usiness during the time he does not proe the commission, if the
principal should den! it, without pre,udice to the o#ligation and proper actions #etween
the principal and agent.
ARTICLE ")2. In case an agent should refuse the commission intrusted to him, he shall
#e o#liged to communicate his decision to the principal #! the -uic.est means possi#le,
#eing re-uired in an! case to confirm it #! the first mail after receiing the commission.
Ae shall also #e o#liged to e(ercise due care in the custod! and preseration of the
merchandise which the principal ma! hae forwarded to him until the latter appoints a
new agent, in iew of his refusal, or until, without awaiting a new designation, the court
has ta.en possession of the goods at the re-uest of the agent.
The noncompliance with an! of the o#ligations esta#lished in the two foregoing
paragraphs shall cause the agent to incur the lia#ilit! of indemnif!ing the principal for the
loss and damages which ma! arise.
ARTICLE ")3. The commission shall #e understood as accepted wheneer the agent
ta.es an! action in the discharge of the commission intrusted to him #! the principal
which is not limited to the action mentioned in the second paragraph of the foregoing
article.
ARTICLE "&%. The discharge of commissions re-uiring the dis#ursement of funds shall
not #e compulsor!, een though the! hae #een accepted, until the principal places the
sum necessar! for the purpose at the disposal of the agent.
The agent ma! also suspend the ta.ing of further action with regard to the commission
intrusted to him when, after haing made use of the sums receied, the principal should
refuse to forward the further funds re-uested #! the former.
ARTICLE "&1. If an agreement has #een made to adance the funds necessar! for the
discharge of the commission, the agent shall #e o#liged to suppl! them, e(cept in case of
the suspension of pa!ments or #an.ruptc! of the principal.
ARTICLE "&". The agent who, without legal cause, does not fulfill the commission
accepted or the performance of which he has #egun to carr! out, shall #e lia#le for all the
damages the principal ma! suffer #! irtue thereof.
ARTICLE "&'. After a contract has #een made #! the agent with all the legal formalities,
the principal must accept all the conse-uences of the commission, resering the right of
action against the agent #! reason of fault or omission committed in its fulfillment.
ARTICLE "&). The agent, who, in the discharge of his commission, acts in accordance
with the instructions receied from the principal, shall #e e(empted from all lia#ilit! to
the same.
ARTICLE "&&. As to matters not e(pressl! foreseen and proided for #! the principal,
the agent shall consult him, proided this is permitted #! the nature of the #usiness.
Cut should said agent #e authori1ed to proceed according to his ,udgment, or the
consultation #e not possi#le, he shall proceed with prudence and in accordance with
commercial customs, acting in the #usiness as if it were his own. 7hould an unforeseen
accident ma.e the e(ecution of the instructions receied ha1ardous or pre,udicial, in the
,udgment of the agent, he ma! suspend the fulfillment of the commission, communicating
the reasons for his action to the principal #! the speediest means of communication.
ARTICLE "&/. In no case shall the agent proceed against an e(press order of the
principal, #eing lia#le for all the losses and damages he ma! occasion his principal #!
doing so.
7imilar lia#ilit! shall #e incurred #! an agent in cases of malice or of a#andonment.
ARTICLE "&0. An agent shall #ear the ris.s for the cash he ma! hae in his hands #!
reason of the commission.
ARTICLE "&2. An agent who, without e(press authorit! from the principal, should
transact some #usiness at prices or conditions which are more onerous than the current
mar.et rates on the date on which it too. place, shall #e lia#le to the principal for the loss
he ma! hae caused him there#!, the statement that he made transactions at the same time
for his own account under similar circumstances not #eing admissi#le as an e(cuse.
ARTICLE "&3. An agent must o#sere the proisions contained in the laws and
regulations with regard to the transaction which has #een intrusted to him, and shall #e
lia#le for the results of their iolation or omission. If he acted in irtue of the e(press
order of the principal, the lia#ilities which ma! arise shall #e incurred #! #oth con,ointl!.

ARTICLE "/%. The agent shall fre-uentl! communicate to the principal the information
which ma! concern the successful result of the transaction, informing him of the
contracts he ma! hae e(ecuted #! the mail of the same or of the ne(t da! on which the!
too. place.
ARTICLE "/1. The agent shall personall! discharge the commissions he ma! receie,
and can not delegate them without the prior consent of the principal unless he has #een
preiousl! authori1ed to ma.e the delegation$ #ut he ma! under his lia#ilit! ma.e use of
his emplo!ees in the routine transactions which, according to general commercial
customs, are intrusted to the same.
ARTICLE "/". If the agent should hae made a delegation or su#stitution with the
authorit! of the principal he shall #e lia#le for the acts of the su#stitute, if the person to
whom the #usiness was delegated was selected #! him, #eing otherwise released from
lia#ilit!.
ARTICLE "/'. An agent is re-uired to render, in accordance with his #oo.s, a specific
and proper account of the amounts he receied for the commission, returning to the
principal, at the time and in the manner prescri#ed #! him, the surplus which appears in
his faor.
In case of tardiness he shall pa! the legal rate of interest.
The loss of surplus funds shall #e suffered #! the principal, proided the agent has
o#sered the instructions of the former with regard to their return.
ARTICLE "/). An agent who, haing receied funds to discharge a commission, inests
them in or uses them for a purpose other than that of the commission, shall pa! the
constituent the principal and its legal interest, and shall #e lia#le from the date on which
he receied the same, for the loss and damage caused #! reason of noncompliance with
the commission, without pre,udice to the criminal action which ma! #e proper.
ARTICLE "/&. The agent shall #e lia#le for the goods and merchandise he ma! receie,
in the terms and with the conditions and descriptions he has #een informed of in the
consignments, unless he proes, in receiing the same, the aerages and deterioration it
has suffered, comparing its condition with the contents of the #ill of lading or charter or
of the instructions receied from the principal.
ARTICLE "//. An agent who has in his possession merchandise or goods for the account
of another person, shall #e lia#le for their preseration in the condition in which he
receied the same. This lia#ilit! shall cease when their destruction or impairment is due
to accidental causes, force ma/eure, lapse of time, or #! a defect in the article.
In cases of total or partial loss on account of lapse of time or defect in the article, the
agent shall #e o#liged to proe the impairment of the merchandise in a legal manner,
informing the principal thereof as soon as it is o#sered.
ARTICLE "/0. Bo agent shall purchase for himself nor for another person what has #een
gien him to sell, nor shall he sell what he has #een re-uested to purchase, without the
permission of the principal.
Ae shall furthermore not #e permitted to change the mar.s on the goods he ma! hae
purchased or sold for the account of another.
ARTICLE "/2. Agents can not handle goods of the same .ind #elonging to different
parties, #earing the same mar., without distinguishing them #! a countermar., in order to
aoid confusion and for the purpose of designating the respectie propert! of each
principal.
ARTICLE "/3. If the goods intrusted to an agent should suffer some change, ma.ing
their sale urgent in order to sae as much as possi#le of their alue, and the haste were
such that there is no time to adise the principal and await his orders, the agent shall
appl! to the ,udge or court of competent ,urisdiction, who shall authori1e the sale with the
formalities and precautions he ma! consider most #eneficial to the principal.
ARTICLE "0%. An agent can not, without authorit! from the principal, loan or sell on
credit or on time, the principal #eing permitted in such cases to re-uire cash pa!ment of
the agent, leaing him an! interest, profit, or adantage which ma! arise from said credit
on time.
ARTICLE "01. If an agent, with the due authorit!, sells on time, he must so state it in the
account or in the communication to the principal, informing him of the names of the
purchasers$ and should he not do so, the sale shall #e considered as made for cash, in so
far as the principal is concerned.
ARTICLE "0". If an agent receies for a sale, #esides the ordinar! commission, another
one called a guarant! commission, the ris.s of the collection shall #e for his account,
#eing o#liged to pa! the principal the proceeds of the sale at the same periods as agreed
upon with the purchaser.
ARTICLE "0'. An agent who does not ma.e the collection of the credits of his principal
at the period the! are demanda#le, shall #e lia#le for the losses arising from his
negligence or dela! unless he proes that he at the proper time made use of the legal
remedies to recoer the pa!ment.
ARTICLE "0). An agent who is intrusted with the e(pedition of merchandise, and who
has receied order to insure the same shall #e lia#le, should he not do so, for the damage
said merchandise ma! suffer, proided the funds necessar! for the pa!ment of the
premium hae #een furnished, or proided he has o#ligated himself to adance them and
should not hae immediatel! adised the principal of his impossi#ilit! to do so.
If during the ris. the underwriter is a declared #an.rupt it shall #e the dut! of the agent to
renew the insurance, unless the principal has gien him orders to the contrar!.
ARTICLE "0&. An agent who as such is to forward merchandise to another point, shall
ma.e the transportation contract, compl!ing with the o#ligations which are imposed on
shippers in land and maritime transportations.
7hould he ma.e the contract for transportation in his own name, although he is acting for
another, he shall #e responsi#le to the carrier for all the o#ligations imposed on shippers
in land and maritime transportations.
ARTICLE "0/. 9erchandise forwarded on consignment shall #e understood as speciall!
#ound to the pa!ment of the commission fees, adances and e(penses the agent ma! hae
made on account of its alue or proceeds.
As a conse-uence of this o#ligation:
1. Bo agent can #e dispossessed of the merchandise he receies on
consignment until he is preiousl! reim#ursed for his adances,
e(penses, and commission charges.
". The agent must #e paid from the proceeds of said merchandise, in
preference oer the other creditors of the principal, with the
e(ception of the proisions of Article '0&.
In order to en,o! the preference mentioned in this article it shall #e a necessar! condition
that the merchandise #e in the possession of the consignee or agent, or that it is at his
disposal in a pu#lic store or warehouse, or that the shipment was made consigned to his
name, the #ill of lading, stu# or transportation contract haing #een receied #! him
properl! signed #! the carrier.
ARTICLE "00. The principal shall #e o#liged to pa! the agent the commission premium,
unless there is an agreement to the contrar!.
7hould there #e no e(press agreement with regard to the #ro.erage, the latter shall #e
fi(ed in accordance with the commercial practices and customs of the mar.et where the
commission is fulfilled.
ARTICLE "02. The principal shall furthermore #e o#liged to pa! the agent in cash, upon
the presentation of a proper account, the total amount of his e(penses and dis#ursements,
with legal interest from the da! he incurred them until the! hae #een full! repaid.
ARTICLE "03. The principal ma! reo.e the commission intrusted to an agent at an!
stage of the transaction, adising him thereof, #ut alwa!s #eing lia#le for the result of the
transactions which too. place #efore the latter was informed of the reocation.
ARTICLE "2%. A contract shall #e rescinded #! the death of the agent or #! his
incapacit!$ #ut it shall not #e rescinded #! the death or incapacit! of the principal,
although it ma! #e reo.ed #! his representaties.
SECTION II
Other !orms of Commercial Commission !actors" Emplo&ees" and #hop Clerks
ARTICLE "21. A merchant ma! constitute general or special attorne!s or agents for the
purpose of transacting #usiness in his name and for his account in whole or in part, or for
the purpose of assisting him therein.
ARTICLE "2". A factor must hae the -ualifications necessar! to o#ligate himself in
accordance with this Code, and a power of attorne! from the person for whose account he
transacts the #usiness.
ARTICLE "2'. The manager of an enterprise or manufacturing or commercial
esta#lishment for the account of another, authori1ed to administer it, direct it, and to
transact #usiness relating thereto, with more or less powers, as the owner ma! hae
considered adisa#le, shall hae the legal -ualifications of a factor, and the proisions
contained in this section shall #e applica#le to him.
ARTICLE "2). The factors shall transact #usiness and ma.e contract in the names of
their principals, and in all instruments which the! su#scri#e as such the! shall state that
the! do so #! irtue of a power of attorne! or in the name of the person or association
the! represent.
ARTICLE "2&. ;hen factors transact #usiness in the manner prescri#ed in the foregoing
article, all the o#ligations the! ma! contract shall deole upon the principals.
An! claim to compel them to fulfill said o#ligations shall #e #rought against the propert!
of the principal, his esta#lishment or enterprise, and not against the propert! of the
factors, unless it is confounded with that of the former.
ARTICLE "2/. Contracts made #! the factor of a manufacturing or commercial
esta#lishment or enterprise, when it is common .nowledge that he #elongs to a well+
.nown enterprise or association, shall #e understood as made for the account of the
owner of said enterprise or association, een though the factor did not mention this fact at
the time of ma.ing the contract$ or that #reach of trust, transgression of powers, or
appropriation of the goods, which are the su#,ect of the contract, is alleged, proided
these contracts inole o#,ects included in the transactions and #usiness of the
esta#lishment, or if, not #eing of this .ind, it should #e proen that the factor acted
according to orders from his principal, or that the latter approed his action in e(press
terms or #! positie acts.

ARTICLE "20. A contract made #! a factor in his own name shall #ind him directl! with
the person with whom it was made$ #ut if the transaction was made for the account of the
principal, the other contracting part! ma! #ring his action against the factor or against the
principal.
ARTICLE "22. :actors can not transact #usiness for their own account, nor interest
themseles in their own names or in that of another person, in negotiations of the same
character as those the! are engaged in for their principals, unless the latter e(pressl!
authori1e them thereto.
7hould the! negotiate without this authori1ation, the profits of the negotiation shall #e for
the principals and the losses for the account of the factors.
If the principal has granted the factor authori1ation to ma.e transactions for his own
account or in union with other persons, the former shall not #e entitled to the profits, nor
shall he participate in the losses which ma! #e suffered.
If the principal has permitted the factor to hae an interest in some transaction, the
participation of the latter in the profits shall #e, unless there is an agreement to the
contrar!, in proportion to the capital he ma! hae contri#uted$ and should he not hae
contri#uted an! capital, he shall #e considered a wor.ing partner.
ARTICLE "23. The fines which a factor ma! incur for the iolations of the fiscal laws
and ordinances of the pu#lic administration in the management of his agenc! shall #e
thereupon enforced against the propert! he manages, without pre,udice to the right of the
principal against the factor for his guilt in the acts which gae rise to the fine.
ARTICLE "3%. The powers of attorne! granted a factor shall #e considered in force until
the! are e(pressl! reo.ed, notwithstanding the death of the principal or of the person
from whom the! were receied in due form.
ARTICLE "31. The acts and contracts made #! the factor shall #e alid with regard to his
constituent, proided the! are prior to the time the former is informed #! legitimate
means of the reocation of the powers of attorne! or of the alienation of the
esta#lishment.
The! shall also #e alid with regard to third persons, until the proisions of num#er / or
Article "1 hae #een fulfilled, with regard to the reocation of the powers of attorne!.
ARTICLE "3". 9erchants ma! intrust to other persons #esides the factors the constant
managements, in their name and for their accounts, of one or more of the #ranches of the
#usiness the! are engaged in #! irtue of a written or er#al agreement, associations
including such agreements in their #!+laws, and priate parties ma.ing them .nown #!
pu#lic notices or #! means of circulars to their correspondents.
The acts of these special emplo!ees or agents shall not #ind the principals e(cept with
regard to the transactions proper to the #ranch of #usiness which has #een e(pressl!
intrusted to them.
ARTICLE "3'. The proisions of the foregoing article shall also #e applica#le to
commercial shop cler.s who are authori1ed to manage a commercial transaction or some
#ranch of the #usiness of their principals.
ARTICLE "3). 7hop cler. intrusted with selling at retail in a pu#lic store shall #e
considered authori1ed to collect the amounts of the sales the! ma! effect, and their
receipts shall #e alid, #eing issued in the name of the principal.
The same power shall #e en,o!ed #! shop cler.s who sell in wholesale stores, proided
the sales are for cash and that the pa!ment therefor is made in the said store$ #ut when the
collections are to #e made outside of the same, or when the! proceed from sales made on
time, the receipts must necessaril! #e signed #! the principal or #! his factor, or #! an
agent legall! authori1ed to ma.e collections.
ARTICLE "3&. ;hen a merchant intrusts a shop cler. with the receipt of merchandise
and the latter receies it without ma.ing an! remar.s with regard to its -uantit! or
-ualit!, its reception shall hae the same effects as though receied #! the principal.
ARTICLE "3/. ;ithout the consent of their principals, neither factors nor shop cler.s of
commerce ma! delegate to others the commissions the! receie from the former$ and
should the! do so without said consent, the! shall #e directl! responsi#le for the conduct
of the su#stitutes and for the o#ligations contracted #! the latter.
ARTICLE "30. :actors and shop cler.s of commerce shall #e lia#le to their principals for
an! damage the! ma! cause their interests #! reason of haing proceeded in the discharge
of their duties with malice, negligence, or iolation of the orders or instructions the! ma!
hae receied.
ARTICLE "32. If, #! reason of the serice he is rendering, a shop cler. of commerce
should incur some e(traordinar! e(pense or should suffer loss regarding which there was
no e(press agreement #etween him and his principal, the latter shall #e o#liged to
indemnif! him for the loss suffered.
ARTICLE "33. If the contracts #etween the merchants and their shop cler.s and
emplo!ees should hae #een made for a fi(ed period, none of the contracting parties,
without the consent of the other, ma! withdraw from the fulfillment of said contract until
the termination of the period agreed upon.
*ersons iolating this clause shall #e su#,ect to indemnif! the loss and damage suffered,
with the e(ception of the proisions contained in the following articles.
ARTICLE '%%. The following shall #e special reasons for which merchants ma!
discharge their emplo!ees, een though the time of serice of the contract has not
elapsed:
1. :raud or #reach of trust in the #usiness intrusted to them.
". The transaction of some commercial #usiness for their own account
without the e(press .nowledge and permission of the principal.
'. 7erious disrespect and lac. of consideration to said principal or to
mem#ers of his famil! or esta#lishment.
ARTICLE '%1. The following shall #e reasons for which emplo!ees ma! leae the
serice of their principals, een though the time of their contract of serice has not
elapsed:
1. Bonpa!ment of the salar! of remuneration agreed upon at the times
fi(ed.
". Boncompliance with an! of the other conditions agreed upon in faor
of the emplo!ee.
'. Cad treatment or serious offenses on the part of the principal.
ARTICLE '%". In cases in which no special time is fi(ed in the contracts of serice, an!
one of the parties thereto ma! dissole it, adising the other part! thereof one month in
adance.
The factor or shop cler. shall #e entitled, in such case, to the salar! due for said month
TITLE IV
Commercial *eposits
ARTICLE '%'. In order that a deposit ma! #e considered commercial, it is necessar! G
1. That the depositar!, at least, #e a merchant.
". That the things deposited #e commercial o#,ects.
'. That the deposit constitutes in itself a commercial transaction, or #e
made #! reason or as a conse-uence of commercial transactions.
ARTICLE '%). The depositar! shall hae a right to demand compensation for the deposit,
unless there is an e(press agreement to the contrar!.
If the contracting parties hae not fi(ed the amount of the compensation, it shall #e
determined according to the current rates in the localit! where the deposit was made.
ARTICLE '%&. The deposit shall #e perfected #! means of the delier! to the depositar!
of the thing which constitutes its o#,ect.
ARTICLE '%/. The depositar! is o#liged to presere the thing deposited in the manner he
receies it, and return it with its increase, should there #e an!, when the depositor
re-uests it of him.
In the preseration of the deposit the depositar! shall #e lia#le for the in,ur! and damage
the articles deposited ma! suffer #! reason of his malice or negligence, and also for those
arising from the nature or defects of the articles, if he should not in the latter cases
personall! hae done all that was possi#le in order to aoid or remed! them, furthermore
notif!ing the depositor immediatel! upon their appearance.
ARTICLE '%0. ;hen the deposits consist of cash with a specification of the currenc!
constituting the same, or when the! are deliered, sealed, or closed, the increase or
reduction in alue suffered #! the same shall #e for the account of the depositor.
The ris.s of such deposits shall #e run #! the depositar!, and he shall also #e lia#le for
an! in,ur! the! ma! suffer unless he proes that the! were caused #! force ma/eure or #!
insurmounta#le accidental case.
;hen the deposits of cash are made without a specification of the currenc! or without
#eing closed or sealed, the depositar! shall #e lia#le for its preseration and ris.s in the
manner esta#lished in the second paragraph of Article '%/.
ARTICLE '%2. The depositaries of #onds, securities, certificates, or instruments which
earn interest are o#liged to collect the same when the! fall due, as well as to ta.e the
steps necessar! in order that the securities deposited ma! presere their alue and the
rights corresponding to the same according to legal proisions.
ARTICLE '%3. ;heneer, with the consent of the depositor, the depositar! disposes of
the articles on deposit either for himself or for his #usiness, or for transactions intrusted
to him #! the former, the rights and o#ligations of the depositar! and of the depositor
shall cease, and the rules and proisions applica#le to the commercial loans, commission,
or contract which too. the place of the deposit shall #e o#sered.
ARTICLE '1%. Botwithstanding the proisions of the foregoing articles, deposits made
with #an.s, with general warehouses, with loan or an! other associations, shall #e
goerned in the first place #! the #!+laws of the same, in the second #! the proisions of
this Code, and finall! #! the rules of common law, which are applica#le to all deposits.
TITLE V
Commercial %oans
SECTION I
Commercial %oans
ARTICLE '11. A loan shall #e considered commercial when the following conditions are
present:
1. If one of the contracting parties is a merchant.
". If the articles loaned are destined to commercial transactions.

ARTICLE '1". If the loan consists of mone!, the de#tor shall pa! it #! returning an
amount e-ual to that receied, in accordance with the legal alue the mone! ma! hae at
the time of the return, unless there was an agreement with regard to the .ind of mone! in
which the pa!ment was to #e made, in which case the fluctuations in alue shall #e for
the loss or #enefit of the lender.
In loans of #onds or securities the de#tor shall pa! returning the same num#er of the same
.ind and same conditions, or their e-uialents if the former hae #een done awa! with,
unless there is an agreement to the contrar!.
If the loans are in .ind the de#tor return, unless there is an agreement to the contrar!, a
similar amount in the same .ind and -ualit!, or its e-uialent in cash if the .ind due
should #e done awa! with.
ARTICLE '1'. In loans for an indefinite period, or in which no due time has #een fi(ed
for their maturit!, pa!ment can not #e demanded of the de#tor until thirt! da!s hae
elapsed, to #e counted from the date of the notarial demand which ma! hae #een made.
ARTICLE '1). Loans shall not pa! an! interest unless there is an agreement to that effect
in writing.
ARTICLE '1&. The interest of the loan ma! #e agreed upon without an! esta#lished rate
limitation whatsoeer.
An! agreement made in faor of the creditor shall #e considered as interest.
ARTICLE '1/. =e#tors who dela! the pa!ment of their de#ts after the same hae fallen
due, must pa!, from the da! following that on which it #ecame due, the interest agreed
upon in such case, or in the a#sence of such agreement, the legal interest.
If the loan is in .ind, in order to compute the interest, its alue shall #e graduated #! the
prices of the merchandise loaned in the localit! in which the return is to #e made, on the
da! following that on which it falls due, or #! the alue fi(ed #! e(perts if the
merchandise should no longer e(ist at the time its appraisement is to #e made.
And if the loan consists of #onds or securities, the interest, #! reason of dela! in
repa!ment, shall #e that earned #! said securities or #onds, or in the a#sence thereof, the
legal rate of interest, the alue of the securities #eing determined #! their price on
e(change, if the! are su#,ect to -uotation, or at their current prices on the da! following
that on which the! fall due.
ARTICLE '10. Interest which has fallen due and has not #een paid shall not earn interest.
The contracting parties ma!, howeer, capitali1e the net interest which has not #een paid,
which, as an increased principal, shall earn interest.
ARTICLE '12. The receipt of the principal #! the creditor without an e(press resere of
the right to the interest agreed upon or due shall e(tinguish the o#ligation of the de#tor
with regard to the same.
*a!ments on account, when there is no e(press stipulation with regard to their
application, shall first #e applied to the pa!ment of interests as the! fall due and then to
the principal.
ARTICLE '13. After an action has #een #rought the accrued interest can not #e added to
the principal for the purpose of demanding greater interest.
SECTION II
%oans Guaranteed b& the Public Bonds or #ecurities
ARTICLE '"%. A loan with a guarant! of securities -uoted on e(change, contained in an
instrument with the intermediation of licensed agents, shall alwa!s #e considered
commercial.
The lender shall hae, on the pu#lic #onds or securities pledged in accordance with the
proisions of this section, a right to collect his credit with reference oer other creditors,
who can not remoe said securities from his possession unless the! satisf! the loan made
on the same.
ARTICLE '"1. The rights of preference, treated of in the foregoing article, shall onl! #e
had on the same securities which constituted the guarant!, for which purpose, if said
guarant! consisted of instruments pa!a#le to #earer, their num#ers shall #e stated in the
instrument constituting the contract, and if it consists of stoc. or transfera#le securities,
the transfer shall #e made to the lender, stating in the instrument, #esides the
circumstances necessar! to proe the identit! of the guarant!, that the transfer does not
include the cone!ance of ownership.
ARTICLE '"". At the will of the persons interested instead of the numeration of
securities pa!a#le to #earer, the! ma! #e deposited in the pu#lic esta#lishment
determined in the e(change regulations.
ARTICLE '"'. After the period for which the loan was contracted has elapsed, the
creditor, unless there was an agreement to the contrar!, and without necessit! of notif!ing
the de#tor, shall #e authori1ed to re-uest the alienation of the securities, for which
purpose he shall present them, with the instrument constituting the loan, to the #oard of
directors, which, after finding their numeration correct, shall cone! them to the amount
necessar! through a licensed agent, on the same da! if it #e possi#le, and otherwise on
the ne(t.
A lender can onl! ma.e use of the said right during the hours of the e(change of the da!
following that on which the de#t fell due.
ARTICLE '"). 7ecurities which are -uoted on e(change pa!a#le to #earer, pledged in
the manner fi(ed in the foregoing articles, shall not #e su#,ect to return until the lender
has #een reim#ursed, without pre,udice to the rights and actions of the dispossessed
owner against the persons lia#le according to the laws, for the acts #! irtue of which he
has #een depried of the possession and ownership of the securities gien as a guarant!.
TITLE VI
Purchase and #ale and Commercial Barter and Transfers of 0on'0egotiable Credits
SECTION I
Purchase and #ale
ARTICLE '"&. A purchase and sale of personal propert! for the purpose of resale, either
in the form purchased or in a different form, for the purpose of deriing profit in the
resale, shall #e considered commercial.
ARTICLE '"/. The following can not #e considered commercial:
1. The purchase of goods destined for the consumption of the purchaser or
of the person for whom the! are #ought.
". 7ales made #! owners and #! farmers or cattlemen of the fruits or
products of their crops or cattle, or of the goods in which their
rents are paid them.
'. 7ales made #! artificers in their wor.shops of the articles constructed
or manufactured #! them.
). The resale made #! an! person who is not a merchant, of the remainder
of the stoc. he laid in for his own consumption.
ARTICLE '"0. If the sales ta.e place #! samples or #! a fi(ed -ualit! .nown in
commerce, the purchaser can not refuse to receie the articles contracted for, if the! are
in accordance with the samples or -ualit! mentioned in the contract.
In case the purchaser refuses to accept them, e(perts shall #e appointed #! #oth parties,
who shall decide whether their reception is proper or not.
If the e(perts should declare that the articles are to #e receied, the sale shall #e
considered as consummated, and in a contrar! case the contract shall #e rescinded,
without pre,udice to the indemnification to which the purchaser ma! #e entitled.
ARTICLE '"2. In the purchase of goods which are not seen or can not #e classified #! a
fi(ed -ualit! and well .nown in commerce it shall #e understood that the purchaser
reseres the priilege of e(amining them and unrestrictedl! rescinding the contract if the
goods do not suit him.
The purchaser shall also #e entitled to rescind said contract if he resered the right #! an
e(press agreement to e(amine the goods contracted for.
ARTICLE '"3. If the endor does not delier the goods sold at the time stipulated, the
purchaser ma! re-uest the fulfillment or the rescission of the contract, with damages in
either case for the loss he ma! hae suffered #! reason of the dela!.
ARTICLE ''%. In contracts in which the delier! of a certain amount of merchandise is
stipulated within a certain time, the purchaser shall not #e o#liged to receie part of said
amount een on the promise of deliering the #alance$ #ut if he accepts the partial
delier! the sale shall #e consummated with regard to the goods receied, resering the
right of the purchaser to demand for the rest the fulfillment of the contract or its
rescission, in accordance with the foregoing article.
ARTICLE ''1. The loss or impairment of the goods #efore their delier!, on account of
unforeseen accidents or without the fault of the endor, shall entitle the purchaser to
rescind the contract, unless the endor has constituted himself the depositar! of the
merchandise, in accordance with Article ''3, in which case his lia#ilit! shall #e limited to
that arising #! reason of the deposit.
ARTICLE ''". If the purchaser refuses without ,ust cause to receie the goods #ought,
the endor ma! demand the fulfillment or rescission of the contract, depositing the
merchandise in court in the first case.
The same ,udicial deposit ma! #e made #! the endor wheneer the purchaser dela!s in
ta.ing charge of the merchandise.
The e(penses arising from the deposit shall #e defra!ed #! the person who caused said
deposit to #e made.
ARTICLE '''. The damages and impairment suffered #! merchandise after the contract
has #een perfected and the endor has the goods at the disposal of the purchaser in the
place and at the time agreed upon, shall #e suffered #! the purchaser, e(cept in cases of
fraud or negligence on the part of the endor.
ARTICLE ''). The damages and impairment suffered #! merchandise, een though it #e
#! reason of an accidental case, shall #e for the account of the endor in the following
cases:
1. If the sale too. place #! num#er, weight, or measure, or if the article
sold is not fi(ed and determined, with mar.s and signs which
identif! it.
". If #! reason of an e(press agreement or the usages of commerce, in
iew of the nature of the article sold, the purchaser has the
priilege to preiousl! e(amine and inestigate it.
'. If the contract contains a clause to the effect that the delier! is not to
#e made until the article sold has ac-uired the conditions
stipulated.

ARTICLE ''&. If the merchandise sold should perish or deteriorate and said loss is to #e
suffered #! the endor, he shall return to the purchaser the amount of the price he ma!
hae receied.
ARTICLE ''/. A purchaser who, at the time of receiing the merchandise, full!
e(amines the same shall not hae a right of action against the endor, alleging a defect in
the -uantit! or -ualit! of the merchandise.
A purchaser shall hae a right of action against a endor for defects in the -uantit! or
-ualit! of merchandise receied in #ales or pac.ages, proided he #rings his action
within the four da!s following its receipt, and that the damage is not due to accident or to
natural defect of the merchandise or to fraud.
In such cases the purchaser ma! choose #etween the rescission of the contract or its
fulfillment in accordance with what has #een agreed upon, #ut alwa!s with the pa!ment
of the damages he ma! hae suffered #! reason of the defects or faults.
The endor ma! aoid this claim #! demanding when ma.ing the delier! that the
merchandise #e e(amined #! the purchaser for his satisfaction with regard to the -uantit!
and -ualit! thereof.
ARTICLE ''0. If the period for the delier! of the merchandise sold has not #een
stipulated, the endor must hae it at the disposal of the purchaser within twent!+four
hours after the contract.
ARTICLE ''2. The e(penses of the delier! of merchandise in commercial sales shall #e
defra!ed #! the endor until said merchandise is placed at the disposal of the purchaser,
weighed or measured, unless there is an e(press agreement to the contrar!.
The e(penses arising from the receipt and remoal of the merchandise from the place of
delier! shall #e defra!ed #! the purchaser.
ARTICLE ''3. After the merchandise sold has #een placed at the disposal of the
purchaser and after the latter has stated his satisfaction, or if said merchandise is
,udiciall! deposited in the case foreseen in Article ''", the o#ligation of the purchaser, to
pa! the price of the same in cash or at the periods agreed upon with the endor shall
#egin.
The endor shall constitute himself the depositar! of the goods sold, and shall #e o#liged
to care for and presere them in accordance with the laws goerning deposits.
ARTICLE ')%. =uring the time the articles sold are in the possession of the endor, een
though the! #e in the nature of deposit, the latter shall hae preference to the same oer
an! other creditor to o#tain the pa!ment of the price with the interest arising from the
dela!.
ARTICLE ')1. The dela! in the pa!ment of the article purchased shall o#ligate the
purchaser to pa! the legal rate of interest on the amount he owes the endor.
ARTICLE ')". A purchaser who has not made an! claim #ased on the inherent defects in
the article sold, within the thirt! da!s following its delier!, shall lose all rights of action
against the endor for such defects.
ARTICLE ')'. The amounts which, as earnest mone!, are deliered in commercial sales
shall alwa!s #e considered as paid on account of the price and as a proof of the
ratification of the contract, unless there is an agreement to the contrar!.
ARTICLE ')). Commercial sales shall not #e rescinded #! reason of damage$ #ut the
contracting part! who acted with malice or fraud, in the contract or in its fulfillment, shall
indemnif! for loss and damage, without pre,udice to the criminal action which ma! #e
proper.
ARTICLE ')&. In all commercial sales the endor shall #e lia#le for eiction and
indemnit! in faor of the purchaser, for an! pre,udice he ma! suffer #! #eing distur#ed in
his possession of the same unless there has #een an agreement to the contrar!.
SECTION II
Barter
ARTICLE ')/. Commercial #arter shall #e goerned #! the same rules as are prescri#ed
in this title for purchase and sale, in so far as the! are applica#le to the circumstances and
conditions of said contracts.
SECTION III
Transfers of 0on'0egotiable Credits
ARTICLE ')0. Commercial credits, which are not negotia#le nor pa!a#le to the #earer,
ma! #e transferred #! the creditor without re-uiring the consent of the de#tor, it #eing
sufficient that the transfer #e communicated to him.
The de#tor shall #e o#ligated to the new creditor #! irtue of the notification, and from
the time said transfer is made no pa!ment shall #e considered legitimate e(cept the one
made to the latter.
ARTICLE ')2. The cone!er shall answer for the legalit! of the credit and for the
capacit! in which he made the transfer$ #ut he shall not answer for the solenc! of the
de#tor, unless there is an e(press agreement to the contrar!. cdtai
TITLE VII
Commercial Contracts for Transportation Overland
ARTICLE ')3. A contract for all .inds of transportation oer land or rier shall #e
considered commercial:
1. ;hen it inoles merchandise or an! commercial goods.
". ;hen, no matter what its o#,ect ma! #e, the carrier is a merchant or is
customaril! engaged in ma.ing transportation for the pu#lic.
ARTICLE '&%. The shipper as well as the carrier of merchandise and goods ma!
mutuall! demand of each other the issue of a #ill of lading in which there shall #e stated:
1. The name, surname, and domicile of the shipper.
". The name, surname, and domicile of the carrier.
'. The name, surname and domicile of the person to whom or to whose
order the goods are addressed, or whether the! are to #e deliered
to the #earer of the said #ill.
). A description of the goods, stating their generic character, their weight,
and the e(ternal mar.s or signs of the pac.ages containing the
same.
&. The cost of the transportation.
/. The date on which the shipment is made.
0. The place of the delier! to the carrier.
2. The place and time at which the delier! is to #e made to the
consignee.
3. The damages to #e paid #! the carrier in case of dela!, if an! agreement
is made on this point.
ARTICLE '&1. In shipments made oer railroads or #! other enterprises which are
su#,ect to schedules or the time fi(ed #! regulations, it shall #e sufficient that the #ills of
lading or declarations of shipment furnished #! the shipper refer, with regard to the rate,
terms, and special conditions of the transportation, to the schedules and regulations, the
application of which is re-uested$ and should no schedule #e determined the carrier must
appl! the rate of the merchandise pa!ing the lowest, with the condition inherent thereto,
alwa!s including such statement or reference in the #ill of lading deliered to the shipper.
ARTICLE '&". Cills of lading or tic.ets in the case of transportation of passengers ma!
#e different, one for persons and another for #aggage, #ut all of them shall contain the
name of the carrier, the date of shipment, the points of departure and arrial, the price,
and with regard to #aggage, the num#er and weight of the pac.ages, with an! other
indications which ma! #e considered necessar! in order to easil! identif! them.
ARTICLE '&'. The legal #asis of the contract #etween the shipper and the carrier shall
#e the #ills of lading, #! the contents of which all disputes which ma! arise with regard to
their e(ecution and fulfillment shall #e decided without admission of other e(ceptions
than forger! or material errors in the drafting thereof.
After the contract has #een complied with the #ill of lading issued #! the carrier shall #e
returned to him, and #! irtue of the e(change of this certificate for the article
transported, the respectie o#ligations and actions shall #e considered as canceled, unless
in the same act the claims which the contracting parties desired to resere are reduced to
writing, e(ception #eing made of the proisions of Article '//.
If in case of loss or for an! other reason whatsoeer, the consignee can not return upon
receiing the merchandise the #ill of lading su#scri#ed #! the carrier, he shall gie said
carrier a receipt for the goods deliered, this receipt producing the same effects as the
return of the #ill of lading.
ARTICLE '&). In the a#sence of a #ill of lading the respectie claims of the parties shall
#e decided #! the legal proofs that each one ma! su#mit in support of his claims, in
accordance with the general proisions esta#lished in this Code for commercial contracts.
cd
ARTICLE '&&. The lia#ilit! of the carrier shall #egin from the moment he receies the
merchandise, in person or through a person intrusted thereto in the place indicated for
their reception.
ARTICLE '&/. Carriers ma! refuse to accept pac.ages which appear unfit for
transportation$ and if said transportation is to #e made oer a railroad, and the shipment is
insisted on, the compan! shall carr! it, #eing e(empt from all lia#ilit! if its o#,ections are
so stated in the #ill of lading.
ARTICLE '&0. If the carrier #! reason of well+founded suspicions as to the correctness
of the declaration of the contents of a pac.age should determine to e(amine it, he shall do
so #efore witnesses, in the presence of the shipper or of the consignee.
7hould the shipper or consignee to #e cited not appear, the e(amination shall #e made
#efore a notar!, who shall draft a certificate of the result of the e(amination, for the
proper purposes.
If the declaration of the shipper should #e correct, the e(penses caused #! the
e(amination and those of carefull! repac.ing the pac.ages shall #e defra!ed #! the
carrier, and in a contrar! case #! the shipper.
ARTICLE '&2. 7hould no period within which goods are to #e deliered #e preiousl!
fi(ed, the carrier shall #e under the o#ligation to forward them in the first shipment of the
same or similar merchandise which he ma! ma.e to the point of delier!$ and should he
not do so, the damages occasioned #! the dela! shall #e suffered #! him.
ARTICLE '&3. If there should #e an agreement #etween the shipper and the carrier with
regard to the road oer which the transportation is to #e made, the carrier can not change
the route, unless o#liged to do so #! force ma/eure$ and should he do so without #eing
forced to, he shall #e lia#le for an! damage which ma! #e suffered #! the goods
transported for an! other cause whatsoeer, #esides #eing re-uired to pa! the amount
which ma! hae #een stipulated for such a case.

;hen on account of the said force ma/eure the carrier is o#liged to ta.e another route,
causing an increase in the transportation charges, he shall #e reim#ursed for said increase
after presenting the formal proof thereof.
ARTICLE '/%. The shipper ma!, without changing the place where the delier! is to #e
made, change the consignment of the goods deliered to the carrier, and the latter shall
compl! with his orders, proided that at the time of ma.ing the change of the consignee
the #ill of lading su#scri#ed #! the carrier #e returned to him, if one were issued,
e(changing it for another containing the noation of the contract.
The e(penses arising from the change of consignment shall #e defra!ed #! the shipper.
ARTICLE '/1. 9erchandise shall #e transported at the ris. and enture of the shipper, if
the contrar! was not e(pressl! stipulated.
Therefore, all damages and impairment suffered #! the goods during the transportation,
#! reason of accident, force ma/eure, or #! irtue of the nature or defect of the articles,
shall #e for the account and ris. of the shipper. cdta
The proof of these accidents is incum#ent on the carrier.
ARTICLE '/". The carrier, howeer, shall #e lia#le for the losses and damages arising
from the causes mentioned in the foregoing article if it is proed that the! occurred on
account of his negligence or #ecause he did not ta.e the precautions usuall! adopted #!
careful persons, unless the shipper committed fraud in the #ill of lading, ma.ing him
#eliee that the goods were of a class or -ualit! different from what the! reall! were.
If, notwithstanding the precaution referred to in this article, the goods transported run the
ris. of #eing lost on account of the nature or #! reason of an unaoida#le accident,
without there #eing time for the owners of the same to dispose thereof, the carrier shall
proceed to their sale, placing them for this purpose at the disposal, of the ,udicial
authorit! or the officials determined #! special proisions.
ARTICLE '/'. ;ith the e(ception of the cases prescri#ed in the second paragraph of
Article '/1, the carrier shall #e o#liged to delier the goods transported in the same
condition in which, according to the #ill of lading, the! were at the time of their receipt,
without an! detriment or impairment, and should he not do so, he shall #e o#liged to pa!
the alue of the goods not deliered at the point where the! should hae #een and at the
time the delier! should hae ta.en place.
If part of the goods transported should #e deliered the consignee ma! refuse to receie
them, when he proes that he can not ma.e use thereof without the others.
ARTICLE '/). If the effect of the damage referred to in Article '/1 should #e onl! a
reduction in the alue of the goods, the o#ligation of the carrier shall #e reduced to the
pa!ment of the amount of said reduction in alue, after appraisal #! e(perts.
ARTICLE '/&. If, on account of the damage, the goods are rendered useless for purposes
of sale or consumption in the use for which the! are properl! destined the consignee shall
not #e #ound to receie them, and ma! leae them on the hands of the carrier, demanding
pa!ment therefor at current mar.et prices.
If among the goods damaged there should #e some in good condition and without an!
defect whatsoeer, the foregoing proision shall #e applica#le with regard to the damaged
ones, and the consignee shall receie those which are sound, this separation #eing made
#! distinct and separate articles, no o#,ect #eing diided for the purpose, unless the
consignee proes the impossi#ilit! of conenientl! ma.ing use thereof in this form. cdt
The same proision shall #e applied to merchandise in #ales or pac.ages, with distinction
of the pac.ages which appear sound.
ARTICLE '//. ;ithin the twent!+four hours following the receipt of the merchandise a
claim ma! #e #rought against the carrier on account of damage or aerage found therein
on opening the pac.ages, proided that the indications of the damage or aerage giing
rise to the claim can not #e ascertained from the e(terior of said pac.ages, in which case
said claim would onl! #e admitted on the receipt of the pac.ages.
After the periods mentioned hae elapsed, or after the transportation charges hae #een
paid, no claim whatsoeer shall #e admitted against the carrier with regard to the
condition in which the goods transported were deliered.
ARTICLE '/0. If there should occur dou#ts and disputes #etween the consignee and the
carrier with regard to the condition of goods transported at the time of their delier! to
the former, the said goods shall #e e(amined #! e(perts appointed #! the parties, and a
third one, in case of disagreement, appointed #! the ,udicial authorit!, the result of the
e(amination #eing reduced to writing$ and if the persons interested should not agree to
the report of the e(perts and could not settle their disputes, said ,udicial authorit! shall
order the deposits of the merchandise in a safe warehouse, and the parties interested shall
ma.e use of their rights in the proper manner.
ARTICLE '/2. The carrier must delier to the consignee without an! dela! or difficult!
the merchandise receied #! him, #! reason of the mere fact of #eing designated in the
#ill of lading to receie it$ and should said carrier not do so he shall #e lia#le for the
damages which ma! arise therefrom.
ARTICLE '/3. 7hould the consignee #e not found at the domicile indicated in the #ill of
lading, or should refuse to pa! the transportation charges and e(penses, or to receie the
goods, the deposit of said goods shall #e ordered #! the municipal ,udge, where there is
no ,udge of first instance, to #e placed at the disposal of the shipper or sender, without
pre,udice to a person haing a #etter right, this deposit haing all the effects of a delier!.
ARTICLE '0%. If a period has #een fi(ed for the delier! of the goods, it must #e made
within the same, and otherwise the carrier shall pa! the indemnit! agreed upon in the #ill
of lading, neither the shipper nor consignee #eing entitled to an!thing else.
7hould no indemnit! hae #een agreed upon and the dela! e(ceeds the time fi(ed in the
#ill of lading, the carrier shall #e lia#le for the damages which ma! hae #een caused #!
the dela!.
ARTICLE '01. In cases of dela! on account of the fault of the carrier, referred to in the
foregoing articles, the consignee ma! leae the goods transported on the hands of the
carrier, informing him thereof in writing #efore the arrial of the same at the point of
destination.
;hen this a#andonment occurs, the carrier shall satisf! the total alue of the goods, as if
the! had #een lost or mislaid. aisadc
7hould the a#andonment not occur the indemnit! for loss and damages on account of the
dela!s can not e(ceed the current price of the goods transported on the da! and at the
place where the delier! was to hae #een made. The same proision shall #e o#sered in
all cases where this indemnit! is due.
ARTICLE '0". The appraisement of the goods which the carrier must pa! in case of their
#eing lost or mislaid shall #e fi(ed in accordance with what is stated in the #ill of lading,
no proofs #eing allowed on the part of the shipper that there were among the goods
declared therein articles of greater alue, and mone!.
Aorses, ehicles, essels, e-uipment, and all the other principal and accessor! means of
transportation, shall #e especiall! o#ligated in faor of the shipper, although with relation
to railroads said o#ligation shall #e su#ordinated to the proisions of the laws of
concession with regard to propert! and to those of this Code with regard to the manner
and form of ma.ing attachments and retentions against the said companies.
ARTICLE '0'. A carrier who deliers merchandise to a consignee #! irtue of
agreements or com#ined serices with other carriers shall assume the o#ligations of the
carriers who preceded him, resering his right to proceed against the latter if he should
not #e directl! responsi#le for the fault which gies rise to the claim of the shipper or of
the consignee.
The carrier ma.ing the delier! shall also assume all the actions and rights of those who
ma! hae preceded him in the transportation.
The sender and the consignee shall hae an immediate right of action against the carrier
who e(ecuted the transportation contract, or against the other carriers who receied the
goods transported without resere.
The reserations made #! the latter shall not e(empt them, howeer, from the lia#ilities
the! ma! hae incurred #! reason of their own acts.
ARTICLE '0). The consignees to whom the remittance ma! hae #een made can not
defer the pa!ment of the e(penses and transportation charges on the goods that the!
receied after twent!+four hours hae elapsed from the time of the delier!$ and in case
of dela! in ma.ing this pa!ment, the carrier ma! re-uest the ,udicial sale of the goods he
transported to a sufficient amount to coer the transportation charges and the e(penses
incurred.
ARTICLE '0&. The goods transported shall #e specificall! o#ligated to answer for the
transportation charges and for the e(penses and fees caused #! the same during their
transportations, or until the time of their delier!.
This special right shall #e limited to eight da!s after the delier! has #een made, and after
said prescription the carrier shall hae no further right of action than that corresponding
to an ordinar! creditor.
ARTICLE '0/. The preference of the carrier to the pa!ment of what is due him for the
transportation and e(penses of the goods deliered to the consignee shall not #e affected
#! the #an.ruptc! of the latter, proided the action is #rought within the eight da!s
mentioned in the foregoing article.
ARTICLE '00. The carrier shall #e lia#le for all the conse-uences arising from
noncompliance on his part with the formalities prescri#ed #! the laws and regulations of
the pu#lic administration during the entire course of the trip and on the arrial at the point
of destination, e(cept when his omission arises from his haing #een induced into error
#! false statements of the shipper in the declaration of the merchandise.

If the carrier has acted in accordance with a formal order receied from the shipper or
consignee of the merchandise #oth shall incur lia#ilit!. cd
ARTICLE '02. Transportation agents shall #e o#liged to .eep a special registr!, with the
formalities re-uired #! Article '/, in which there shall #e entered, in progressie order of
num#ers and dates, all the goods the transportation of which is underta.en, stating the
circumstances re-uired #! Articles '&% et se-. for the responsie #ills of lading.
ARTICLE '03. The proisions contained in Articles ')3 et se-. shall also #e understood
as relating to persons who, although the! do not personall! effect the transportation of
commercial goods, contract to do so through others, either as contractors for a special and
fi(ed transaction or as freight and transportation agents.
In either case the! shall #e su#rogated to the place of the carriers with regard to the
o#ligations and lia#ilit! of the latter, as well as with regard to their right.
TITLE VIII
(nsurance Contracts
SECTION I
(nsurance Contracts in General
ARTICLE '2%. An insurance contract shall #e commercial if the underwriter is a
merchant and the contract is at a fi(ed premium, or when the insured pa!s onl! a single
and constant amount as the price or compensation for the insurance.
ARTICLE '21. An insurance contract shall #e oid G
1. C! reason of the #ad faith of an! of the parties at the time of the
e(ecution of the contracts.
". C! reason of the incorrect declaration of the insured, een though made
in good faith, proided it ma! influence the estimation of the ris.s.
'. C! reason of the omission or concealment on the part of the insured, of
facts or circumstances which ma! hae influenced the e(ecution of
the contract.
ARTICLE '2". An insurance contract shall #e reduced to writing in a polic! or in another
pu#lic or priate instrument su#scri#ed #! the contracting parties.
ARTICLE '2'. The polic! of an insurance contract must contain G
1. The names of the underwriter and of the insured.
". The ris. against which insurance is ta.en.
'. The designation and location of the articles insured, and the indications
which ma! #e necessar! to determine the nature of the ris.s.
). The appraised alue of the articles insured, in detailed amounts,
according to the different .inds of articles.
&. The sum or premium which the insured #inds himself to pa! the form
and manner of pa!ment, and the place where said pa!ment is to #e
made.
/. The duration of the insurance.
0. The da! and the hour from which the effect of the contract is to #egin.
2. The insurance alread! e(isting on the same goods.
3. The other agreements made #! the contracting parties.
ARTICLE '2). The noations made in the contract during the time of the insurance,
increasing the goods insured, e(tending the insurance to new ris.s, reducing the latter or
the amount insured, or introducing an! other essential modification, must #e included in
the polic! of insurance.
ARTICLE '2&. The insurance contract shall #e goerned #! the licit agreements
contained in each polic! or instrument, and in the a#sence thereof, #! the rules contained
in this title.
SECTION II
!ire (nsurance
ARTICLE '2/. All personal or real propert! which is lia#le to #e destro!ed or in,ured #!
fire ma! #e the su#,ect of an insurance contract against fire.
ARTICLE '20. All commercial securities or instruments are e(cepted from this
proision, as well as those of the 7tate or of priate parties, #an. notes, shares and
o#ligations of associations, precious stones and metals, in coin or in #ullion, and o#,ects
of art, unless an e(press agreement to the contrar! is made, the alue and conditions of
said article #eing fi(ed in the polic!.
ARTICLE '22. In contracts of insurance against fire, in order that the underwriter #e
o#ligated, he must hae receied the single premium agreed upon or the partial ones at
the periods fi(ed.
The insurance premium shall #e paid in adance, and the pa!ment shall #ind the
underwriter, no matter what ma! #e the duration of the insurance.
ARTICLE '23. If the insured dela!s in pa!ing the premium, the underwriter ma! rescind
the contract within the first fort!+eight hours, immediatel! adising the insured of his
action.
7hould he not e(ercise this right the contract shall #e understood as in force and he shall
hae a right of action to secure an e(ecution to recoer pa!ment for the premium or
premiums lapsed without further re-uisite than the ac.nowledgment of the signatures of
the polic!.
ARTICLE '3%. The alue set upon the o#,ects of the insurance, the premiums paid #! the
insured, the designations, and the appraisements contained in the polic! shall not in
themseles #e proof of the e(istence of the articles insured at the time and in the place
where the fire occurs.
ARTICLE '31. The su#stitution or change of the articles insured for others of a different
.ind or species not included in the insurance shall annul the contract from the time the
su#stitution too. place.
ARTICLE '3". The alteration or transformation of the articles insured, #! reason of an
accident or #! the act of a third person, shall entitle either of the contracting parties to
rescind the contract.
ARTICLE '3'. The insurance against fire shall include the repair or indemnit! for all the
loss and material damage caused #! the direct action of the fire and #! the ineita#le
conse-uences of the fire, and particularl! G
1. The e(penses incurred #! the insured #! reason of the transportation of
the goods for the purpose of saing them.
". The damage suffered #! the goods saed.
'. The damage to the goods insured caused #! the measures adopted #!
the authorit! to reduce or e(tinguish the fire.
ARTICLE '3). In insurance against meteorological accidents, e(plosions of gas or steam
apparatus, the underwriter shall onl! #e lia#le for the conse-uences of the fires caused #!
said accidents, unless there is an agreement to the contrar!.
ARTICLE '3&. The insurance against fires does not include, unless there is an agreement
to the contrar!, the loss suffered #! the insured on account of suspension of wor. or of
industr!, or of profit from the estate lost #! fire, or an! other similar causes which gie
rise to losses and damages.
ARTICLE '3/. The underwriter shall secure the insured against the effects of fire, #e it
caused either #! an accident or #! the malice of strangers or #! personal negligence or
carelessness of the persons, he is ciill! lia#le for.
The underwriter shall not secure against fires caused #! the crime of the insured$ nor #!
militar! forces in time of war nor on account of those caused #! mo#s or #! eruptions,
olcanoes and earth-ua.es.
ARTICLE '30. The guarant! of the underwriter shall onl! e(tend to the goods insured
and in the #uilding in which the! were located, and his lia#ilit! shall in no case e(ceed
the amount at which the good were alued or at which the ris. was appraised.
ARTICLE '32. The insured must gie an account to the underwriter of:
1. All preious insurances, and those ta.en out simultaneousl! or
su#se-uentl!.
". The modifications to which the insurance mentioned in the polic! was
su#,ected.
'. The changes and alterations in -ualit! suffered #! the goods insured,
and which increase the ris.s.
ARTICLE '33. The goods insured for their full alue can not #e again insured while the
first insurance is in force, unless in case the new underwriter guarantee or gie #ond for
the fulfillment of the contract made with the first underwriter.
ARTICLE )%%. If in different contracts one article has #een insured for an ali-uot part of
its alue, the underwriters shall contri#ute to the indemnit! in proportion to the amounts
the! underwrote.
The underwriter ma! cone! to other underwriters one or more parts of the insurance, #ut
shall #e directl! and e(clusiel! lia#le to the insured.
In cases of cone!ance of part of the insurance or of the reinsurance the assignees who
receie the proportionate part of the premium shall #e o#ligated, with regard to the first
underwriter, to contri#ute in e-ual proportion to the indemnit!, assuming the lia#ilit! of
the agreements, transactions, and arrangements made #etween the insured and the
principal or first underwriter.
ARTICLE )%1. The insurance shall not #e annulled #! reason of the death, li-uidation, or
#an.ruptc! of the insured, and sale or transfer of the goods, if the article insured
consisted of real estate.
The underwriter ma! rescind the contract #! reason of the death, li-uidation, or
#an.ruptc! of the insured and the sale or transfer of the goods, if the articles insured
consisted of personal propert!, of a manufacturing esta#lishment, or shop.
In case of rescission, the underwriter must inform the insured or his representaties
within the period of fifteen da!s, which can not #e e(tended.
ARTICLE )%". If the insured or his representatie does not inform the underwriter of an!
of the facts enumerated in the second paragraph of the foregoing article within the period
of fifteen da!s, the contract shall #e oid from the date on which said acts occurred.
ARTICLE )%'. *ersonal propert! shall #e lia#le for the pa!ment of the insurance
premium with preference to an! other credits whatsoeer which ma! #e due.
;ith regard to real propert!, the proisions of the mortgage law shall #e o#sered.
ARTICLE )%). In case of a calamit! the insured must immediatel! inform the
underwriter, also filing with the municipal ,udge a statement of the goods e(isting at the
time of the calamit!, and of goods saed, as well as the loss suffered, according to his
aluation.
ARTICLE )%&. The insured must proe the loss suffered, proing the e(istence of the
goods #efore the fire occurred.
ARTICLE )%/. The appraisement of the damage caused #! the fire shall #e made #!
e(perts in the manner esta#lished in the polic!, #! an agreement #etween the parties, in
the a#sence of which, said appraisement shall #e made in accordance with the proisions
of the Law of Ciil *rocedure.

ARTICLE )%0. The e(perts shall decide:
1. The causes of the fire.
". The true alue of the goods insured on the da! of the fire, #efore it too.
place.
'. The alue of the same goods after the fire, and eer!thing else which
ma! #e su#mitted to their ,udgment.
ARTICLE )%2. If the amount of loss suffered e(ceeds the amount of insurance carried,
the insured shall #e considered his own underwriter for this e(cess, and shall #e lia#le for
the ali-uot part of the losses and e(penses.
ARTICLE )%3. The underwriter shall #e o#liged to pa! the indemnit! fi(ed #! the
e(perts within ten da!s following their decision after it has #een agreed to.
In case of dela!, the underwriter shall pa! the insured the legal interest on the amount due
from the date of the termination of said period.
ARTICLE )1%. The decision of the e(perts shall #e the #asis for an e(ecution against the
underwriter, if said decision was rendered #efore a notar!$ and should this not hae #een
done, after an ac.nowledgment and ,udicial admission of their signatures and of the truth
of the instrument.
ARTICLE )11. The insurer shall choose, within the ten da!s fi(ed in Article )%3,
#etween indemnif!ing for the calamit!, or repair, re#uild, or replace, according to their
nature or character, in whole or in part, the goods insured and destro!ed #! the fire, if an
agreement should #e reached.
ARTICLE )1". The insurer ma! ac-uire the goods saed for himself, proided he pa!s
the insured their true alue in accordance with the appraisement referred to in case Bo. "
of Article )%0.
ARTICLE )1'. The underwriter after pa!ing the indemnit! shall #e su#rogated to the
rights and actions of the insured against all the authors and persons lia#le for the fire in
the necessar! capacit! or right, as the case ma! #e.
ARTICLE )1). The underwriter, after the calamit!, ma! rescind the contract with regard
to ulterior accidents, as well as an! other contract he ma! hae made with the insured,
adising the latter fifteen da!s in adance and returning the part of the premium
corresponding to the period not elapsed.
ARTICLE )1&. The e(penses arising from the e(pert appraisement and the li-uidation of
the indemnit! shall #e defra!ed for the account in e-ual parts of the insured and of the
underwriter$ #ut if there is an o#ious e(aggeration of the loss on the part of the insured,
the latter shall #e the onl! one lia#le therefor.
SECTION III
%ife (nsurance
ARTICLE )1/. Life insurance shall include all the com#inations which can #e made,
ma.ing agreements with regard to the pa!ment of premiums or of capital in e(change for
the en,o!ment of a life annuit! or up to a certain age, or the receipt of capital on the death
of a certain person, in faor of the insured, his legal representatie, or of a third person,
or an! other similar or analogous com#ination.
ARTICLE )10. The life+insurance polic! shall contain, #esides the re-uisites mentioned
in Article '2', the following:
1. A statement of the amount insured for, in capital or in annuit!.
". A statement of the reduction or increase in the capital or annuit!
assured, and of the dates from which said increase or reduction is
to #e computed.
ARTICLE )12. The contract ma! #e made on the life of a person or of seeral persons
without regard to age, condition, se(, and state of health.
ARTICLE )13. The insurance ma! #e made in faor of a third person, stating in the
polic! the name, surname, and conditions of the donor or person insured, or determining
said person in some other indisputa#le manner.
ARTICLE )"%. A person insuring a third person is #ound to fulfill the conditions of the
insurance, the proisions of Articles )"/ and )'% #eing applica#le to the latter.
ARTICLE )"1. <nl! the person who insures and contracts directl! with the underwriting
compan! shall #e #ound to the fulfillment of the contract as insured and to the
conse-uent pa!ment of the premium, #! the pa!ment of the single sum or of the partial
ones which ma! hae #een agreed upon.
The polic!, howeer, shall entitle the person insured to demand the fulfillment of the
contract of the underwriting compan!.
ARTICLE )"". There shall onl! #e understood em#raced in a life insurance the ris.s
which are enumerated speciall! and in detail in the polic!.
ARTICLE )"'. The insurance in case of death shall not #e paid if it occurs in an! of the
following manners:
1. If the insured dies in a duel or as the conse-uences thereof.
". If he commits suicide.
'. If he suffers capital punishment for ordinar! crimes.
ARTICLE )"). The insurance in case of death shall not #e paid, unless there is an
agreement to the contrar! and the insured pa!s the e(tra premium re-uired #! the
underwriter G
1. If the death occurs in o!ages outside the limits of the lands and water
under the ,urisdiction of the 7panish proinces of <ceania.
". If the death occurs in the militar! or naal serice in time of war.
'. If the death occurs in an! e(traordinar! underta.ing or act which is
ac.nowledged as rec.less and imprudent.
ARTICLE )"&. The insured who dela!s the pa!ment of the premium or sum agreed upon
shall not hae a right to demand the amount of the insurance or the amount insured if the
calamit! occurs or the condition of the contract is complied with if he is in default.
ARTICLE )"/. If the insured has paid seeral partial installments and can not continue
the contract, he shall inform the underwriter, reducing the amount insured to the sum
which is in ,ust proportion with the installments paid, in accordance with the calculations
which appear in the schedules of the insurance compan!, and ta.ing into consideration
the ris.s run #! the latter.
ARTICLE )"0. The insured must inform the underwriter of the insurance on his life
which he preiousl! or simultaneousl! ta.es out in other insurance companies.
The lac. of this re-uisite shall deprie the insured of the #enefits of the insurance, he
#eing onl! entitled to the face alue of the polic!.
ARTICLE )"2. The amounts which the underwriter must delier to the person insured, in
fulfillment of the contract, shall #e the propert! of the latter, een against the claims of
the legitimate heirs or creditors of an! .ind whatsoeer of the person who effected the
insurance in faor of the former.
ARTICLE )"3. The failure or #an.ruptc! of the insured shall not annul nor rescind the
life+insurance contract, #ut it ma! #e reduced at the re-uest of the legitimate
representaties of the #an.ruptc!, or #e li-uidated in the terms fi(ed in Article )"/.
ARTICLE )'%. The life+insurance policies, after the premiums or installments which the
insured #ound himself to pa! hae #een satisfied, shall #e negotia#le, the indorsement
#eing placed on the polic! itself, the insurance compan! #eing informed thereof in an
authentic manner #! the indorser and indorsee.
ARTICLE )'1. The life+insurance polic! in which a fi(ed amount and time for pa!ment
is stipulated, either in faor of the insured or in that of the underwriter, shall #e the #asis
for an action to o#tain an e(ecution with regard to #oth contracting parties.
The insurance compan!, after the period fi(ed in the polic! for pa!ment has elapsed, ma!
furthermore rescind the contract, communicating its decision within a period not
e(ceeding twent! da!s following the due date, and the amount of the polic! #eing for the
#enefit of the insured e(clusiel!.
SECTION IV
%and Transportation (nsurance
ARTICLE )'". All goods which can #e transported #! the usual means of land
locomotion ma! #e the su#,ect of an insurance contract against the ris.s of transportation.
ARTICLE )''. Cesides the re-uisites which a polic! must contain, according to Article
'2', a transportation+insurance polic! must include:
1. The compan! or person who ta.es charge of the transportation.
". The specific .inds of goods insured, with a statement of the num#er of
pac.ages and their mar.s.
'. The designation of the point where the goods insured are to #e receied
and where the delier! is to #e made.
ARTICLE )'). Bot onl! the owners of the goods transported, #ut also all those who are
interested or are lia#le for their preseration, ma! ta.e out insurance thereon, stating in
the polic! in what capacit! the! do so.
ARTICLE )'&. The contract for transportation insurance shall include ris.s of all .inds,
no matter what their reason ma! #e, #ut the underwriter shall not #e lia#le for impairment
caused #! the defects inherent in the article or on account of the natural lapse of time,
unless there is an agreement to the contrar!.
ARTICLE )'/. In cases of impairment on account of a defect in the article or #! reason
of lapse of time, the underwriter shall ,udiciall! proe the condition of the merchandise
insured, within the twent!+four hours following its arrial at the point it is to #e
deliered.
;ithout this proof the e(emption which he ma! #ring forward as underwriter shall not #e
admissi#le.
ARTICLE )'0. The underwriters shall su#rogate themseles to the rights of the insured
for the purpose of #ringing an action against the carriers on account of the damage the!
ma! #e lia#le for, in accordance with the proisions of this code.
SECTION V
Other )inds of (nsurance
ARTICLE )'2. An! other ris.s ma! #e the su#,ect of a commercial insurance contract,
which arises from accidental cases or natural accidents, and the agreements made must #e
complied with proided the! are licit and are in accordance with the proisions of the
first section of this title.
TITLE IX
Commercial Guaranties
ARTICLE )'3. All guaranties shall #e considered commercial the purpose of which is to
insure the fulfillment of a commercial contract, een though the guarantor is not a
merchant.
ARTICLE ))%. The commercial guarant! must #e reduced to writing #eing otherwise
null and oid.
ARTICLE ))1. A commercial guarant! shall #e gratuitous unless there is an agreement to
the contrar!.
ARTICLE ))". In contracts for an indefinite period, if it has #een agreed to gie the
guarantor a compensation, the guarant! shall continue in force until, #! reason of the
complete termination of the principal contract which is secured, the o#ligations arising
therefrom are definitel! canceled, no matter what their duration ma! #e, unless a fi(ed
period during which the guarant! was to continue in force was e(pressl! agreed upon.

TITLE X
Contracts and Bills of Exchange
SECTION I
!orms of Bill of Exchange
ARTICLE ))'. A #ill of e(change shall #e considered a commercial instrument, and all
the rights and actions arising therefrom, without distinction of persons, shall #e goerned
#! the proisions of this Code.
ARTICLE ))). The #ill of e(change must contain, in order that it ma! #e admissi#le in
suits G
1. The designation of the place, da!, month, and !ear on which it is
issued.
". The time it falls due.
'. The name and surname, firm name, or title of the person to whose order
the pa!ment is to #e made.
). The amount which the drawer orders paid, stating the same in cash or
in the figures which commerce ma! hae adopted for e(change
purposes.
&. The form in which the consideration is ac.nowledged, either on
account of the receipt of its alue in cash or merchandise or other
propert!, which shall #e e(pressed with the words Falue
receied,F or accepting it on those which ma! #e pending, which
shall #e indicated #! the words Falue on accountF or Falue
understood.F
/. The name, surname, firm name, or title of the person from whom the
amount of the #ill of e(change is receied, or to whose account it
is charged.
0. The name and surname, firm name, or title of the person or association
on whom it is drawn, as well as his or its domicile.
2. The signature of the drawer, in his own hand or that of his agent haing
sufficient power of attorne! for the purpose.
ARTICLE ))&. The clauses of Falue on accountF and Falue understoodF shall ma.e the
purchaser of the draft lia#le for the amount of the same in faor of the drawer, in order to
demand it or compensate him in the manner and at the time which #oth ma! hae agreed
on in ma.ing the e(change contract.
ARTICLE ))/. The drawer ma! draw the #ill of e(change:
1. To his own order, stating that he reseres to himself the alue thereof.
". <n a person, in order that he ma! ma.e the pa!ment at the domicile of
a third person.
'. <n another person, at the same place as the residence of the drawer.
). <n himself, #ut #! order and for the account of a third person, this
#eing stated in the #ill of e(change.
This circumstance shall not change the lia#ilit! of the drawer, nor shall the holder ac-uire
an! right whatsoeer against the third person for whose account the #ill was drawn.
ARTICLE ))0. All persons who place their signature on #ills of e(change in the name of
others, as drawers, indorsers, or as acceptors of the same, must #e authori1ed thereto #!
irtue of a power of attorne! of the persons for whom the! act, this #eing stated in the
su#scri#ing clause. rsLmLn
The purchasers and holders of #ills of e(change shall hae a right to demand of the
signers the e(hi#ition of the power of attorne!.
The managers of associations shall #e understood as authori1ed #! the mere fact of their
appointment.
ARTICLE ))2. The drawers can not refuse to issue to holders of the #ills of e(change
second and third #ills, and as man! as the! ma! re-uire of the same #ill, proided the
re-uest is made #efore the #ills fall due, e(cepting the proision of Article &%%, there
#eing stated in all of them that the! shall not #e considered alid e(cept in case pa!ment
was not made on the first #ill of e(change issued, or other prior ones.
ARTICLE ))3. In the a#sence of duplicate copies of the draft issued #! the drawer an!
holder ma! gie the purchaser a cop!, stating that he issues it in the a#sence of the
original, which it is desired to su#stitute.
In this cop! there must #e inserted literall! all the indorsements which the original
contains.
ARTICLE )&%. If the #ill of e(change contains some error or lac. of legal formalit! it
shall #e loo.ed upon as a promissor! note in faor of the holder and for the account of
the drawer.
SECTION II
Periods and *ue *ates of *rafts
ARTICLE )&1. =rafts ma! #e drawn for cash or on time for one of the following periods:
1. At sight.
". At one or more da!s, and at one or more months after sight.
'. At one or more da!s or at one or more months from date.
). At one or more usances.
&. At a fi(ed or determined da!.
/. At fairs.
ARTICLE )&". Each one of these periods shall o#ligate to the pa!ment of the drafts, as
follows:
1. The sight draft, on its presentation.
". The da!s or months after sight draft, on the da! the period fi(ed
elapses, to #e counted from the da! following its acceptance or
protest on account of nonacceptance.
'. The da!s or months from date draft as well as that at one or more
usances, on the da! the period fi(ed elapses, to #e counted from
that immediatel! following the date of the draft.
). Those drawn for pa!ment on a certain date, on said date.
&. Those drawn on fairs, on the last da! thereof.
ARTICLE )&'. The usance of drafts drawn in one place on another in the interior of the
islands of Lu1on and Iisa!as shall #e si(t! da!s. cdasia
That of the drafts drawn on Iisa!as or Lu1on in the other 7panish islands of said
archipelago shall #e ninet! da!s, as well as for those drawn in ports of China on the sea
of the same name, calling places in the Jellow 7ea, and places in the straits of 7onda and
9ala..a.
In other places, one hundred and twent! da!s.
ARTICLE )&). The months for the periods of drafts shall #e computed from date to date.
If in the month the draft falls due there is no da! e-uialent to that of the date on which
the #ill was drawn it shall #e understood that it falls due the last da! of the month.
ARTICLE )&&. All drafts must #e paid on the da! the! fall due, #efore sunset, without
an! da!s of grace or of courtes!.
If the da! it falls due should #e a holida! the draft shall #e paid on the preious da!.
SECTION III
Obligations of *ra1ers
ARTICLE )&/. The drawer shall #e under the o#ligation to suppl! the funds necessar! to
the person on whom the #ill was drawn, unless the draft is made for the account of a third
person, in which case the o#ligation will rest on the latter, alwa!s resering the direct
lia#ilit! of the drawer with regard to the purchaser or holder of the draft and that of the
third person for whose account the draft was made with regard to the drawer.
ARTICLE )&0. The suppl! of funds shall #e considered made, when, the #ill #eing due,
the person on whom it was drawn is the de#tor of an e-ual or greater sum than the draft
to the drawer or to the third person for whose account the #ill was drawn.
ARTICLE )&2. The e(penses arising from the nonacceptance or nonpa!ment of the draft
shall #e paid #! the drawer or #! the third person for whose account it was made, unless
he proes that he supplied the funds at the proper time, or that he was a creditor in
accordance with the foregoing article, or that he was speciall! authori1ed to draw for the
amount in -uestion.
In an! of the three cases, the drawer ma! re-uire of the person o#ligated to accept and to
pa! the indemnit! for the e(penses which he ma! hae paid the holder of the draft.
ARTICLE )&3. The drawer shall #e ciill! lia#le for the results of his draft to all the
persons who successiel! ac-uire and cone! it.
The effects of this lia#ilit! are specified in Articles )&/, )&2, and the following one.
ARTICLE )/%. The lia#ilit! of the drawer shall cease when the holder of the draft has not
presented it or did not protest it in due time and form, proided he proes that when the
#ill fell due he had supplied the funds for its pa!ment in the manner prescri#ed in Articles
)&/ and )&0.
7hould he not adduce this proof, he shall reim#urse the amount of the draft not paid, een
though the protest was not made at the proper time during the time the draft has not
prescri#ed. 7hould he adduce said proof, the lia#ilit! for the reim#ursement shall #e
incurred #! the person who is in default, proided the draft has not prescri#ed.
SECTION IV
(ndorsements of Bills of Exchange
ARTICLE )/1. The ownership of drafts shall #e transferred #! indorsement.
ARTICLE )/". The indorsement must contain:
1. The name and surname, firm name, or title of the person or compan! to
whom or which the draft is transferred.
". The form in which the assignor ac.nowledges the consideration of the
purchaser, as stated in Bo. & of Article ))).
'. The name and surname, firm name, or title of the person from whom it
is receied, or to the account of whom it is charged, if it is not the
same person to whom the draft is transferred.
). The date on which it is drawn.
&. The signature of the indorser, or of the person legall! authori1ed to sign
for him, which shall #e stated in the su#scri#ing clause.
ARTICLE )/'. If the statement of the date is omitted in the indorsement, the ownership
of the draft shall not #e transferred, and it shall #e understood as simpl! a commission for
collection.
ARTICLE )/). If a date prior to the da! on which the indorsement was made is placed on
the draft, the indorser shall #e lia#le for the damages suffered there#! #! a third person,
without pre,udice to the penalt! which he ma! incur for the crime of forger!, if he did so
maliciousl!.
ARTICLE )/&. Indorsements signed in #lan. and those in which the alue is not stated
shall transfer the ownership of the draft and shall produce the same effect as if Falue
receiedF were written therein.
ARTICLE )//. =rafts not issued to order can not #e indorsed, nor those which hae
fallen due or are damaged.
The transfer of ownership shall #e licit #! the means ac.nowledged in the common law$
and if, howeer, an indorsement is made, it shall hae no further force than that of a
simple cession.
ARTICLE )/0. The indorsement shall produce in each and eer! one of the indorsers the
lia#ilit! for the guarant! for the amount of the draft, if it is not accepted, and to its
repa!ment, with the costs of the protest and re+e(change, if not paid when due, proided
the proceeding of presentation and protest too. place at the time and in the manner
prescri#ed in this Code.
This lia#ilit! shall cease on the part of the indorsers who, at the time of transferring the
draft, ma! hae placed thereon the clause Fwithout m! lia#ilit!.F

In such case the indorser shall onl! answer for the identit! of the person ma.ing the
transfer or for the right with which he ma.es the transfer or indorsement.
ARTICLE )/2. The #ro.er of negotia#le #ills of e(change or promissor! notes,
constitutes himself guarantor of those he ac-uires or negotiates for the account of others,
if he places his indorsement thereon, and he can onl! refuse to do so for good reasons,
when there was an e(press agreement made #! which the principal freed him from the
lia#ilit!. In this case the agent ma! ma.e the indorsement at the order of the principal,
with the clause, Fwithout m! lia#ilit!.F
SECTION V
Presentation of *rafts and Their $cceptance
ARTICLE )/3. =rafts which are not presented for acceptance or pa!ment within the
period fi(ed shall #e affected there#!, as well as when the! are not protested at the proper
time.
ARTICLE )0%. Cills of e(change drawn in the islands of Lu1on and Iisa!as and in the
ad,acent ones, on an! point therein, at sight or at a period counted after sight, must #e
presented for collection or acceptance within si(t! da!s from their date.
ARTICLE )01. Cills of e(change drawn in the islands of Lu1on, Iisa!as, and the
ad,acent ones, on place in the 9ariana Islands, Carolines, and *alaos, shall #e presented
in the cases referred to in the foregoing article within the period of si( months.
Cills of e(change drawn #etween the *eninsula and the 7panish Antilles or other points
which are on this side of Cape Aorn and the Cape of 8ood Aope, no matter what ma! #e
the form of the period mentioned therein, shall #e presented for pa!ment, or acceptance
within si( months at most.
;ith regard to places which are on the other side of said capes the period shall #e of one
!ear.
ARTICLE )0". Cills of e(change drawn #etween the *hilippine Islands and the
*eninsula, no matter what ma! #e the form of the period mentioned therein, shall #e
presented for pa!ment or acceptance within si( months at most. ;ith regard to places
situated in the Antilles and other 7panish territories, the period shall #e of one !ear.
ARTICLE )0'. *ersons forwarding #ills of e(change to points across the seas must send
at least second copies in different essels from those #! which the first were sent$ and
should the! proe that the carr!ing essels suffered some accident on the sea which
dela!ed their o!age, the time which elapsed up to the date on which said accident was
made .nown in the place of residence of the sender shall not #e ta.en into consideration
in the computation of the legal period.
The same effect shall #e produced #! the real or presumed loss of the essels.
In accidents which occurred on land and which are well .nown, the same rule shall #e
o#sered with regard to the computation of the legal period.
ARTICLE )0). =rafts drawn at sight in foreign countries on places of the territor! of the
*hilippine Islands shall #e presented for collection or acceptance within the fort! da!s
following their introduction in the respectie islands, and those drawn after date at the
times stipulated therein.
ARTICLE )0&. =rafts drawn in the *hilippine Islands on foreign countries shall #e
presented in accordance with the laws in force in the place where the! are to #e paid.
ARTICLE )0/. The holders of the drafts drawn at a period counted after the date thereof
need not #e presented for acceptance.
The holder of the draft ma!, if he deems it conenient to him interests, present it to the
person on whom it is drawn #efore it falls due, and in such case, the latter shall accept it
or shall state the reasons for his refusal to do so.
ARTICLE )00. After a draft has #een presented for acceptance within the periods fi(ed in
the foregoing articles, the person or persons on whom it is drawn must accept it #! means
of the words FI acceptF or Fwe accept,F adding the date, or state to the holder their reasons
for not accepting it.
If the #ill of e(change is drawn at sight or at a period to #e counted after sight, and the
person on whom it is drawn does not add the date of the acceptance, the period shall run
from the da! on which the holder could hae presented the draft without dela! in the
mail$ and the computation of time #eing made in this manner, and the draft #eing due, it
is collecta#le on the da! immediatel! following that of the presentation.
ARTICLE )02. The acceptance of the draft must ta.e place or #e refused on the same da!
on which the holder presents it for this purpose, and the person of whom acceptance is
demanded can not retain the draft in his possession under an! prete(t whatsoeer.
If the draft presented for acceptance is to #e paid in a place other than that of the
residence of the person accepting the same, the domicile in which pa!ment is to #e made
must #e stated in the draft.
The person who receies a draft for acceptance, if it is drawn on him, or to hae it
accepted if it is drawn on a third person, and should retain possession thereof e(pecting
another cop!, and shall adise its acceptance #! means of a letter, telegram, or other
means of writing, shall #e lia#le to the drawer and indorsers thereof in the same manner
as if the acceptance had #een placed on the draft in -uestion, een though such
acceptance has not ta.en place, or een when he refuses the delier! of the cop! accepted
to the person legall! re-uesting it.
ARTICLE )03. Cill of e(change can not #e accepted conditionall!, #ut the acceptance for
a smaller amount than that contained in the draft can #e made, in which case it ma! #e
protested for the #alance of the full amount of the same.
ARTICLE )2%. The acceptance of a draft shall #ind the person accepting it to the
pa!ment thereof when it falls due, and he shall not #e relieed from ma.ing the pa!ment
on account of not haing #een supplied with funds #! the drawer, nor for an! other
reason whatsoeer e(cept the forger! of the draft.
ARTICLE )21. In case the acceptance of a #ill of e(change is refused it shall #e
protested, and in iew of said protest the holder shall hae a right to re-uire the drawer or
an!one of the indorsers to secure the amount of the draft to his satisfaction, or to deposit
the amount thereof, or to reim#urse him for the costs of the protest and of the re+
e(change, discounting the legal rate of interest for the period which still is to elapse until
it falls due.
The holder ma! also, een though the draft has #een accepted #! the person on whom it
is drawn, if the latter allowed other acceptances to #e protested, appl! #efore its due date
to the other person mentioned therein re-uesting #! protest a #etter securit!.
ARTICLE )2". If the holder of a draft allows the periods fi(ed according to the cases to
elapse without presenting it for acceptance, or does not order it protested, he shall lose all
rights to demand the securit!, deposit, or reim#ursement, with the e(ception of the
proisions of Article &"&.
ARTICLE )2'. If the holder of a #ill of e(change should not present it for collection on
the da! it falls due, or, in the a#sence of pa!ment, does not hae it protested on the
following da!, he shall lose his right to #e reim#ursed #! the indorsers$ and with regard to
the drawer, the proisions of Articles )&2 and )/% shall #e o#sered.
The holder shall not lose his right to reim#ursement, if it were not possi#le to present the
draft or to ta.e out the protest in time #! reason of force ma/eure.
ARTICLE )2). If the #ill of e(change should contain indications made #! the drawer or
indorsers of other persons of whom acceptance is to #e demanded in default of the one
indicated in the first place, the holder must, after the protest has #een made, if the former
has refused acceptance, demand acceptance of the persons mentioned.
ARTICLE )2&. *ersons who forward drafts from one place to another too late to #e
presented or protested at the proper time shall #e lia#le for the conse-uences which ma!
arise #! reason thereof.
SECTION VI
Guarantees and Their Effects
ARTICLE )2/. The pa!ment of a draft ma! #e secured #! a written o#ligation,
independent of that contracted #! the acceptor and indorser, .nown #! the name of
guarantee 5aval6.
ARTICLE )20. If the guarantee 5aval6 is drawn up in general terms and without
restriction, the person giing it shall #e lia#le for the pa!ment of the draft in the same
cases and manner as the person for whom he appears as guarantor$ #ut if the guarantee
5aval6 is limited as to a determined time, case, amount, or person it shall not produce
further lia#ilit! than that arising from the terms of the guarantee 5aval6.
SECTION VII
Pa&ments
ARTICLE )22. Cills of e(change must #e paid to the holder on the da! the! fall due, in
accordance with Article )&&. aisadc
ARTICLE )23. Cills of e(change must #e paid in the mone! designated therein, and if
that could not #e procured, in its e-uialent, according to the use and customs at the place
of pa!ment.
ARTICLE )3%. The person pa!ing a #ill of e(change #efore it is due shall not #e
e(empted from pa!ing the amount of the same if the first pa!ment was not made to a
legitimate person.
ARTICLE )31. The pa!ment of a #ill of e(change pa!a#le to #earer which is due shall #e
considered alid, unless a garnishment of the amount thereof #! reason of a ,udicial
,udgment was preiousl! issued.
ARTICLE )3". The holder of a draft, who re-uests its pa!ment, is o#liged to satisf! the
person pa!ing it as to his identit!, #! means of instruments or though residents who are
ac-uainted with him or who will guarantee his identit!.
The a#sence of this proof shall not preent the deposit of the amount of the draft on the
da! of its presentation in an esta#lishment or with a person accepted #! the holder and
pa!or, in which case the esta#lishment or person shall retain the sum deposited in his or
its possession until the legitimate pa!ment is made.
The e(penses and ris.s arising from this deposit shall #e for the account of the holder of
the draft.
ARTICLE )3'. The holder of a draft shall not #e o#liged to collect its amount #efore it
falls due$ #ut should he accept said pa!ment it shall #e alid, e(cept in case of the
#an.ruptc! of the pa!or in the fifteen da!s following, in accordance with the proisions
of Article 203.

ARTICLE )3). Beither shall the holder #e o#liged, een after the draft has fallen due, to
receie part and not the whole amount of the same, and onl! with his consent ma! a
portion of its alue #e paid and the #alance #e left standing.
In such case the draft ma! #e protested for the amount which has not #een paid, and the
holder shall retain possession thereof, ma.ing a memorandum on the same of the amount
collected and giing a separate receipt for said amount.
ARTICLE )3&. =rafts accepted must necessaril! #e paid on the cop! which contains the
acceptance.
If the pa!ment is made on an! of the other ones, the person who made the pa!ment shall
#e lia#le for the alue of the draft to the third person who is the legitimate holder of the
acceptance.
ARTICLE )3/. The acceptor can not #e forced to pa!ment, een though the holder of the
cop! not containing the acceptance #inds himself to gie securit! to the satisfaction of the
former$ #ut in the latter case the #earer ma! demand the deposit and formulate the protest
in the terms mentioned in Article )32.
If the acceptor oluntaril! admits the securit! and ma.es the pa!ment, the former shall #e
legall! canceled as soon as the acceptance has prescri#ed which gae rise to the
e(ecution of the securit!.
ARTICLE )30. Cills of e(change not accepted ma! #e paid after the! hae fallen due and
not #efore, on the seconds, thirds, or other ones issued in accordance with the proisions
of Article ))2$ #ut not on the copies gien in accordance with the proision of Article
))3, unless one of the copies issued #! the drawer is attached thereto.
ARTICLE )32. The person who ma! hae lost a draft, accepted or not, and the person
haing in his possession an accepted first draft and who is awaiting the second, and has
no other cop! with which to re-uest the pa!ment, ma! demand the pa!or to deposit the
amount of the draft in the pu#lic esta#lishment deoted to this purpose, or with a person
haing their mutual confidence, or designated #! the ,udge or court in case of
disagreement, and if the person o#liged to pa! should refuse to ma.e the deposit, the
refusal shall #e made .nown #! a protest similar to that for nonpa!ment, and with this
instrument the claimant shall presere his rights against the persons who ma! #e lia#le
for the results of the draft.
ARTICLE )33. If the draft lost should hae #een drawn a#road or outside of the territor!
of the *hilippine Islands, and the holder proes his ownership #! the #oo.s or #! the
correspondence of the person from whom he receied the draft, or #! a certificate of the
#ro.er who mediated in the transaction, he shall #e entitled to recoer its alue, if #esides
this proof he gies sufficient securit!, the effects of which shall continue until the cop! of
the draft gien #! the said drawer is presented or until it has prescri#ed.
ARTICLE &%%. The re-uest for a cop! to ta.e the place of the draft lost must #e made #!
the last holder, from the person who transferred it to him, and thus successiel! from one
to another indorser until the drawer is reached.
Bo person can refuse to lend his name and interposition to the steps ta.en to procure a
new cop!, the owner of the draft defra!ing the e(penses which ma! arise until it is
o#tained.
ARTICLE &%1. The pa!ments made on account of the alue of a draft #! the person on
whom it is drawn shall reduce the lia#ilit! of the drawer and indorsers in li.e proportion.
SECTION VIII
Protests
ARTICLE &%". The nonacceptance or nonpa!ment of #ills of e(change must #e proen
#! means of a protest, without the first protest haing #een made e(empting the holder
from ma.ing the second, and without the death of the person on whom it is drawn nor his
condition of #an.ruptc! permitting the holder not to ma.e protest.
ARTICLE &%'. All protests on account of nonacceptance or nonpa!ment place the person
who gae rise thereto under the o#ligation to defra! the e(penses, losses, and damages.
ARTICLE &%). In order that a protest ma! #e alid, it must necessaril! include the
following conditions:
1. It must #e made #efore sunset on the da! following that on which
acceptance or pa!ment was refused$ and, if it is a holida!, on the
first wor.ing da! thereafter.
". It must #e #efore a notar! pu#lic.
'. 7aid protest must #e sered on the person on whom the #ill of
e(change is drawn, in the place where it is to #e paid if he can #e
found there, and otherwise, on his emplo!ees, should he hae an!$
or, in the a#sence of the latter, on his wife, children, or serants, or
on the neigh#or referred to in Article &%&.
). It must contain an e(act cop! of the #ill of e(change, of its acceptance,
should it hae #een accepted, and of all the indorsements and
indications included in the same.
&. It must include the demand for pa!ment made on the person who must
accept or pa! the #ill$ and should he not hae #een found, the
demand shall #e made upon the person with whom the proceedings
are had.
/. It must also contain the answer gien to the demand.
0. It must state in the same manner the threat that the e(penses and losses
are to #e paid #! the person who occasioned them.
2. It must #e signed #! the person who ma.es it, and, should he not .now
how or not #e a#le to do so, #! two attending witnesses.
3. It must state the date and hour when the protest was made.
1%. The person with whom the proceedings were held must #e furnished a
cop! of the protest drafted on common paper.
ARTICLE &%&. The legal domicile in which to ma.e the protest shall #e:
1. That designated in the draft.
". In the a#sence of such designation, the domicile of the pa!or at the
time.
'. In the a#sence of either, the last at which he was .nown.
7hould the domicile of the person on whom the draft was drawn not appear to #e in an!
of the three places a#oe cited, a neigh#or haing an office in the place where the
acceptance and pa!ment is to #e made shall #e applied to, with whom the formalities
shall #e gone through and to whom the cop! shall #e deliered.
ARTICLE &%/. Bo matter at what time the protest ma! #e made, the notaries shall retain
possession of the drafts, without deliering the latter or the certified cop! of the protest to
the holder, until sunset of the da! on which it is made$ and if the protest was made for
nonpa!ment, and the pa!or in the meantime appears in order to satisf! the amount of the
draft and the costs of the protest, the pa!ment shall #e accepted, the draft #eing deliered
with a memorandum thereon stating that the protest has #een paid and canceled.
ARTICLE &%0. If the protested draft should contain indications, there shall #e included in
the protest the demand made of the persons indicated and their answers and the
acceptance or pa!ment, if the! should hae done so.
In such cases, if the indications are made for the same place, the period for the conclusion
and delier! of the protest shall #e e(tended to 11 o4cloc. a.m. of the following wor.ing+
da!.
If the indications are for a different place the protest shall #e closed as if it did not contain
an!, the holder of the draft #eing permitted to appl! to them within a period not to e(ceed
twice the time re-uired #! the mail to reach said place from the first one designated, and
ma!, through a notar!, demand pa!ment in their order of the persons in each place,
renewing the protest with the same if there should #e occasion therefor.
ARTICLE &%2. All the formalities of a protest of a #ill of e(change must #e drafted in a
single instrument, #eing entered successiel! in the order the! ta.e place.
The notar! shall gie a certified cop! of this instrument to the holder, returning the
original draft to him.
ARTICLE &%3. Bo act or instrument can suppl! the omission and a#sence of the protest
for the preseration of the action which ma! #e instituted #! the holder against the
persons lia#le for the legal effects of the draft.
ARTICLE &1%. If the person on whom the draft was drawn should #ecome a #an.rupt, it
ma! #e protested for nonpa!ment een #efore it falls due$ and after #eing protested, the
holder ma! ma.e use of his right of action against the persons lia#le for the legal effects
of the draft.
SECTION IX
(ntervention in $cceptance and Pa&ment
ARTICLE &11. If after a #ill of e(change should #e protested for nonacceptance or
nonpa!ment a third person should appear offering to accept or pa! the same for the
account of the drawer or for the account of an! of the indorsers, een though there is no
prior mandate to do so, the interention for the acceptance or pa!ment shall #e admitted,
one or the other #eing entered immediatel! after the protest, under the signature of the
person who interened and that of the notar!, the name of the person for whose account
the interention too. place #eing stated in the instrument.
If seeral persons appear to interene, the person doing so for the drawer shall #e
preferred, and if all of them desire to interene for the indorsers, the one who does so for
the prior indorser shall #e preferred.
ARTICLE &1". The person who interenes in the protest of a #ill of e(change, if he
accepts it, shall #e lia#le for its pa!ment in the same manner as if it were drawn on him,
#eing o#liged to gie notice of its acceptance #! the first mail to the person for whom he
interened$ and should he pa! it, he shall #e su#rogated to the rights of the holder,
compl!ing with the o#ligations prescri#ed for the latter, with the following limitations:
1. If he pa!s said draft for the account of the drawer, the latter onl! shall
#e lia#le to him for the amount dis#ursed, the indorsers #eing free.
". If he pa!s it for the account of one of the latter, he shall #e entitled to
#ring an action against the drawer, against the indorser for whose
account he interened, and against the others who precede said
indorser in the order of their indorsements, #ut not against those
who ma! #e su#se-uent.
ARTICLE &1'. The interention in the acceptance shall not deprie the holder of the
draft protested of the right to demand of the drawer or of the indorsers the securit! for the
results.

ARTICLE &1). If the person who did not accept a draft, giing rise to a protest there#!,
should appear to pa! it when it falls due, his pa!ment shall #e accepted in preference to
that of the person who interened or wished to interene for the acceptance or pa!ment$
#ut the e(penses caused #! the nonacceptance of the draft at the proper time shall #e for
his account.
ARTICLE &1&. A person who interenes in the pa!ment of a draft affected in an!
manner, shall not hae an! further right of action than that which the holder would hae
against the drawer who did not proide funds at the proper time, or against the person
who retains possession of the alue of the draft without haing made its delier! or
reim#ursement.
SECTION X
$ctions ,hich Ma& Be (nstituted b& the 2older of a Bill of Exchange
ARTICLE &1/. In default of the pa!ment of a #ill of e(change presented and protested at
the proper time and in the proper manner, the holder shall hae a right to demand of the
acceptor, of the drawer, or of an! of the indorsers the reim#ursement for the costs of
protest and re+e(change$ #ut after an action has #een instituted against one of them, it
cannot #e #rought against the rest e(cept in the case of the insolenc! of the defendant.
ARTICLE &10. If the holder of a protested draft would direct his action against the
acceptor #efore the drawer and indorsers, he shall notif! all of them of the protest through
a notar! pu#lic within the periods mentioned in the fifth section of this title, for the
purpose of o#taining their acceptance$ and if it is directed against an! of the latter a
similar notification shall #e made within the same periods to the rest.
The indorsers to whom this notification is not made shall #e e(empted from lia#ilit!, een
when the defendant is insolent, and the same shall #e understood with regard to the
drawer who proes that he made the proision of funds at the proper time.
ARTICLE &12. If an e(ecution has #een had against the propert! of the de#tor for the
pa!ment or reim#ursement of a draft and the holder should hae #een a#le to reali1e onl!
a part of his credit, he ma! #ring an action against the rest for the #alance of his account
until he is full! reim#ursed, in the manner esta#lished in Article &1/. cdtai
The same shall #e done in case the person proceeded against is declared in #an.ruptc!,
and if all the persons lia#le for the draft are in similar circumstances, the claimant shall
#e entitled to recoer from each set of assets the corresponding diidend until his credit is
totall! cancelled.
ARTICLE &13. The indorser who pa!s a protested draft shall su#rogate himself to the
rights of the holder thereof, i1.:
1. If the protest were for nonacceptance, against the drawer and the other
indorsers who precede him in order, for the securit! of the alue of
the draft, or the deposit in the a#sence of securit!.
". If it were for non+pa!ment, against the said drawer, acceptor, and prior
indorsers for the recoer! of the amount of the draft and of all the
costs he ma! hae paid.
If the drawer and the indorser #oth should appear to ma.e the pa!ment, the drawer shall
#e preferred$ and if the indorsers onl! should appear, the one of a prior date.
ARTICLE &"%. The drawer as well as an! of the indorsers of a protested #ill of e(change
ma! demand, as soon as the! receie notice of the protest, that the holder receie the
amount with the legitimate e(penses, and delier to them the draft with the protest and
the account of the redraft.
ARTICLE &"1. The action arising from #ills of e(change to recoer, in the respectie
cases, of the drawer, acceptors, or indorsers the pa!ment or reim#ursement, shall include
an attachment, which must #e issued, in iew of the draft and of the protest, without
further re-uisite than the ,udicial ac.nowledgment of their signatures #! the drawer and
indorsers proceeded against. A similar action ma! #e #rought against the acceptor to
compel him to ma.e the pa!ment.
The ac.nowledgment of the signature shall not #e necessar! to carr! out the attachment
against the acceptor when no charge of forger! has #een made in the instrument of protest
for nonpa!ment.
ARTICLE &"". The action #rought to secure the guarant! or the deposit of the amount of
a #ill of e(change, in the cases in which it is proper with regard to the proisions of
Articles )21, )3", and )32 of this Code, shall #e in accordance with the proceedings
prescri#ed in Coo. ', part ", title ', of the law of ciil procedure, it #eing sufficient to
accompan! to the claim in the first case the protest showing the nonacceptance of the
draft.
ARTICLE &"'. Against the actions including attachment #! reason of #ills of e(change,
no further e(ceptions shall #e admitted #ut those mentioned in the law of ciil procedure.
ARTICLE &"). The amount which a creditor remits or releases a de#tor against whom an
action has #een #rought from the pa!ment or reim#ursement of a #ill of e(change, shall
#e understood as e(tended also to the rest who ma! #e lia#le for the effects of the
collection.
ARTICLE &"&. The prescription of a protested draft shall not hae an! effect #! reason of
nonpresentation, protest, or its notification at the times which hae #een stated, with
regard to the drawer or indorser who, after said periods hae elapsed, has #alanced the
amount of the draft in his accounts with the de#tor or reim#ursed him with #onds or
securities #elonging to him.
ARTICLE &"/. Cills of e(change protested #! reason of nonpa!ment shall earn interest
in faor of the holders thereof from the date of the protest.
SECTION XI
Re'Exchange and Redraft
ARTICLE &"0. The holder of a protested #ill of e(change ma! recoer the amount
thereof and the costs of protest and re+e(change #! drawing a new #ill against the drawer
or one of its indorsers and attaching to this draft the original one, as well as the certified
cop! of the protest and the account of the redraft, which shall onl! contain the following
clauses:
1. The amount of the #ill of e(change protested.
". *rotest costs.
'. 7tamp ta( for the redraft.
). E(change according to the customs of the place.
&. Cro.erage of the transaction.
/. E(pense of the correspondence.
0. Loss #! reason of the re+e(change.
In this account there shall #e stated the name of the person on whom the redraft is made.
ARTICLE &"2. All the items of the redraft shall conform to the usages of the place, and
the re+e(change to the current rate on the da! of the draft. This will #e proen #! the
official -uotation on e(change, or #! means of a certificate of an official agent or #ro.er,
should there #e one, and in their a#sence #! that of two recorded merchants.
ARTICLE &"3. <nl! one account or redraft can #e made for each #ill of e(change, which
account shall #e paid #! the indorsers of one or the other until it is e(tinguished #! means
of the reim#ursement of the drawer.
9ore than one re+e(change shall not #e charged, and the amount thereof shall #e
graduated #! increasing or reducing the amount due from each person, according as to
whether the paper on the place to which the redraft is addressed is negotiated in that of its
domicile with a premium or with discount, which circumstance shall #e proen #! means
of certificate of an agent, #ro.er, or merchant. cdasia
ARTICLE &'%. The holder of a redraft can not demand legal interest thereon until after
the da! he demands pa!ment of the person who is to pa! it, in the manner prescri#ed in
Article /' of this Code.
TITLE XI
*rafts" Bills" and Promissor& 0otes Pa&able to Order" and Checks
SECTION I
*rafts" Bills" and Promissor& 0otes Pa&able to Order
ARTICLE &'1. The drafts, #ills, and promissor! notes pa!a#le to order must contain:
1. The specific name of the draft, #ill or promissor! note.
". The date of issue.
'. The amount.
). The time of pa!ment.
&. The person to whose order the pa!ment is to #e made, and, in drafts,
the name and domicile of the person against whom the! are drawn.
/. The place where the pa!ment is to #e made.
0. The origin and .ind of alue the! represent.
2. The signature of the person ma.ing the draft, and, in #ills or
promissor! notes, the person who contracts the o#ligation to pa!
them.
Cills which are to #e paid in a place other than that of the residence of the pa!or, shall
indicate a domicile for the pa!ment.
ARTICLE &'". =rafts pa!a#le to order #etween merchants and the #ills or promissor!
notes li.ewise pa!a#le to order, which arise from commercial transactions, shall produce
the same o#ligations and effects as #ills of e(change, e(cept with regard to acceptance,
which is a -ualit! of the latter onl!.
The #ills or promissor! notes which are not pa!a#le to order shall #e considered simple
promises to pa! su#,ect to the common law or the commercial law according to their
nature, e(cepting the proisions contained in the following title.
ARTICLE &''. The indorsements on drafts and promissor! notes pa!a#le to order must
contain the same statements as those on #ills of e(change.
SECTION II
Checks
ARTICLE &'). The order to pa!, .nown in commerce #! the name of chec., is an
instrument which permits the ma.er to withdraw for his #enefit or for that of a third
person the whole or part of the funds he ma! hae at his disposal in the hands of the
depositar!.
ARTICLE &'&. The chec. must contain:
The name and the signature of the ma.er, and the name of the person on whom it is
drawn and his domicile, amount and date of issue, which must #e written out, and if
pa!a#le to #earer, to a determined person, or to order$ in the latter case it shall #e
transfera#le #! indorsement.
ARTICLE &'/. It ma! #e drawn in the same place it is to #e paid, or in a different place$
#ut the ma.er shall #e o#liged to preiousl! hae the funds on deposit with the person on
whom it is drawn.
ARTICLE &'0. The holder of a chec. must present it for pa!ment within fie da!s of its
issue, if drawn in the same place, and within eight da!s if drawn in another one.
The holder who allows this period to elapse shall lose his right of action against the
indorsers as well as against the ma.er, if the funds deposited with the person on whom it
is drawn should disappear #ecause the latter has suspended pa!ments or is a #an.rupt.

ARTICLE &'2. The period of eight da!s following the arrial of the mail fi(ed in the
foregoing article shall also #e understood for those drawn a#road.
ARTICLE &'3. *a!ment of a chec. shall #e demanded of the depositor! on presentation.
The person to whom pa!ment is made shall state in his receipt his name and the date of
pa!ment.
ARTICLE &)%. =uplicates of chec.s can not #e issued unless the originals hae #een
preiousl! canceled after the! hae lapsed and the agreement thereto of the depositor!
has #een o#tained.
ARTICLE &)1. The ma.er or an! legal holder of a chec. shall #e entitled to indicate
therein that it #e paid to a certain #an.er or institution, which he shall do #! writing
across the face the name of said #an.er or institution, or onl! the words Fand compan!.F
The pa!ment made to a person other than #an.er or institution shall not e(empt the
person on whom it is drawn, if the pa!ment was not correctl! made.
ARTICLE &)". The proisions contained in this Code relating to the ,oint lia#ilit! of the
ma.er and indorsers, and to protests, as well as to the e(ercise of the actions arising from
#ills of e(change, shall #e applica#le to these instruments.
ARTICLE &)'. The foregoing proision, in so far as the! are applica#le, shall goern pa!
orders .nown #! the name of stu#s, in current account, of #an.s or institutions.
TITLE XII
(nstruments Pa&able to Bearer" and !orger&" Robber&" Theft" or %oss of the #ame
SECTION I
(nstruments Pa&able to Bearer
ARTICLE &)). All instruments pa!a#le to order, discussed in the foregoing title, ma! #e
issued pa!a#le to #earer, and shall, the same as the former, include an attachment from
the da! the! fall due, without further re-uisite than the ac.nowledgment of the signature
of the person lia#le for the pa!ment.
The due date shall #e counted according to the rules esta#lished for instruments issued
pa!a#le to order, and against the action to secure ,udgment no e(ceptions #ut those
mentioned in Article &"' shall #e admitted.
ARTICLE &)&. <ther instruments pa!a#le to #earer, #e the! either the ones mentioned in
Article /2 or #an. notes, shares, or o#ligations of other #an.s, mortgage loan,
agricultural loan, or of associations handling pu#lic securities, railroad companies,
companies of pu#lic wor.s, industrial or commercial associations, or of an! other .ind
whatsoeer, issued in accordance with the laws and proisions of this Code, shall produce
the following effects:
1. The! shall include attachment, as well as their coupons, from the da!
the respectie o#ligation falls due, or when the! are presented, if
no due date has #een affi(ed.
". The! shall #e transfera#le #! the simple delier! of the instrument.
'. The! are not su#,ect to restitution if the! were negotiated on e(change
with the interention of a licensed agent, and where there is no
such agent with the interention of a notar! pu#lic or of a
commercial #ro.er.
The rights and actions of the legitimate owner against the endor or other persons lia#le
according to the laws for the acts which depried him of the possession and ownership of
the instruments sold, shall #e resered.
ARTICLE &)/. The holder of an instrument pa!a#le to #earer shall hae a right to
compare it with the originals wheneer he considers it adisa#le.
SECTION II
Robber&3 Theft" or %oss of (nstruments of Credit and those Pa&able to Bearer
ARTICLE &)0. The following shall #e instruments of credit pa!a#le to #earer for the
effects of this section, according to the following cases:
1. Instruments of credit against the 7tate, proinces, or municipalities,
legall! issued.
". Those issued #! foreign countries the -uotation of which has #een
authori1ed #! the 8oernment, on the recommendation of the
#oard of directors of the association of agents.
'. Instruments of credit pa!a#le to #earer, of foreign enterprises,
esta#lished in accordance with the law of the 7tate to which the!
#elong.
). Instruments of credit pa!a#le to #earer issued in accordance with the
laws of their association #! national esta#lishments, associations,
or enterprises.
&. Those issued #! priate parties, proided the! are mortgaged or are
sufficientl! secured. cdt
ARTICLE &)2. The dispossessed owner, no matter for what cause it ma! #e, ma! appl!
to the ,udge or court of competent ,urisdiction, as.ing that the principal, interest, or
diidends due or a#out to #ecome due, #e not paid a third person, as well as in order to
preent the ownership of the instrument from #eing transferred to another person, or he
ma! re-uest that a duplicate #e issued him.
The ,udge or court e(ercising ,urisdiction in the district in which the de#tor esta#lishment
or person is situated, shall #e of competent ,urisdiction.
ARTICLE &)3. In the complaint made to the ,udge or court #! the dispossessed owner he
must state the name, character, nominal alue, num#er if it should hae one, and the
series of the instrument$ and furthermore, if it were possi#le, the time and place he
ac-uired ownership and the manner of ac-uisition thereof, the time and place where he
receied the last interest or diidends, and the circumstances attending the dispossession.
The person dispossessed, in ma.ing the complaint, shall indicate within the district in
which the ,udge or court of competent ,urisdiction e(ercises the domicile where he is to
#e sered with all notifications.
ARTICLE &&%. If the complaint relates onl! to the pa!ment of the principal or interest or
diidends which are due or a#out to #ecome due, the ,udge or court, when the legalit! of
the ac-uisition of the instrument has #een proed, must admit said complaint
immediatel! ordering:
1. That the complaint #e immediatel! pu#lished in the Gacetas of 9adrid
and 9anila, in the Boletin oficial of the proince, and in the *iario
oficial de $visos of the place, should there #e one, fi(ing a short
period within which the holder of the instrument ma! appear.
". That it #e communicated to the managing office of the institution which
issued the instrument, or to the association or priate person from
whom it originates, in order that the pa!ment of the principal or
interest ma! #e suspended.
ARTICLE &&1. The re-uest shall #e heard in the presence of a mem#er of the department
of pu#lic prosecution, and in the manner prescri#ed in the law of ciil procedure for
interlocutor! issues.
ARTICLE &&". After one !ear has elapsed since the complaint without an!#od!
contradicting it, and if in the interal two diidends hae #een distri#uted, the
complainant ma! re-uest the ,udge or court for authorit! not onl! to recoer the interest
or diidends due or a#out to #ecome due, in the proportion and means of their
collecti#ilit!, #ut also the principal of the instruments, if it is demanda#le.
ARTICLE &&'. After authori1ation has #een granted #! the ,udge or court, the person
dispossessed must, #efore receiing the interest or diidends, or the principal, gie
sufficient securit! to coer the amount of the annuities recoera#le, and, furthermore,
twice the amount of the last annuit! due.
After two !ears hae elapsed from the date of the authori1ation without the complainant
#eing contradicted, the guarant! shall #e canceled.
If the complainant does not wish to or can not gie the securit!, the de#tor association or
priate person ma! re-uest the deposit of the interest or diidends past due or of the
principal recoera#le, and to receie after the two !ears the amount deposited if there #e
no o#,ection.
ARTICLE &&). If the principal should #e recoera#le after the authori1ation, it ma! #e
demanded under securit! or the deposit ma! #e re-uired.
After fie !ears hae elapsed, without opposition, from the date of the authori1ation, or
ten !ears from the date it was demanda#le, the person dispossessed ma! receie the
securities deposited.
ARTICLE &&&. The solenc! of the guarant! shall #e passed upon #! the ,udges and
courts.
The complainant ma! gie securit! in #onds of the 7tate, recoering them at the
termination of the period fi(ed for the guarant!.
ARTICLE &&/. If the complaint relates to coupons pa!a#le to #earer separated from the
instrument, and the claim should not #e oerruled, the claimant ma! recoer the amount
of the coupons after three !ears hae elapsed, counted from the date of the ,udicial
declaration admitting the complaint.
ARTICLE &&0. The pa!ments made to the person dispossessed in accordance with the
rules a#oe esta#lished e(empt the de#tor from all the lia#ilit!$ and a third person who
considers himself in,ured shall onl! retain the right of personal action against the
claimant who acted without ,ust cause.
ARTICLE &&2. If, #efore the e(emption of the de#tor, a third holder should appear with
the instruments the su#,ect of the complaint, the former must retain possession thereof
and inform the ,udge or court and the first claimant, at the same time stating the name,
residence, or manner in which the third holder ma! #e found. cdasia
The appearance of a third person shall suspend the effects of the claim until it is decided
#! the ,udge or court.
ARTICLE &&3. If the purpose of the complaint should #e to preent the negotiation or
transfer of instruments which can #e -uoted, the person dispossessed ma! address
himself to the #oard of directors of the association of agents, and, in the a#sence of the
latter, to the #oard of the association of commercial #ro.ers, complaining of the ro##er!,
theft, or loss, and accompan!ing thereto a memorandum giing the series and num#ers of
the instruments lost, time of their ac-uisition, and manner in which the! were ac-uired.
The #oard of directors, on the same da! of the e(changes or on the following one, shall
affi( a notice to the #oard, and shall announce at the opening of the e(change the
complaint made, and also adise the other #oards of directors of e(changes of said
complaint.
In the a#sence of a #oard of directors of the association of agents or of commercial
#ro.ers, the person dispossessed shall complain of the ro##er!, theft, or loss in the
manner prescri#ed in this article, to the Hudge of :irst Instance of his domicile, which
authorit! shall ma.e it pu#lic #! means of letters regator! to the #oard of directors of the
association of agents of 9adrid.

The complaints to which this article limits itself shall #e inserted at the e(pense of the
complainant in the official Gaceta of 9anila, and in one or two of the newspapers haing
the largest circulation, in the opinion of the ,udge.
ARTICLE &/%. The negotiation of securities lost or stolen, which ta.e place after the
announcements referred to in the foregoing article, shall #e oid, and the person
ac-uiring the same shall not en,o! the right of remaining in undistur#ed possession
thereof$ #ut the right of the third person against the endor and against the agent who
too. part in the transaction shall #e resered.
ARTICLE &/1. If the complainant should appl! directl! to the #oard of directors of the
e(change of 9adrid, or of other e(changes, he shall #e re-uired, in order for the
complaint to hae effect, to communicate it to the ,udge of his domicile in order that the
latter ma! ratif! the prohi#ition to negotiate or transfer the instruments. If the decision
rendered should not #e communicated to the #oard of directors #! the first mail after the
complainant gae notice, the #oard shall annul the notice after nine da!s from the date of
the arrial of the mail at the place of residence of the #oard of directors hae elapsed, and
the transfer of the instruments which ma! su#se-uentl! #e made shall #e alid.
ARTICLE &/". After fie !ears hae elapsed to #e counted from the date of the
pu#lications made #! irtue of the proisions of Articles &&% and &&3, and from that of
the ratification of the ,udge or court referred to in Article &/1, without an! o#,ection to
the complaint haing #een made, the ,udge or court shall declare the nullit! of the
instrument stolen or lost, and shall communicate it to the official managing office,
association, or priate person from whom it came, ordering the issue of a duplicate to the
person who appears to #e its legal owner.
If within the fie !ears a third complainant should appear, the period shall #e suspended
until the decision of the ,udges or courts is rendered.
ARTICLE &/'. The duplicate shall #ear the same num#er as the original instrument$ it
shall state that it was issued in duplicate$ it shall produce the same effects as the former,
and shall #e negotia#le under the same conditions.
The issue of the duplicate shall annul the original instrument, and this shall #e stated in
the entires or records relating thereto.
ARTICLE &/). If the complaint of the person who suffered the loss should #e for the
purpose of recoering the principal, diidends, or coupons, and also to preent the
negotiation or transfer on e(change of the instruments which can #e -uoted thereon, the
rules esta#lished for each one of the foregoing articles shall #e o#sered according to the
cases.
ARTICLE &/&. Botwithstanding the proisions contained in this section, if the person
dispossessed should hae ac-uired the instruments on e(change, and if he attaches to the
complaint the certificate of the agent in which the instruments are detailed or specified in
such manner that the! can #e identified #efore appl!ing to the ,udge or court, he ma! do
so to the de#tor institution or person, and een to the #oard of directors of the association
of agents o#,ecting to ma.ing the pa!ment and re-uesting that the proper notices #e
issued. In such case the de#tor institution or person and the #oard of directors shall #e
o#liged to act as if the court or ,udge has notified them of the admission of the complaint
and that it has #een passed upon.
If the ,udge or court, within the period of one month, does not order the retention or
pu#lication, the complaint made #! the person dispossessed shall hae no effect, and the
de#tor institution or person and the #oard of directors shall #e e(empted from all lia#ilit!.
ARTICLE &//. The foregoing proisions shall not #e applica#le to the #an. notes of the
7panish *hilippine Can. 5Canco EspaEol+:ilipino6, nor to notes of the same .ind issued
#! institutions su#,ect to the same rule, nor to the instruments pa!a#le to #earer issued #!
the 7tate, which are goerned #! special laws, decrees, or regulations.
TITLE XIII
%etters of Credit
ARTICLE &/0. Letters of credit are those issued #! one merchant to another, or for
purpose of attending to a commercial transaction.
ARTICLE &/2. The essential conditions of letters of credit shall #e:
1. To #e issued in faor of a determined person and not to order.
". To #e limited to a fi(ed and specified amount, or to one or more
indeterminate amounts, #ut all included in a ma(imum sum the
limit of which must #e e(actl! stated.
Letters of credit which do not hae one of these conditions shall #e considered simpl! as
letters of recommendation.
ARTICLE &/3. ;ho issues a letter of credit shall #e lia#le to the person on whom it was
issued for the amount paid #! irtue of the same within the ma(imum fi(ed therein.
Letters of credit can not #e protested, een when not paid, nor can the holder thereof
ac-uire an! right of action for said nonpa!ment against the person who issued it.
The pa!or shall hae a right to demand the proof of the identit! of the person in whose
faor the letter of credit was issued.
ARTICLE &0%. The donor of a letter of credit ma! annul it, informing the #earer and the
person to whom it is addressed of said reocation.
ARTICLE &01. The holder of a letter of credit shall pa! the donor the amount receied
without dela!.
7hould he not do so an action including attachment ma! #e #rought to recoer said
amount with the legal interest and the current e(change in the place where the pa!ment
was made to the place where it was repaid.
ARTICLE &0". If the holder of a letter of credit does not ma.e use thereof within the
period agreed upon with the donor of the same, or, in the a#sence of a fi(ed period,
within si( months from its date in an! point of the *hilippine Islands, and within twele
months outside thereof, it shall #e oid in fact and in law.
BOOK III
Maritime Commerce
TITLE I
4essels
ARTICLE &0'. 9erchant essels constitute propert! which ma! #e ac-uired and
transferred #! an! of the means recogni1ed #! law. The ac-uisition of a essel must #e
included in a written instrument, which shall not produce an! effect with regard to third
persons if not recorded in the mercantile registr!. cd
The ownership of a essel shall also #e ac-uired #! the possession thereof in good faith
for three !ears, with a good title dul! recorded.
In the a#sence of an! of these re-uisites, uninterrupted possession for ten !ears shall #e
necessar! in order to ac-uire ownership.
A captain can not ac-uire #! prescription the ship of which he is in command.
ARTICLE &0). The #uilders of essels ma! emplo! the material and with regard to their
construction and rigging ma! follow the s!stem which is most conenient to their
interests. 7hip agents and seamen shall #e su#,ect to the proisions of the laws and
regulations of the pu#lic administration on naigation, customs, health, safet! of the
essels, and other similar proisions.
ARTICLE &0&. *art owners of essels shall en,o! the right of option of purchase and
withdrawal in the sales made to strangers$ #ut the! can onl! e(ercise it within the nine
da!s following the record of the sale in the registr! and #! deliering the price at once.
ARTICLE &0/. The rigging, tac.le, stores, and engine of a essel, if it is a steamer, shall
alwa!s #e understood as included in the sale thereof if the! are owned #! the endor at
the time of the sale.
The arms, munitions of war, proisions, and fuel shall not #e considered as included in
the sale.
The endor shall #e under the o#ligation to delier to the purchaser a certificate of the
record of the essel in the registr! up to the date of the sale.
ARTICLE &00. If the alienation of the essel should ta.e place while said essel is on a
o!age, the purchaser shall receie all the freights it earns from the time it receied its
last cargo, and the pa!ment of the crew and other persons which go to ma.e up its
complement shall #e paid #! the purchaser for the said o!age.
If the sale ta.es place after the arrial of the essel at the port of its destination, the
freights shall #elong to the endors and he shall pa! the crew and other persons which go
to ma.e up its complement, unless there is an agreement to the contrar! in either case.
ARTICLE &02. If, the steamer #eing on a o!age or in a foreign port, her owner or
owners should oluntaril! alienate her either to 7paniards
*
or to foreigners domiciled in
the capital or in a port of another countr!, the #ill of sale shall #e e(ecuted #efore the
consul of 7pain
*
of the port where she terminates her o!age, and said instrument shall
hae no effect with regard to third persons if it is not recorded in the registr! of the
consulate. The consul shall immediatel! forward a true cop! of the #ill of purchase of the
essel to the ?commercial registr!@ of the port where said essel is recorded and
registered.
In eer! case the alienation of the essel must #e stated, indicating whether the endor
receies the full price or part thereof, or whether he retains an! interest in said essel in
full or in part. In case the sale is made to a 7paniard,
*
this fact shall #e stated in the
certificate of naigation. aisadc
;hen, the ship #eing on a o!age, it should #e rendered useless for naigation, the
captain shall appl! to the ,udge or court of competent ,urisdiction of the port of arrial,
should it #e a foreign port, to the consul of 7pain,
*
should there #e one or to the ,udge, or
court, or local authorit! in the a#sence of the former$ and the consul, or the ,udge, or
court, or in their a#sence, the local authorit!, shall order an e(amination of the essel to
#e made.
If the consignee or the underwriter should reside at said port, or should hae
representaties there, the! must #e cited in order to ta.e part in the proceedings for the
account of whom it ma! concern.
ARTICLE &03. After the damage to the essel has #een proen as well as the
impossi#ilit! of her #eing repaired, to continue the o!age, her sale at pu#lic auction
shall #e ordered, su#,ect to the following rules:

1. The hull of the essel, her rigging, engines, stores, and other articles
shall #e appraised #! means of an inentor!, said proceedings
#eing #rought to the notice of the persons who ma! wish to ta.e
part in the auction.
". The order or decree ordering the pu#lic auction shall #e posted in the
usual places, and shall #e adertised in the newspapers of the port
where the auction is to #e held, should there #e an!, and in the
other newspapers which the court ma! determine.
The period which ma! #e fi(ed for the auction can not #e less than twent!
da!s.
'. These adertisements shall #e repeated eer! ten da!s, and their
pu#lication shall #e stated in the proceedings.
). The auction shall #e held on the da! fi(ed, with the formalities
prescri#ed in the common law for ,udicial sales.
&. If the sale should ta.e place when the essel is in a foreign countr!, the
special proisions goerning such cases shall #e o#sered.
ARTICLE &2%. In all ,udicial sales of essels for the pa!ment of creditors, the said
creditors shall hae preference in the order stated:
1. The credits in faor of the pu#lic treasur! proen #! means of an
official certificate of the competent authorit!.
". The ,udicial costs of the proceedings, according to an appraisement
approed #! the ,udge or court.
'. The pilotage charges, tonnage dues, and the other sea or port charges,
proen #! means of proper certificates of the officers intrusted
with the collection.
). The salaries of the careta.ers and watchmen of the essel and an! other
e(pense connected with the preseration of said essel, from the
time of arrial until her sale, which appear to hae #een paid or are
due #! irtue of a true account approed #! the ,udge or court. cdta
&. The rent of the warehouse where the rigging and stores of the essel
hae #een ta.en care of, according to contract.
/. The salaries due the captain and crew during their last o!age, which
shall #e erified #! irtue of the li-uidation made from the rolls of
the crew and account #oo.s of the essel, approed #! the chief of
the Cureau of 9erchant 9arine where there is one, and in his
a#sence #! the consul, or ,udge, or court.
0. The reim#ursement for the parts of the freight the captain ma! hae
sold in order to repair the essel, proided the sale has #een
ordered #! a ,udicial instrument e(ecuted with the formalities
re-uired in such cases, and recorded in the certificate of the
registr! of the essel.
2. The part of the price which has not #een paid the last endor, the
credits pending for the pa!ment of material and wor. in the
construction of the essel, when it has not naigated, and those
arising from the repair and e-uipment of the essel and its
proisioning with ictuals and fuel during its last o!age.
In order that the credits proided for in this su#diision ma! en,o! the preference the!
must appear #! contracts recorded in the commercial registr!, or if the! were contracted
for the essel while on a o!age and said essel has not returned to the port of her
registr!, the! must #e made under the authorit! re-uired for such cases and entered in the
certificate of registr! of the said essel. cdtai
3. The amounts #orrowed on #ottomr! #onds #efore the departure of the
essel, proen #! means of the contracts e(ecuted according to law
and recorded in the commercial registr!$ the amounts #orrowed
during the o!age with the authorit! mentioned in the foregoing
su#diision, filling the same re-uisites, and the insurance
premium, proen #! the polic! of the contract or certificate ta.en
from the #oo.s of the #ro.er.
1%. The indemnit! due the shippers for the alue of the goods shipped,
which were not deliered to the consignees, or for aerages
suffered for which the essel is lia#le, proided either appear in a
,udicial or ar#itration decision.
ARTICLE &21. If the proceeds of the sale are not sufficient to pa! all the creditors
included in one num#er or grade, the amount shall #e diided among them pro rata.
ARTICLE &2". After the #ill of the ,udicial sale at auction has #een e(ecuted and
recorded in the commercial registr!, all the other lia#ilities of the essel in faor of the
creditors shall #e considered canceled.
Cut if the sale should hae #een oluntar!, and too. place while the essel was on a
o!age, the creditors shall retain their rights against the essel until her return to the port
of her registr!, and three months after the record of sale in the commercial registr!, or
after her arrial.
ARTICLE &2'. If the ship #eing on a o!age the captain should find it necessar! to
contract one or more of the o#ligations mentioned in Bos. 2 and 3 of Article &2%, he shall
appl! to the ,udge or court if he is in 7panish
*
territor!, and otherwise to the consul of
7pain,
*
should there #e one, and, in his a#sence to the ,udge or court or to the proper
local authorit!, presenting the certificate of the registr! of the essel treated of in Article
/1", and the instruments proing the o#ligation contracted.
The ,udge or court, the consul or the local authorit! as the case ma! #e, in iew of the
result of the proceedings instituted, shall ma.e a temporar! memorandum in the
certificate of their result, in order that it ma! #e recorded in the registr! when the essel
returns to the port of her registr!, or so that it can #e admitted as a legal and preferred
o#ligation in case of sale #efore the return, #! reason of the sale of the essel #! irtue of
a declaration of unseaworthiness.
The lac. of this formalit! shall ma.e the captain personall! lia#le to the creditors who
ma! #e pre,udiced through his fault.
ARTICLE &2). The essels su#,ect to the lia#ilit! for the credits mentioned in Article &2%
ma! #e attached and ,udiciall! sold in the manner prescri#ed in Article &03, in the port in
which the! are, at the instance of an! of the creditors$ #ut if the! should #e freighted and
read! to sail the attachment can not ta.e place e(cept for de#ts contracted for the
preparation and proisioning of the essel for the same o!age, and een then the
attachment shall #e dissoled if an! person interested in her sailing should gie #ond for
the return of the essel within the period fi(ed in the certificate of naigation, and
#inding himself to pa! the de#t in so far as it ma! #e legal, should the essel #e dela!ed
in her return een if it were caused #! some fortuitous eent.
:or de#ts of an! other .ind whatsoeer not included in the said Article &2%, the essel
can onl! #e attached in the port of her registr!.
ARTICLE &2&. :or all purposes of law not modified or restricted #! the proisions of this
Code, essels shall continue to #e considered as personal propert!.
TITLE II
Persons ,ho Ma& Take Part in Maritime Commerce
SECTION I
O1ners of 4essels and #hip $gents
ARTICLE &2/. The owner of a essel and the agent shall #e ciill! lia#le for the acts of
the captain and for the o#ligations contracted #! the latter to repair, e-uip, and proision
the essel, proided the creditor proes that the amount claimed was inested therein.
C! agent is understood the person intrusted with the proisioning of a essel, or who
represents her in the port in which she happens to #e.
ARTICLE &20. The agent shall also #e ciill! lia#le for the indemnities in faor of third
persons which arise from the conduct of the captain in the care of the goods which the
essel carried$ #ut he ma! e(empt himself therefrom #! a#andoning the essel with all
her e-uipments and the freight he ma! hae earned during the o!age.
ARTICLE &22. Beither the owner of the essel nor the agent shall #e lia#le for the
o#ligations contracted #! the captain if the latter e(ceeds his powers and priileges which
are his #! reason of his position or hae #een conferred upon him #! the former.
Aoweer, if the amounts claimed were made use of for the #enefit of the essel, the
owner or agent shall #e lia#le.
ARTICLE &23. If two or more persons should #e part owners of a merchant essel, an
association shall #e presumed as esta#lished #! the part owners.
This association shall #e goerned #! the resolutions of a ma,orit! of the mem#ers.
A ma,orit! shall #e the relatie ma,orit! of the oting mem#ers.
If there should #e onl! two part owners, in case of disagreement the ote of the mem#er
haing the largest interest shall #e decisie. If the interests are e-ual, it shall #e decided
#! lot.
The representation of the smallest part in the ownership shall hae one ote$ and
proportionatel! the other part owners as man! otes as the! hae parts e-ual to the
smallest one. aisadc
A essel can not #e detained, attached or leied upon e(ecution in her entiret! for the
priate de#ts of a part owner, #ut the proceedings shall #e limited to the interest the
de#tor ma! hae in the essel, without interfering with her naigation.
ARTICLE &3%. The owners of a essel shall #e ciill! lia#le in the proportion of their
contri#ution to the common fund, for the results of the acts of the captain, referred to in
Article &20.
Each part owner ma! e(empt himself from this lia#ilit! #! the a#andonment #efore a
notar! of the part of the essel #elonging to him.
ARTICLE &31. All the part owners shall #e lia#le, in proportion to their respectie
ownership, for the e(penses of repairs to the essel, and for other e(penses which are
incurred #! irtue of a resolution of the ma,orit!.
The! shall li.ewise #e lia#le in the same proportion for the e(penses of maintenance,
e-uipment, and proisioning of the essel, necessar! for naigation.
ARTICLE &3". The resolutions of the ma,orit! with regard to the repair, e-uipment, and
proisioning of the essel in the port of departure shall #ind the ma,orit! unless the
partners in the minorit! renounce their participation therein, which must #e ac-uired #!
the other part owners after a ,udicial appraisement of the alue of the portion or portions
assigned.
The resolutions of the ma,orit! relating to the dissolution of the association and sale of
the essel shall also #e #inding on the minorit!.

The sale of the essel must ta.e place at a pu#lic auction, su#,ect to the proisions of the
law of ciil procedure unless the part owners unanimousl! agree otherwise, the right of
option to purchase and to withdraw mentioned in Article &0& #eing alwa!s resered in
faor of said part owners.
ARTICLE &3'. The owners of a essel shall hae preference in her charter to other
persons, offering e-ual conditions and price. If two or more of the former should claim
said right the one haing greater interest shall #e preferred, and should the! hae an e-ual
interest it shall #e decided #! lot.
ARTICLE &3). The part owners shall elect the manager who is to represent them in the
capacit! of agent.
The appointment of director or agent shall #e reoca#le at the will of the mem#ers.
ARTICLE &3&. The agent, #e he at the same time an owner of a essel or a manager for
an owner or for an association of co+owners, must #e -ualified to trade and must #e
recorded in the merchant4s registr! of the proince.
The agent shall represent the ownership of the essel, and ma! in his own name and in
such capacit! ta.e ,udicial and e(tra,udicial steps in all that relates to commerce.
ARTICLE &3/. The agent ma! discharge the duties of captain of the essel, su#,ect, in
eer! case, to the proisions contained in Article /%3.
If two or more co+owners re-uest the position of captain, the disagreement shall #e
decided #! a ote of the mem#ers$ and if the ote should result in a tie, the position shall
#e gien to the part owner haing the larger interest in the essel.
If the interest of the petitioners should #e the same, and there should #e a tie, the matter
shall #e decided #! lot.
ARTICLE &30. The agent shall select and come to an agreement with the captain, and
shall contract in the name of the owners, who shall #e #ound in all that refers to repairs,
details of e-uipment, armament, proisions, fuel, and freight of the essel, and, in
general, in all that relates to the re-uirements of naigation.
ARTICLE &32. The agent can not order a new o!age, nor ma.e contracts for a new
charter, nor insure the essel, without the authorit! of her owner or #! irtue of a
resolution of the ma,orit! of the co+owners, unless these priileges were granted him in
the certificate of his appointment. cdasia
If he should insure the essel without authorit! therefor he shall #e secondaril! lia#le for
the solenc! of the underwriter.
ARTICLE &33. The managing agent of an association, shall gie his co+owners an
account of the results of each o!age of the essel, without pre,udice to alwa!s haing
the #oo.s and correspondence relating to the essel and to its o!ages at the disposal of
the same.
ARTICLE /%%. After the account of the managing agent has #een approed #! a relatie
ma,orit!, the co+owners shall satisf! the e(penses in proportion to their interest, without
pre,udice to the ciil or criminal actions which the minorit! ma! deem fit to institute
afterwards.
In order to enforce the pa!ment, the managing agent shall hae a right of action to secure
e(ecution, which shall #e instituted #! irtue of a resolution of the ma,orit!, and without
further proceedings than the ac.nowledgment of the signatures of the persons who oted
the resolution.
ARTICLE /%1. 7hould there #e an! profits, the co+owners ma! demand of the managing
agent the amount due them, #! means of an e(ecutor! action without further re-uisites
than the ac.nowledgment of the signatures of the instrument approing the account.
ARTICLE /%". The agent shall indemnif! the captain for all the e(penses he ma! hae
incurred from his own funds or from those of other persons, for the #enefit of the essel.
ARTICLE /%'. Cefore a essel goes out to sea the agent shall hae at his discretion, a
right to discharge the captain and mem#ers of the crew whose contract did not state a
definite period nor a definite o!age, pa!ing them the salaries earned according to their
contracts, and without an! indemnit! whatsoeer, unless there is a special and specific
agreement in respect thereto.
ARTICLE /%). If the captain or an! other mem#er of the crew should #e discharged
during the o!age, the! shall receie their salar! until the return to the place where the
contract was made, unless there are good reasons for the discharge, all in accordance with
Articles /'/ et se-. of this Code.
ARTICLE /%&. If the contracts of the captain and mem#ers of the crew with the agent
should #e for a definite period or o!age, the! can not #e discharged until the fulfillment
of their contracts, e(cept for reasons of insu#ordination in serious matters, ro##er!, theft,
ha#itual drun.enness, and damage caused to the essel or to its cargo #! malice or
manifest or proen negligence.
ARTICLE /%/. If the captain should #e a part owner in the essel, he can not #e
discharged without the agent returning him the amount of his interest therein, which, in
the a#sence of an agreement #etween the parties, shall #e appraised #! e(perts appointed
in the manner esta#lished in the law of ciil procedure.
ARTICLE /%0. If the captain who is a part owner should hae o#tained the command of
the essel #! irtue of a special agreement contained in the articles of co+partnership, he
can not #e depried thereof e(cept for the reasons mentioned in Article /%&.
ARTICLE /%2. In case of the oluntar! sale of the essel, all contracts #etween the agent
and captain shall terminate, the right to proper indemnit! #eing resered in faor of the
captain, according to the agreements made with the agent.
The! essel sold shall remain su#,ect to the securit! of the pa!ment of said indemnit! if,
after the action against the endor has #een instituted, the latter should #e insolent.
SECTION II
Captains and Masters of 4essels
ARTICLE /%3. Captains and masters of essels must #e 7paniards
*
haing legal capacit!
to #ind themseles in accordance with this Code, and must proe that the! hae the s.ill,
capacit!, and -ualifications re-uired to command and direct the essel, as esta#lished #!
marine laws, ordinances, or regulations, or #! those of naigation, and that the! are not
dis-ualified according to the same for the discharge of the duties of that position. cdt
If the owner of a essel desires to #e the captain thereof and does not hae the legal
-ualifications therefor, he shall limit himself to the financial administration of the essel,
and shall intrust her naigation to a person possessing the -ualifications re-uired #! said
ordinances and regulations.
ARTICLE /1%. The following powers are inherent in the position of captain or master of
a essel:
1. To appoint or ma.e contracts with the crew in the a#sence of the agent
and propose said crew, should said agent #e present$ #ut the agent
shall not #e permitted to emplo! an! mem#er against the captain4s
e(press refusal.
". To command the crew and direct the essel to the port of its
destination, in accordance with the instructions he ma! hae
receied from the agent.
'. To impose, in accordance with the agreements and the laws and
regulations of the merchants marine, on #oard the essel,
correctional punishment upon those who do not compl! with his
orders or who conduct themseles against discipline, holding a
preliminar! inestigation on the crimes committed on #oard the
essel on the high seas, which shall #e turned oer to the
authorities, who are to ta.e cogni1ance thereof, at the first port
touched.
). To ma.e contracts for the charter of the essel in the a#sence of the
agent or of her consignee, acting in accordance with the
instructions receied and protecting the interests of the owner most
carefull!.
&. To adopt all the measures which ma! #e necessar! to .eep the essel
well supplied and e-uipped, purchasing for the purpose all that
ma! #e necessar!, proided there is no time to re-uest instructions
of the agent.
/. To ma.e, in similar urgent cases and on a o!age, the repairs to the hull
and engines of the essel and to her rigging and e-uipment which
are a#solutel! necessar! in order for her to #e a#le to continue and
conclude her o!age$ #ut if she should arrie at a point where there
is a consignee of the essel, he shall act in concurrence with the
latter.
ARTICLE /11. In order to compl! with the o#ligations mentioned in the foregoing
article, the captain, when he has no funds and does not e(pect to receie an! from the
agent, shall procure the same in the successie order stated #elow:
1. C! re-uesting said funds of the consignees or correspondents of a
essel.
". C! appl!ing to the consignees of the cargo or to the persons interested
therein.
'. C! drawing on the agent.
). C! #orrowing the amount re-uired #! means of a #ottomr! #ond.
&. C! selling a sufficient amount of the cargo to coer the amount
a#solutel! necessar! to repair the essel, and to e-uip her to pursue
the o!age. cd
In the two latter cases he must appl! to the ,udicial authorit! of the port, if in 7pain
*
and
to the 7panish
*
consul, if in a foreign countr!$ and where there should #e none, to the
local authorit!, proceeding in accordance with the prescriptions of Article &2', and with
the proisions of the law of ciil procedure.
ARTICLE /1". The following o#ligations are inherent in the office of captain:
1. To hae on #oard #efore starting on a o!age a detailed inentor! of
the hull, engines, rigging, tac.le, stores, and other e-uipments of
the essel$ the naigation certificate$ the roll of the persons who
ma.e up the crew of the essel, and the contracts entered into with
the crew$ the list of passengers$ the health certificate$ the certificate
of the registr! proing the ownership of the essel, and all the
o#ligations which encum#er the same up to that date$ the charters
or authenticated copies thereof$ the inoices or manifest of the
cargo, and the instrument of the e(pert isit or inspection, should it
hae #een made at the port of departure.
". To hae a cop! of this Code on #oard.
'. To hae three folioed and stamped #oo.s, placing at the #eginning of
each one a note of the num#er of folios it contains, signed #! the
maritime official, and in his a#sence #! the competent authorit!.

In the first #oo., which shall #e called Flog #oo.,F he shall enter eer! da! the condition
of the atmosphere, the preailing winds, the course sailed, the rigging carried, the
horsepower of the engines, the distance coered, the maneuers e(ecuted, and other
incidents of naigation. Ae shall also enter the damage suffered #! the essel in her hull,
engines, rigging, and tac.le, no matter what is its cause, as well as the imperfections and
aerages of the cargo, and the effects and conse-uence of the ,ettison, should there #e
an!$ and in cases of grae resolutions which re-uire the adice or a meeting of the
officers of the essel, or een of the passengers and crew, he shall record the decision
adopted. :or the informations indicated he shall ma.e use of the #innacle #oo., and of
the steam or engine #oo. .ept #! the engineer.
In the second #oo., called the Faccounting #oo.,F he shall enter all the amounts collected
and paid for the account of the essel, entering specificall! article #! article, the sources
of the collection, and the amounts inested in proisions, repairs, ac-uisition of rigging or
goods, fuel, outfits, wages, and all other e(penses. Ae shall furthermore enter therein a
list of all the mem#ers of the crew, stating their domiciles, their wages and salaries, and
the amounts the! ma! hae receied on account, either directl! or #! delier! to their
families.
In the third #oo., called Ffreight #oo.,F he shall record the entr! and e(it of all the goods,
stating their mar.s and pac.ages, names of the shippers and of the consignees, ports of
loading and unloading, and the freight earned. In the same #oo. he shall record the names
and places of sailing of the passengers and the num#er of pac.ages of which their
#aggage consists, and the price of the passage.
). To ma.e, #efore receiing the freight, with the officers of the crew, and the two
e(perts, if re-uired #! the shippers and passengers, an e(amination of the essel, in order
to ascertain whether she is watertight, and whether the rigging and engines are in good
condition$ and if she has the e-uipment re-uired for good naigation, presering a
certificate of the memorandum of this inspection, signed #! all the persons who ma! hae
ta.en part therein, under their lia#ilit!.
The e(perts shall #e appointed one #! the captain of the essel and the other one #! the
persons who re-uest the e(amination, and in case of disagreement a third shall #e
appointed #! the marine authorit! of the port.
&. To remain constantl! on #oard the essel with the crew during the time the freight is
ta.en on #oard and carefull! watch the stowage thereof$ not to consent to an!
merchandise or goods of a dangerous character to #e ta.en on, such as inflamma#le or
e(plosie su#stances, without the precautions which are recommended for their pac.ing,
management and isolation$ not to permit that an! freight #e carried on dec. which #!
reason of its disposition, olume, or weight ma.es the wor. of the sailors difficult, and
which might endanger the safet! of the essel$ and if, on account of the nature of the
merchandise, the special character of the shipment, and principall! the faora#le season it
ta.es place, he allows merchandise to #e carried on dec., he must hear the opinion of the
officers of the essel, and hae the consent of the shippers and of the agent.
/. To demand a pilot at the e(pense of the essel wheneer re-uired #! naigation, and
principall! when a port, canal, or rier, or a roadstead or anchoring place is to #e entered
with which neither he, the officers nor the crew are ac-uainted.
0. To #e on dec. at the time of sighting land and to ta.e command on entering and
leaing ports, canals, roadsteads, and riers, unless there is a pilot on #oard discharging
his duties. Ae shall not spend the night awa! from the essel e(cept for serious causes or
#! reason of official #usiness. cdtai
2. To present himself, when ma.ing a port in distress, to the maritime authorit! if in
7pain
*
and to the 7panish
*
consul if in a foreign countr!, #efore twent!+four hours hae
elapsed, and ma.e a statement of the name, registr!, and port of departure of the essel,
of its cargo, and reason of arrial, which declaration shall #e ised #! the authorit! or #!
the consul if after e(amining the same it is found to #e accepta#le, giing the captain the
proper certificate in order to show his arrial under stress and the reasons therefor. In the
a#sence of marine officials or of the consul, the declaration must #e made #efore the local
authorit!.
3. To ta.e the steps necessar! #efore the competent authorit! in order to enter in the
certificate of the Commercial Registr! of the essel the o#ligations which he ma!
contract in accordance with Article &2'.
1%. To put in a safe place and .eep all the papers and #elongings of an! mem#ers of the
crew who might die on the essel, drawing up a detailed inentor!, in the presence of
passengers as witnesses, and, in their a#sence, of mem#ers of the crew.
11. To conduct himself according to the rules and precepts contained in the instructions of
the agent, #eing lia#le for all that he ma! do in iolation thereof.
1". To gie an account to the agent from the port where the essel arries, of the reason
thereof, ta.ing adantage of the semaphore, telegraph, mail, etc., according to the cases$
notif! him the freight he ma! hae receied, stating the name and domicile of the
shippers, freight earned, and amounts #orrowed on #ottomr! #ond, adise him of his
departure, and gie him an! information and data which ma! #e of interest.
1'. To o#sere the rules on the situation of lights and eolutions to preent collisions.
1). To remain on #oard in case of danger to the essel, until all hope to sae her is lost,
and #efore a#andoning her to hear the officers of the crew, a#iding #! the decision of the
ma,orit!$ and if he should hae to ta.e a #oat he shall ta.e with him, #efore an!thing
else, the #oo.s and papers, and then the articles of most alue, #eing o#liged to proe in
case of the loss of the #oo.s and papers that he did all he could to sae them.
1&. In case of wrec. he shall ma.e the proper protest in due form at the first port reached,
#efore the competent authorit! or the 7panish
*
consul, within twent!+four hours, stating
therein all the incidents of the wrec., in accordance with case 2 of this article.
1/. To compl! with the o#ligations imposed #! the laws and rules of naigation, customs,
health, and others.
ARTICLE /1'. A captain who naigates for freight in common or on shares can not ma.e
an! transaction for his e(clusie account, and should he do so the profit shall #elong to
the other persons in interest, and the losses shall #e for his own e(clusie account.
ARTICLE /1). A captain who, haing made an agreement to ma.e a o!age, should not
fulfill his o#ligation, without #eing preented #! an accident case or #! force ma/eure,
shall pa! for all the losses his action ma! cause, without pre,udice to criminal penalties
which ma! #e proper.
ARTICLE /1&. ;ithout the consent of the agent, the captain can not hae himself
su#stituted #! another person$ and should he do so, #esides #eing lia#le for all the acts of
the su#stitute and #ound to the indemnities mentioned in the foregoing article, the
su#stitute as well as the captain ma! #e discharged #! the agent.
ARTICLE /1/. If the proisions and fuel of the essel are consumed #efore arriing at
the port of destination, the captain shall decide, with the consent of the officers of the
same, to ma.e the nearest port to get a suppl! of either$ #ut if there are persons on #oard
who hae proisions of their own he ma! force them to turn said proisions oer for the
common consumption of all persons on #oard, pa!ing the price thereof immediatel!, or at
the latest, at the first port reached.
ARTICLE /10. The captain can not contract loans on respondentia, and should he do so
the contracts shall #e oid.
Beither can he #orrow mone! on #ottomr! for his own transactions, e(cept on the portion
of the essel he owns, proided no mone! has #een preiousl! #orrowed on the whole
essel, and proided there does not e(ist an! other .ind of lien or o#ligation thereon.
;hen he is permitted to do so, he must necessaril! state what interest he has in the
essel.
In case of iolation of this article the principal, interest, and costs shall #e charged to the
priate account of the captain, and the agent ma! furthermore hae the right to discharge
him.
ARTICLE /12. The captain shall #e ciill! lia#le to the agent, and the latter to the third
persons who ma! hae made contracts with the former G
1. :or all the damages suffered #! the essel and his cargo #! reason of
want of s.ill or negligence on his part. If a misdemeanor or crime
has #een committed he shall #e lia#le in accordance with the *enal
Code. cda
". :or all the thefts committed #! the crew, resering his right of action
against the guilt! parties.
'. :or the losses, fines, and confiscations imposed an account of iolation
of the laws and regulations of customs, police, health, and
naigation.
). :or the losses and damages caused #! mutinies on #oard the essel, or
#! reason of faults committed #! the crew in the serice and
defense of the same, if he does not proe that he made full use of
his authorit! to preent or aoid them.
&. :or those arising #! reason of an undue use of powers and non+
fulfillment of the o#ligations which are his in accordance with
Articles /1% and /1".
/. :or those arising #! reason of his going out of his course or ta.ing a
course which he should not hae ta.en without sufficient cause, in
the opinion of the officers of the essel, at a meeting with the
shippers or supercargoes who ma! #e on #oard.
Bo e(ception whatsoeer shall e(empt him from this o#ligation.
0. :or those arising #! reason of his oluntaril! entering a port other than
his destination, with the e(ception of the cases or without the
formalities referred to in Article /1".

2. :or those arising #! reason of the non+o#serance of the proisions
contained in the regulations for lights and eolutions for the
purpose of preenting collisions.
ARTICLE /13. The captain shall #e lia#le for the cargo from the time it is turned oer to
him at the doc., or afloat alongside the ship, at the port of loading until he deliers it on
the shores or on the discharging wharf, of the port of unloading unless the contrar! has
#een e(pressl! agreed upon.
ARTICLE /"%. The captain shall not #e lia#le for the damages caused to the essel or to
the cargo #! reason of force ma/eure$ #ut he shall alwa!s #e so G no agreement to the
contrar! #eing alid G for those arising through his own fault.
Beither shall he #e personall! lia#le for the o#ligations he ma! hae contracted for the
repair, e-uipment, and proisioning of the essel, which shall #e incurred #! the agent,
unless the former has e(pressl! #ound himself personall! or signed a draft or promissor!
note in his name.
ARTICLE /"1. A captain who #orrows mone! on #ottomr!, or who pledges or sells
merchandise or proisions in other cases and without the formalities prescri#ed in this
Code, shall #e lia#le for the principle, interest, and costs, and shall indemnif! for the
damages he ma! cause.
The captain who commits fraud in his accounts shall reim#urse the amount defrauded,
and shall #e su#,ect to the proisions contained in the *enal Code.
ARTICLE /"". If when on a o!age the captain should receie news of the appearance of
priateers or men of war against his flag, he shall #e o#liged to ma.e the nearest neutral
port, inform his agent or shippers, and await an occasion to sail under cono! or until the
danger is oer or to receie final orders from the agent or shippers.
ARTICLE /"'. If he should find himself #eing attac.ed #! a priateer and after haing
done all that was possi#le to aoid the encounter and hae resisted the delier! of the
e-uipment of the essel or of its cargo, the! should #e forci#l! ta.en awa! from him, or
he should #e o#liged to delier them, he shall ma.e an entr! in his freight #oo. and shall
proe the fact #efore the competent authorit! at the first port he touches. cdasia
After the force ma/eure has #een proen, he shall #e e(empted from lia#ilit!.
ARTICLE /"). A captain whose essel has gone through a hurricane or who #eliees that
the cargo has suffered damages or aerages, shall ma.e a protest thereon #efore the
competent authorit! at the first port he touches within the twent!+four hours following his
arrial, and shall ratif! it within the same period when he arries at the place of his
destination, immediatel! proceeding with the proof of the facts, it not #eing permitted to
open the hatches until this has #een done.
The captain shall proceed in the same manner if, the essel haing #een wrec.ed, he is
saed alone or with part of his crew, in which case he shall appear #efore the nearest
authorit!, and ma.e a sworn statement of the facts.
The authorit! or the consul a#road shall erif! the said facts, receiing a sworn statement
of the mem#ers of the crew and passengers who ma! hae #een saed, and ta.ing the
other steps which ma! assist in arriing at the facts, drafting a certificate of the result of
the proceedings in the log #oo. and in that of the sailing mate, and shall delier the
original records of the proceedings to the captain, stamped and folioed, with a
memorandum of the folios, which he must ru#ricate, for their presentation to the ,udge or
court of the port of destination.
The statement of the captain shall #e #elieed if it is in accordance with those of the crew
and passengers$ if the! disagree, the latter shall #e accepted, unless there is proof to the
contrar!.
ARTICLE /"&. The captain, under his personal lia#ilit!, as soon as he arries at the port
of destination, o#tains the necessar! permission from the health and customs officers and
fulfills the other formalities re-uired #! the regulations of the administration, shall turn
oer the cargo, without an! defalcation, to the consignees, and, in a proper case, the
essel, rigging, and freights to the agent.
If, #! reason of the a#sence of the consignee or on account of the nonappearance of a
legal holder of the inoices, the captain does not .now to whom he is to ma.e the legal
delier! of the cargo, he shall place it at the disposal of the proper ,udge or court or
authorit!, in order that he ma! decide with regard to its deposit, preseration, and
custod!.
SECTION III
Officers and Cre1s of 4essels
ARTICLE /"/. In order to #e a sailing mate it shall #e necessar!:
1. To hae the conditions re-uired #! the marine or naigation laws or
regulations.
". Bot to #e dis-ualified in accordance therewith for the discharge of the
position.
ARTICLE /"0. The sailing mate, as the second chief of the essel and unless the agent
orders otherwise, shall ta.e the place of the captain in cases of a#sence, sic.ness, or
death, and shall then assume all his powers, o#ligations, and responsi#ilities.
ARTICLE /"2. The sailing mate must suppl! himself with charts of the waters which are
to #e naigated, with the maps and -uadrants or se(tants which are in use and which are
necessar! for the discharge of his duties, #eing lia#le for the accidents which ma! arise
#! reason of his fault in this matter.
ARTICLE /"3. The sailing mate shall personall! and speciall! .eep a #oo. folioed and
stamped on all its pages, called the F#innacle #oo.F, with a memorandum at the
#eginning stating the num#er of folios it contains, signed #! the competent authorit!, and
shall enter therein dail! the distance and course traelled, the ariations of the needle, the
leewa!, the direction and force of the wind, the condition of the atmosphere and of the
sea, the rigging set, the latitude and longitude o#sered, the num#er of purnaces fired, the
steam pressure, the num#er of reolutions, and under the name of FincidentsF the
reolutions made, the meetings with other essels, and all the particulars and accidents
which ma! occur during the o!age.
ARTICLE /'%. In order to change the course and to ta.e the one most conenient for a
good o!age of the essel, the sailing mate shall come to an agreement with the captain.
If the latter should o#,ect, the sailing mate shall ma.e the remar.s he ma! consider
necessar! in the presence of the other officers of the essel. If the captain should still
insist on his o#,ection, the sailing mate shall ma.e the proper protest, signed #! him and
#! another one of the officers in the log #oo., and shall o#e! the captain, who shall #e the
onl! one lia#le for the conse-uences of his order.
ARTICLE /'1. The sailing mate shall #e lia#le for all the damages suffered #! the essel
and cargo #! reason of his negligence or want of s.ill, without pre,udice to the criminal
lia#ilit! which ma! arise, if a felon! or misdemeanor were committed. aisadc
ARTICLE /'". It shall #e the dut! of the second mate:
1. To watch oer the preseration of the hull, and rigging of the essel,
and to ta.e charge of the tac.le and e-uipment which ma.e up her
outfit, suggesting to the captain the repairs necessar! and the
replacement of the goods and implements which are rendered
useless and lost.
". To ta.e care that the cargo is well arranged, .eeping the essel alwa!s
read! for eolutions.
'. To presere order, discipline, and good serice among the crew,
re-uesting the necessar! orders and instructions of the captain, and
-uic.l! informing him of an! occurrence in which the interention
of his authorit! ma! #e necessar!.
). To assign to each sailor the wor. he is to do on #oard, in accordance
with the instructions receied, and see that it is e(actl! and
carefull! carried out.
&. To ta.e charge #! inentor! of the rigging and all the e-uipments of the
essel, if it should #e laid up, unless the agent has ordered
otherwise.
;ith regard to engineers the following rules shall goern:
1. In order to #e ta.en on #oard as a marine engineer forming part of the
complement of a merchant essel it shall #e necessar! to possess
the -ualifications which the laws and regulations re-uire, and not
to #e dis-ualified in accordance therewith to hold said position.
Engineers shall #e considered as officers of the essel, #ut the!
shall e(ercise no command nor interention e(cept that which
refers to the motie power.
". ;hen there are two or more engineers on one essel, one of them shall
#e the chief, and the other engineers and all the personnel of the
engines shall #e under his orders$ he shall furthermore hae the
motie power under his charge, as well as the spare pieces,
instruments, and implements #elonging thereto, the fuel, the
lu#ricating material and, finall!, all which comes under the
,urisdiction of an engineer on #oard a essel.
'. Ae shall .eep the engines and #oilers in good condition and in state of
cleanliness, and shall order what ma! #e proper in order that the!
ma! alwa!s #e read! for regular use, #eing lia#le for the accidents
or damages which ma! arise #! reason of his want of s.ill or
negligence to the motie apparatus, or to the essel and cargo,
without pre,udice to the criminal lia#ilit! which ma! #e proper if a
felon! or misdemeanor is proen.
). Ae shall ma.e no change in the motie apparatus, nor shall he repair
the aerages he ma! hae noticed in the same, nor change the
normal speed of its moement without the prior authorit! of the
captain, to whom, if he should o#,ect to their #eing made, he shall
state the reasons he ma! deem proper in the presence of the other
engineers or officers$ and if, notwithstanding this, the captain
should insist on his o#,ection, the chief engineer shall ma.e the
proper protest, entering the same in the engine #oo., and shall
o#e! the captain, who shall #e the onl! one lia#le for the
conse-uences of his order.
&. Ae shall inform the captain of an! aerage which ma! occur to the
motie apparatus, and shall inform him when it ma! #e necessar!
to stop the engines for some time, or when an! other incident
occurs in his department of which the captain should #e
immediatel! informed, fre-uentl! adising him furthermore of the
consumption of fuel and lu#ricating material.

/. Ae shall .eep a #oo. or registr! called the FEngine Coo.,F in which
there shall #e entered all the data that refer to the wor. of the
engines, such as, for e(ample, the num#er of furnaces fired, the
steam pressure in the #oilers and c!linders, the acuum in the
condenser, the temperatures, the degree of saturation of the water,
the consumption of fuel and lu#ricating material, and under the
heading of FBoteworth! occurrencesF the aerage and
imperfections which occur in the engines and #oilers, the causes
therefor, and the means emplo!ed to repair the same. There shall
also #e stated, ta.ing the information from the #innacle #oo., and
direction of the wind, the rigging set, and the speed of the essel.
ARTICLE /''. The second mate shall ta.e command of the essel in case of the
impossi#ilit! or disa#ilit! of the captain and sailing mate, assuming in such case their
powers and lia#ilit!.
ARTICLE /'). The captain ma! ma.e up his crew with the num#er he ma! consider
adisa#le, and in the a#sence of 7panish
*
sailors he ma! ship foreigners residing in the
countr!, the num#er thereof not to e(ceed one+fifth of the total crew. If in foreign ports
the captain should not find a sufficient num#er of 7panish
*
sailors, he ma! ma.e up the
crew with foreigners, with the consent of the consul or marine authorities.
The agreements which the captain ma! ma.e with the mem#ers of the crew and others
who go to ma.e up the complement of the essels, to which reference is made in Article
/1", must #e reduced to writing in the account #oo. without the interention of a notar!
pu#lic or cler., signed #! the parties thereto, and ised #! the marine authorit! if the! are
e(ecuted in 7panish
*
territor!, or #! the consuls or consular agents of 7pain
*
if e(ecuted
a#road, stating therein all the o#ligations which each one contracts and all the rights the!
ac-uire, said authorities ta.ing care that these o#ligations and rights are recorded in a
concise and clear manner, which will not gie rise to dou#ts or claims. cd
The captain shall ta.e care to read to them the articles of this Code, which concern them,
stating that the! were read in the said document.
If the #oo. includes the re-uisites prescri#ed in Article /1", and there should not appear
an! signs of alterations in its clauses, it shall #e admitted as eidence in -uestions which
ma! arise #etween the captain and the crew with regard to the agreements contained
therein and the amounts paid on account of the same.
Eer! mem#er of the crew ma! re-uest a cop! of the captain, signed #! the latter, of the
agreement and of the li-uidation of his wages, as the! appear in the #oo..
ARTICLE /'&. A sailor who has #een contracted to sere on a essel can not rescind his
contract nor fail to compl! therewith e(cept #! reason of a legitimate impediment which
ma! hae occurred.
Beither can he pass from the serice of one essel to another without o#taining the
written consent of the essel on which he ma! #e.
If, without o#taining said permission, the sailor who has signed for one essel should sign
for another one, the second contract shall #e oid, and the captain ma! choose #etween
forcing him to fulfill the serice to which he first #ound himself or loo. for a person to
su#stitute him at his e(pense.
7aid sailor shall furthermore lose the wages earned on his first contract to the #enefit of
the essel for which he ma! hae signed.
A captain who, .nowing that a sailor is in the serice of another essel, should hae made
a new agreement with him, without haing re-uested the permission referred to in the
foregoing paragraphs, shall #e personall! lia#le to the captain of the essel to which the
sailor first #elonged for that part of the indemnit!, referred to in the third paragraph of
this article, which the sailor could not pa!.
ARTICLE /'/. 7hould a fi(ed period for which a sailor has signed not #e stated, he can
not #e discharged until the end of the return o!age to the port where he enrolled.
ARTICLE /'0. Beither can the captain discharge a sailor during the time of his contract
e(cept for sufficient cause, the following #eing considered as such:
1. The perpetration of a crime which distur#s order on the essel.
". Repeated offenses of insu#ordination, against discipline, or against the
fulfillment of the serice.
'. Repeated incapacit! or negligence in the fulfillment of the serice to #e
rendered.
). Aa#itual drun.enness.
&. An! occurrence which incapacitates the sailor to carr! out the wor.
under his charge, with the e(ception of the proisions contained in
Article /)).
/. =esertion.
The captain ma!, howeer, #efore setting out on a o!age and without giing an! reason
whatsoeer, refuse to permit a sailor he ma! hae engaged from going on #oard and ma!
leae him on land, in which case he will #e o#liged to pa! him his wages as if he had
rendered serices.
This indemnit! shall #e paid from the funds of the essel if the captain should hae acted
for reasons of prudence and in the interest of the safet! and good serice of the former.
7hould this not #e the case, it shall #e paid #! the captain personall!. aisadc
After the essel has sailed, and during the o!age and until the conclusion thereof, the
captain can not a#andon an! mem#er of his crew on land or on the sea, unless, #! reason
of #eing guilt! of some crime, his imprisonment and delier! to the competent authorit!
is proper in the first port touched, which will #e o#ligator! on the captain.
ARTICLE /'2. If, the crew haing #een engaged, the o!age is reo.ed #! the will of
the agent or of the charterers #efore or after the essel has put to sea or if the essel is in
the same manner gien a different destination than that fi(ed in the agreement with the
crew, the latter shall #e indemnified #ecause of the rescission of the contract according to
the case, i1:
1. If the reocation of the o!age should #e decided #efore the departure
of the essel from the port, each sailor engaged shall #e gien one
month4s salar!, #esides what ma! #e due him in accordance with
his contract, for the serices rendered to the essel up to the date of
the reocation.
". If the agreement should hae #een for a fi(ed amount for the whole
o!age, there shall #e graduated what ma! #e due for said month
and da!s, calculating the same in proportion to the estimated
duration of the o!age, in the ,udgment of e(perts, in the manner
esta#lished in the law of ciil procedure$ and if the proposed
o!age should #e of such short duration that it is calculated at one
month more or less, the indemnit! shall #e fi(ed for fifteen da!s,
discounting in all cases the sums adanced.
'. If the reocation should ta.e place after the essel has put to sea, the
sailors engaged for a fi(ed amount for the o!age shall receie the
salar! which ma! hae #een offered them in full as if the o!age
had terminated, and those engaged #! the month shall receie the
amount corresponding to the time the! might hae #een on #oard
and to the time the! ma! re-uire to arrie at the port of destination,
the captain #eing o#liged, furthermore, to pa! said sailors the
passage to the said port or to the port of sailing of the essel, as
ma! #e conenient for them.
). If the agent or the charterers of the essel should gie said essel a
destination other than that fi(ed in the agreement, and the mem#ers
of the crew should not agree thereto, the! shall #e gien #! wa! of
indemnit! half the amount fi(ed in case Bo. 1, #esides what ma!
#e owed them for the part of the monthl! wages corresponding to
the da!s which hae elapsed from the date of their agreements.
If the! accept the change, and the o!age, on account of the greater distance or for other
reasons, should gie rise to an increase of wages, the latter shall #e priatel! regulated, or
through amica#le ar#itrators in case of disagreement. Een though the o!age ma! #e to
a nearer point, this shall not gie rise to a reduction in the wages agreed upon.
If the reocation or change of the o!age should originate from the shippers or charterers,
the agent shall hae a right to demand of them the indemnit! which is ,ustl! due.
ARTICLE /'3. If the reocation of the o!age should arise from a ,ust cause independent
of the will of the agent or charterers, and the essel should not hae left the port, the
mem#ers of the crew shall not hae an! other right than to receie the wages earned up to
the da! on which the reocation too. place.
ARTICLE /)%. The following shall #e ,ust causes for the reocation of the o!age:
1. A declaration of war or interdiction of commerce with the power to
whose territor! the essel was #ound.
". The #loc.ade of the port of destination or the #rea.ing out of an
epidemic after the agreement.
'. The prohi#ition to receie in said port the goods which ma.e up the
cargo of the essel.
). The detention or em#argo of the same #! order of the 8oernment, or
for an! other reason independent of the will of the agent.
&. The ina#ilit! of the essel to naigate. cdasia
ARTICLE /)1. If, after a o!age has #een #egun, an! of the first three causes mentioned
in the foregoing article should occur, the sailors shall #e paid at the port the captain ma!
deem it adisa#le to ma.e for the #enefit of the essel and cargo, according to the time
the! ma! hae sered thereon$ #ut if the essel is to continue the o!age, the captain and
the crew ma! mutuall! demand the enforcement of the contract.
In case of the occurrence of the fourth cause, the crew shall continue to #e paid half
wages, if the agreement is #! month #ut if the detention should e(ceed three months, the
engagement shall #e rescinded and the crew shall #e paid what the! should hae earned,
according to the contract, if the o!age had #een made. And if the agreement had #een
made for a fi(ed sum for the o!age, the contract must #e complied within the terms
agreed upon.
In the fifth case, the crew shall not hae an! other right than #e entitled to recoer the
wages earned$ #ut if the disa#ilit! of the essel should hae #een caused #! the
negligence or lac. of s.ill of the captain, engineer, or sailing mate, the! shall indemnif!
the crew for the loss suffered, alwa!s resering the criminal lia#ilit! which ma! #e
proper.

ARTICLE /)". If the crew has #een engaged to wor. on shares the! shall not #e entitled,
#! reason of the reocation, dela!, or greater e(tension of the o!age, to an!thing #ut the
proportionate part of the indemnit! paid into the common funds of the essel #! the
persons lia#le for said occurrences.
ARTICLE /)'. If the essel and her freight should #e totall! lost, #! reason of capture or
wrec., all rights of the crew to demand an! wages whatsoeer shall #e e(tinguished, as
well as that of the agent for the recoer! of the adances made.
If a portion of the essel or freight should #e saed, or part of either, the crew engaged on
wages, including the captain, shall retain their rights on the salage, so far as the! go, on
the remainder of the essel as well as alue of the freightage or the cargo saed$ #ut
sailors who are engaged on shares shall not hae an! right whatsoeer to the salage of
the hull, #ut onl! on the portion of the freightage saed. If the! should hae wor.ed to
collect the remainder of the ship+wrec.ed essel, the! shall #e gien an award in
proportion to the efforts made and to the ris.s encountered in order to accomplish the
salage.
ARTICLE /)). A sailor who falls sic. shall not lose his right to wages during the o!age,
unless the sic.ness is the result of his own fault. At an! rate, the costs of the attendance
and cure shall #e defra!ed from the common funds, in the form of a loan.
If the sic.ness should #e caused #! an in,ur! receied in the serice or defense of the
essel the sailor shall #e attended and cured from the common funds, there #eing
deducted #efore an!thing else from the proceeds of the freight, the cost of the attendance
and cure.
ARTICLE /)&. If a sailor should die during the o!age his heir shall #e gien the wages
earned and not receied, according to his engagement and the reason for his death,
namel! G
If he should hae died a natural death and should hae #een engaged on wages there shall
#e paid what ma! hae #een earned up to the date of his death.
If the engagement had #een made for a fi(ed sum for the whole o!age there shall #e
paid half the amount earned if the sailor died on the o!age out, and the whole amount if
he died on the return o!age.
And if the engagement had #een made on shares and the death should hae occurred after
the o!age was #egun, the heirs shall #e paid the entire portion due the sailor$ #ut should
the latter hae died #efore the departure of the essel from the port, the heirs shall not #e
entitled to claim an!thing.
If the death should hae occurred in the defense of the essel, the sailor shall #e
considered as liing, and his heirs shall #e paid, at the end of the o!age, the full amount
of wages or the full part of the profits due him as to the others of his grade.
The sailor shall li.ewise #e considered as present in the eent of his capture when
defending the essel, in order to en,o! the same #enefits as the rest$ #ut should he hae
#een captured on account of carelessness or other accident not related to the serice, he
shall onl! receie the wages due up to the da! of his capture.
ARTICLE /)/. The essel with her engines, rigging, e-uipment, and freights shall #e
lia#le for the wages earned #! the crew engaged per month or for the trip, the li-uidation
and pa!ment ought to ta.e place #etween one o!age and the other.
After a new o!age has #een underta.en, credits such as the former shall lose their right
of preference.
ARTICLE /)0. The officers and the crew of the essel shall #e e(empted from all
o#ligations contracted, if the! deem it proper, in the following cases:
1. If, #efore the #eginning of the o!age, the captain attempts to change
it, or there occurs a naal war with the power to which the essel
was destined.
". If a disease should #rea. out and #e officiall! declared epidemic in the
port of destination.
'. If the essel should change owner or captain.
ARTICLE /)2. C! the complement of a essel shall #e understood all the persons
em#ar.ed, from the captain to the ca#in #o!, necessar! for the management, eolutions,
and serice, and there shall, therefore, #e understood as included in the complement the
crew, sailing mates, engineers, sto.ers, and other persons not haing a specific name$ #ut
there shall not #e included the passengers nor the persons the essel is onl! transporting.
SECTION IV
#upercargoes
ARTICLE /)3. 7upercargoes shall discharge on #oard the essel the administratie duties
which the agent or shippers ma! hae assigned them$ the! shall .eep an account and
record of their transactions in a #oo. which shall hae the same conditions and re-uisites
as re-uired for the accounting #oo. of the captain, and shall respect the latter in his duties
as chief of the essel. cdta
The powers and lia#ilities of the captain shall cease, when there is a supercargo, with
regard to that part of the administration legitimatel! conferred upon the latter, #ut shall
continue in force for all acts which are insepara#le from his authorit! and office.
ARTICLE /&%. All the proisions contained in the second section of Title III, Coo. II,
with regard to -ualifications, manner of ma.ing contracts, and lia#ilities of factors shall
#e applica#le to supercargoes.
ARTICLE /&1. 7upercargoes can not, without special authori1ation or agreement, ma.e
an! transaction for their own account during the o!age, with the e(ception of the
entures which, in accordance with the custom of the port of destination, the! are
permitted to do.
Beither shall the! #e permitted to inest in the return trip more than the profits from the
entures, unless there is a special authori1ation thereto from the principals.
TITLE III
#pecial Contracts of Maritime Commerce
SECTION I
Charter Parties
1. !orms and Effects of Charter Parties
ARTICLE /&". A charter part! must #e drawn in duplicate and signed #! the contracting
parties, and when either does not .now how or can not do so, #! two witnesses at their
re-uest.
The charter part! shall include, #esides the conditions unrestrictedl! stipulated, the
following statements:
1. The .ind, name, and tonnage of the essel.
". Aer flag and port of registr!.
'. The name, surname, and domicile of the captain.
). The name, surname, and domicile of the agent, if the latter should ma.e
the charter part!.
&. The name, surname, and domicile of the charterer, and if he states that
he is acting #! commission, that of the person for whose account
he ma.es the contract.
/. The port of loading and unloading.
0. The capacit!, num#er of tons or weight, or measure which the!
respectiel! #ind themseles to load and transport, or whether it is
the total cargo.
2. The freightage to #e paid, stating whether it is to #e a fi(ed amount for
the o!age or so much per month, or for the space to #e occupied,
or for the weight or measure of the goods of which the cargo
consists, or in an! other manner whatsoeer agreed upon.
3. The amount of primage to #e paid to the captain.
1%. The da!s agreed upon for loading and unloading.
11. The la! da!s and e(tra la! da!s to #e allowed and the rate of
demurrage.
ARTICLE /&'. If the freight should #e receied without the charter part! haing #een
signed, the contract shall #e understood as e(ecuted in accordance with what appears in
the #ill of lading, which shall #e the onl! instrument with regard to the freight to
determine the rights and o#ligations of the owner, of the captain, and of the charterer. cdt
ARTICLE /&). The charter parties e(ecuted with the interention of a #ro.er, who
certifies to the authenticit! of the signatures of the contracting parties made in his
presence, shall #e full eidence in court$ and if said signatures should not agree the ones
identical with the signatures the #ro.er must .eep in his registr!, if .ept in accordance to
law, shall #e final.
The contracts shall also #e admitted as eidence, een though a #ro.er has not ta.en part
therein, if the contracting parties ac.nowledge the signatures to #e the same as their own.
7hould no #ro.er hae ta.en part in the charter part! and should the signatures not hae
#een ac.nowledged, dou#ts shall #e decided #! what is proided for in the #ill of lading,
and in the a#sence thereof #! the proofs su#mitted #! the parties.
ARTICLE /&&. Charter parties e(ecuted #! the captain in the a#sence of the agent shall
#e alid and efficient, een though in e(ecuting them he should hae acted in iolation of
the orders and instructions of the agent or shipowner$ #ut the latter shall hae a right of
action against the captain to recoer damages.
ARTICLE /&/. If in the charter part! the time in which the loading and unloading is to
ta.e place is not stated, the customs of the port where these acts ta.e place shall #e
o#sered. After the period stipulated or the customar! one has passed, and should there
not #e in the freight contract an e(press clause fi(ing the indemnification for the dela!,
the captain shall #e entitled to demand demurrage for the usual and e(tra la! da!s which
ma! hae elapsed in loading and unloading.
ARTICLE /&0. If during the o!age the essel should #e rendered unseaworth! the
captain shall #e o#liged to charter another one at his e(pense, in good condition, to ta.e
the cargo to its destination, for which purpose he shall #e o#liged to loo. for a essel not
onl! at the port of arrial #ut in the other ports within a distance of 1&% .ilometers.
If the captain should not furnish a essel to ta.e the cargo to its destination, either
through indolence or malice, the freighters, after a demand of the captain to charter a
essel within an une(tendi#le period, ma! charter one and appl! to the ,udicial authorit!
re-uesting that the charter part! which ma! hae #een made #e immediatel! approed.
The same authorit! shall ,udiciall! compel the captain to confirm the charter made #! the
shippers for his account and under his responsi#ilit!.
If the captain, notwithstanding his efforts, should not find a essel to charter, he shall
deposit the cargo at the disposal of the freighters, to whom he shall communicate the
facts on the first opportunit! presenting itself, the charter #eing regulated in such cases #!
the distance coered #! the essel, there #eing no right to an! indemnification
whatsoeer.

ARTICLE /&2. The freight shall #e paid according to the conditions stipulated in the
contract, and should the! not #e specific, or should the! #e am#iguous, the following
rules shall #e o#sered:
1. If the essel has #een chartered #! months or #! da!s, the freight shall
#egin to run from the da! the loading of the essel is #egun.
". In charters made for a fi(ed period, the freight shall #egin from that
er! da!.
'. If the freight is charged according to weight, the pa!ment shall #e made
according to gross weight, including the containers, such as #arrels
or an! other o#,ects containing the cargo.
ARTICLE /&3. The merchandise sold #! the captain to pa! for the necessar! repairs to
the hull, machiner! or e-uipment, or for unaoida#le and urgent re-uirements, shall pa!
freight. cdt
The price of this merchandise shall #e fi(ed according to the success of the o!age,
namel!:
1. If the essel should arrie safel! at the port of destination, the captain
shall pa! the price which the sale of merchandise of the same .ind
#rings at that port.
". If the essel should #e lost, the captain shall pa! the price said
merchandise would hae #rought in the sale.
The same rule shall #e o#sered in the pa!ment of the freight which shall #e in full if the
essel arries at her destination, and in proportion to the distance coered if she should #e
lost #eforehand.
ARTICLE //%. 9erchandise ,ettisoned for the common safet! shall not pa! freight$ #ut
its alue shall #e considered as general aerage, and shall #e computed in proportion to
the distance coered when it was ,ettisoned.
ARTICLE //1. Beither shall merchandise which was lost #! reason of shipwrec. or
stranding pa! freight, nor that sei1ed #! pirates or enemies.
If the freight should hae #een paid in adance, it shall #e returned, unless there was an
agreement to the contrar!.
ARTICLE //". If the essel or the merchandise should #e recoered, or should the goods
of the shipwrec. #e pic.ed up, the freight corresponding to the distance coered #! the
essel transporting the cargo shall #e paid$ and should the essel #e repaired and
transport said merchandise to the port of destination, the full freight shall #e paid, without
pre,udice to what ma! #e due #! reason of the aerage.
ARTICLE //'. 9erchandise which is damaged or reduced on account of its own defects
or #ad -ualit! and condition of the pac.ing, or #! reason of an accidental case, shall pa!
full freight, and as was stipulated in the charter part!.
ARTICLE //). The natural increase in weight or si1e of the merchandise loaded on the
essel shall accrue to the #enefit of the owner, and shall pa! the proper freight fi(ed in
the contract for the same.
ARTICLE //&. The cargo shall #e speciall! lia#le for the pa!ment of the freight
e(penses, and duties arising therefrom, which must #e reim#ursed #! the shippers, as
well as for the part of the general aerage which ma! #e due, #ut it shall not #e legal for
the captain to dela! unloading on account of dela! in compl!ing with this o#ligation.
7hould there #e reasons for distrust, the ,udge or court, at the instance of the captain, ma!
order the deposit of the merchandise until he has #een paid in full.
ARTICLE ///. The captain ma! re-uest the sale of the cargo to the amount necessar! to
pa! the freight, e(penses, and aerages due him, resering the right to demand the
#alance due him therefor if the proceeds of the sale should not hae sufficed to coer his
credit.
ARTICLE //0. The goods loaded shall #e lia#le in the first place for their freight and
e(penses during twent! da!s, to #e counted from the date of their delier! or deposit.
=uring this period, the sale of the same ma! #e re-uested, een though there #e other
creditors and the case of #an.ruptc! of the freighter or consignee should occur.
This right can not #e made use of, howeer, on the goods which after #eing deliered,
were turned oer to a third person without malice on the part of the latter and for a
alua#le consideration. cdasia
ARTICLE //2. If the consignee should not #e found or should refuse to receie the
cargo, the ,udge or court, at the instance of the captain, shall order its deposit and the sale
of the merchandise in so far as necessar! to pa! the freight and other e(penses on the
same.
The sale shall li.ewise ta.e place when the goods deposited run the ris. of deteriorating
or #! reason of their condition or for other reasons the e(penses of preseration and
custod! should #e disproportionate to the alue thereof.
". Rights and Obligations of O1ners
ARTICLE //3. The owners or the captain shall o#sere in charter parties the capacit! of
the essel or that e(pressl! designated in the registr! of the same, a difference greater
than " per cent #etween that stated and her true capacit! not #eing permissi#le.
If the owners or the captain should contract to carr! a greater amount of cargo than the
essel can hold, in iew of her tonnage, the! shall indemnif! the freighters whose
contracts the! do not fulfill for the losses the! ma! hae caused them #! reason of their
default, according to the cases, i1:
If the essel has #een chartered #! one freighter onl!, and there should appear to #e an
error or fraud in her capacit!, and the charterer should not wish to rescind the contract,
when he has a right to do so, the charter should #e reduced in proportion to the cargo the
essel can not receie, the person from whom the essel is chartered #eing furthermore
o#liged to indemnif! the charterer for the losses he ma! hae caused.
If, on the contrar!, there should #e seeral charter parties, and #! reason of the want of
space all the cargo contracted for can not #e receied, and none of the charterers desires
to rescind the contract, preference shall #e gien to the person who has alread! loaded
and arranged the freight in the essel, and the rest shall ta.e the place corresponding to
them in the order of the dates of their contracts.
7hould there #e no priorit!, the charterers ma! load, if the! wish, pro rata of the amounts
of weight or space the! ma! hae engaged, and the person from whom the essel was
chartered shall #e o#liged to indemnif! them for the loss and damage.
ARTICLE /0%. If the person from whom the essel is chartered, after receiing a part of
the freight, should not find sufficient to ma.e up at least three+fifths of the amount which
the essel can hold, at the price he ma! hae fi(ed, he ma! su#stitute for the
transportation another essel inspected and declared suita#le for the same o!age, the
e(penses of transfer #eing defra!ed #! him, as well as the increase, should there #e an!,
in the price of the charter. 7hould he not #e a#le to ma.e this change, the o!age shall #e
underta.en at the time agreed upon$ and should no time hae #een fi(ed, within fifteen
da!s from the time of #eginning to load, should nothing to the contrar! hae #een
stipulated.
If the owner of the part of the freight alread! loaded should procure some more at the
same price and under similar or proportionate conditions to those accepted for the freight
receied, the person from whom the essel is chartered or the captain can not refuse to
accept the rest of the cargo$ and should he do so, the freighter shall hae a right to
demand that the essel put to sea with the cargo she ma! hae on #oard.
ARTICLE /01. After three+fifths of the essel is loaded, the person from whom she is
chartered can not, without the consent of the charterers or freighters su#stitute the essel
designated in the charter part! #! another one, under the penalt! of ma.ing himself
there#! lia#le for all the losses and damages occurring during the o!age to the cargo of
the person who did not consent to the change.
ARTICLE /0". If the essel has #een chartered in whole, the captain can not, without the
consent of the person chartering her, accept freight from an! other person$ and should he
do so, said charterer ma! o#lige him to unload it and re-uire him to indemnif! him for
the losses suffered there#!.
ARTICLE /0'. The person from whom the essel is chartered shall #e lia#le for all the
losses caused the charterer #! reason of the oluntar! dela! of the captain in putting to
sea, according to the rules prescri#ed, proided he has #een re-uested to put to sea at the
proper time through a notar! or ,udiciall!.
ARTICLE /0). If the charterer should carr! to the essel more freight than that
contracted for, the e(cess ma! #e admitted in accordance with the price stipulated in the
contract, if it can #e well stowed without in,uring the other freighters, #ut if in order to
stow said freight it should #e necessar! to stow it in such manner as to throw the essel
out of trim the captain must refuse it or unload it at the e(pense of its owner.
The captain ma! li.ewise, #efore leaing the port, unload the merchandise placed on
#oard clandestinel!, or transport it, if he can do so and .eep the essel in trim, demanding
#! wa! of freightage the highest price which ma! hae #een stipulated for said o!age.
ARTICLE /0&. If the essel has #een chartered to receie the cargo in another port, the
captain shall appear #efore the consignee designated in the charter part!, and, should the
latter not delier the cargo to him, he shall inform the charterer and await his instructions,
and in the meantime the la! da!s agreed upon shall #egin to run, or those allowed #!
custom in the port, unless there is a special agreement to the contrar!.
7hould the captain not receie an answer within the time necessar! therefor, he shall
ma.e efforts to find freight$ and should he not find an! after the la! da!s and e(tra la!
da!s hae elapsed, he shall ma.e a protest and return to the port where the charter was
made.
The charterer shall pa! the freightage in full, discounting that which ma! hae #een
earned on the merchandise which ma! hae #een carried on the o!age out or on the
return trip, if carried for the account of third persons.
The same shall #e done if a essel, haing #een chartered for the round trip, should not #e
gien an! cargo for her return.

ARTICLE /0/. The captain shall lose the freightage and shall indemnif! the charterers if
the latter should proe, een against the certificate of inspection, should one hae ta.en
place at the port of departure, that the essel was not in a condition to naigate at the time
of receiing the cargo.
ARTICLE /00. The charter part! shall #e enforced if the captain should not hae an!
instructions from the charterer, and a declaration of war or a #loc.ade should ta.e place
during the o!age.
In such case the captain shall #e o#liged to ma.e the nearest safe and neutral port, and
re-uest and await orders from the freighter$ and the e(penses incurred and salaries earned
during the detention shall #e paid as general aerage.
If, #! orders of the freighter, the cargo should #e discharged at the port of arrial, the
freight for the o!age out shall #e paid in full.
ARTICLE /02. If the time necessar!, in the opinion of the ,udge or court, in which to
receie orders from the freighters should hae elapsed without the captain haing
receied an! instructions, the cargo shall #e deposited, and it shall #e lia#le for the
pa!ment of the freight and e(penses incurred #! reason of the dela! which shall #e paid
from the proceeds of the part first sold.
'. Obligations of Charterers
ARTICLE /03. The charterer of an entire essel ma! su#charter the whole or part thereof
for the amounts he ma! consider most conenient, without the captain #eing allowed to
refuse to receie on #oard the freight deliered #! the second charterers, proided the
conditions of the first charter are not changed, and that the person from whom the essel
is chartered #e paid the full price agreed upon een though the full cargo is not em#ar.ed,
with the limitation esta#lished in the ne(t article. cdtai
ARTICLE /2%. A charterer who does not ma.e up the full cargo he #ound himself to ship
shall pa! the freightage of the amount he fails to ship, if the captain did not ta.e other
freight to ma.e up the cargo of the essel, in which case he shall pa! the first charterer
the difference should there #e an!.
ARTICLE /21. If the charterer should ship goods different from those indicated at the
time of e(ecuting the charter part!, without the .nowledge of the person from whom the
essel was chartered or of the captain, and should there#! gie rise to losses, #! reason of
confiscation, em#argo, detention, or other causes, to the person from whom the essel
was chartered or to the shippers, the person giing rise thereto shall #e lia#le with the
alue of his shipment and furthermore with his propert!, for the full indemnit! to all
those in,ured through his fault.
ARTICLE /2". If the merchandise shipped should hae #een for the purpose of illicit
commerce, and was ta.en on #oard with the .nowledge of the person from whom the
essel was chartered or of the captain, the latter, ,ointl! with the owner of the same, shall
#e lia#le for all the losses which ma! #e caused the other shippers, and een though it
ma! hae #een agreed, the! can not demand an! indemnit! whatsoeer of the charterer
for the damage caused the essel.
ARTICLE /2'. In case of ma.ing a port to repair the hull, machiner!, or e-uipment of the
essel, the freighters must wait until the essel is repaired, #eing permitted to unload her
at their own e(pense should the! deem it adisa#le.
If, for the #enefit of the cargo su#,ect to deterioration, the freighters or the court, or the
consul, or the competent authorit! in a foreign land should order the merchandise to #e
unloaded, the e(penses of loading and unloading shall #e for the account of the former.
ARTICLE /2). If the charterer, without the occurrence of an! of the cases of force
ma/eure mentioned in the foregoing article, should wish to unload his merchandise #efore
arriing at the port of destination, he shall pa! the full freight, the e(penses of the stop
made at his re-uest, and the losses and damages caused the other freighters, should there
#e an!.
ARTICLE /2&. In charters for transportation of general freight an! of the freighters ma!
unload the merchandise #efore the #eginning of the o!age, #! pa!ing one+half the
freight, the e(pense of stowing and restowing the cargo, and an! other damage which
ma! #e caused the other shippers.
ARTICLE /2/. After the essel has #een unloaded and the cargo placed at the disposal of
the consignee, the latter must immediatel! pa! the captain the freight due and the other
e(penses to which he ma! #e lia#le for said cargo.
The primage must #e paid in the same proportion and at the same time as the freight, all
the changes and modifications to which the latter should #e su#,ect also goerning the
former.
ARTICLE /20. The charters and freighters can not a#andon merchandise damaged on
account of the inherent ice of the goods or #! reason of an accidental case, for the
pa!ment of the freight and other e(penses. aisadc
The a#andonment shall #e proper, howeer, if the cargo should consist of li-uids and
should the! hae lea.ed out, there not remaining in the containers more than one+-uarter
of their contents.
). Total or Partial Rescissions of Charter Parties
ARTICLE /22. A charter part! ma! #e annulled at the re-uest of the charterer:
1. If #efore loading the essel he should a#andon the charter, pa!ing half
of the freightage agreed upon.
". If the capacit! of the essel should not agree with that stated in the
certificate of the tonnage, or if there is an error in the statement of
the flag under which she sails.
'. If the essel should not #e placed at the disposal of the charterer within
the period and in the manner agreed upon.
). If, after the essel has put to sea, she should return to the port of
departure, on account of ris. of pirates, enemies, or #ad weather,
and the freighters should agree to unload her.
In the second and third cases the person from whom the essel was chartered shall
indemnif! the charterer for the losses he ma! suffer.
In the fourth case the person from whom the essel was chartered shall hae a right to the
freightage in full for the o!age out.
If the charter should hae #een made #! the months, the charterers shall pa! the full
freightage for one month, if the o!age were to a port in the same waters, and two
months, if the o!age were to a port in different waters.
:rom one port to another of the *eninsula and ad,acent islands, the freightage for one
month onl! shall #e paid.
&. If a essel should ma.e a port during the o!age in order to ma.e
urgent repairs and the freighters should prefer to dispose of the
merchandise.
;hen the dela! does not e(ceed thirt! da!s, the freighters shall pa! the full freight for the
o!age out.
7hould the dela! e(ceed thirt! da!s, the! shall onl! pa! the freight in proportion to the
distance coered #! the essel.
ARTICLE /23. At the re-uest of the person from whom the essel is chartered the charter
part! ma! #e rescinded:
1. If the charterer at the termination of the e(tra la! da!s does not place the cargo
alongside the essel.
In such case the charterer must pa! half the freight stipulated #esides the demurrage for
the la! da!s and e(tra la! da!s elapsed.
". If the person from whom the essel was chartered should sell her #efore the charterer
has #egun to load her and the purchaser should load her for his own account.
In such case the endor shall indemnif! the charterer for the losses he ma! suffer.
If the new owner of the essel should not load her for his own account the charter part!
shall #e respected, and the endor shall indemnif! the purchaser if the former did not
inform him of the charter pending at the time of ma.ing the sale.
ARTICLE /3%. The charter part! shall #e rescinded and all action arising therefrom shall
#e e(tinguished if, #efore the essel puts to sea from the port of departure, an! of the
following cases should occur:
1. A declaration of war or interdiction of commerce with the power to
whose ports the essel was going to sail.
". A condition of #loc.ade of the port of destination of said essel, or the
#rea.ing out of an epidemic after the contract was e(ecuted.
'. The prohi#ition to receie the merchandise of the essel at the said
port.
). An indefinite detention, #! reason of an em#argo of the essel #! order
of the goernment or for an! other reason independent of the will
of the agent.
&. The impossi#ilit! of the essel to naigate, without fault of the captain
or agent.
The unloading shall #e made for the account of the charterer.
ARTICLE /31. If the essel can not put to sea on account of the closing of the port of
departure, or an! other temporar! cause, the charter shall #e in force without an! of the
contracting parties haing a right to claim damages.
The su#sistence and wages of the crew shall #e considered as general aerage.
=uring the interruption the charterer ma!, at the proper time and for his own account,
unload and load the merchandise, pa!ing demurrage if the reloading should continue after
the reason for the detention has ceased.
ARTICLE /3". A charter part! shall #e partiall! rescinded, unless there is an agreement
to the contrar!, and the captain shall onl! #e entitled to the freight for the o!age out, if,
#! reason of a declaration of war, closing of ports, or interdiction of commercial relations
during the o!age, the essel should ma.e the port designated for such a case in the
instructions of the charterer.
&. Passengers on #ea 4o&ages
ARTICLE /3'. 7hould the passage price not hae #een agreed upon, the ,udge or court
shall summaril! fi( it, after a statement of e(perts.
ARTICLE /3). 7hould the passenger not arrie on #oard at the time fi(ed, or should
leae the essel without permission from the captain, when the latter is read! to leae the
port, the captain ma! continue the o!age and demand the full passage price.
ARTICLE /3&. The right to passage, if issued to a specified person, can not #e
transferred without the consent of the captain or of the consignee.
ARTICLE /3/. If #efore #eginning the o!age the passenger should die, his heirs shall
onl! #e o#liged to pa! half of the passage agreed upon.

If there should #e understood in the price stipulated the e(penses of su#sistence, the
,udge, or court, hearing e(perts if he considers it necessar!, shall fi( the amount to #e
paid the essel.
7hould another passenger #e receied in the place of the deceased, nothing shall #e paid
#! said heirs.
ARTICLE /30. If #efore #eginning the o!age it should #e suspended through the sole
fault of the captain or agent, the passengers shall #e entitled to hae their passage
refunded and to recoer for losses and damages$ #ut if the suspension was due to an
accidental cause, or to force ma/eure, or to an! other cause #e!ond the control of the
captain or agent, the passengers shall onl! #e entitled to the return of the passage mone!.
cd
ARTICLE /32. In case a o!age alread! #egun should #e interrupted the passengers shall
#e o#liged onl! to pa! the passage in proportion to the distance coered, and shall not #e
entitled to recoer for losses and damages if the interruption is due to an accidental cause
or to force ma/eure, #ut hae a right to indemnit! if the interruption should hae #een
caused #! the captain e(clusiel!. If the interruption should #e #! reason of the disa#ilit!
of the essel, and the passenger should agree to await her repair, he can not #e re-uired to
pa! an! increased price of passage, #ut his liing e(penses during the dela! shall #e for
his own account.
In case the departure of the essel is dela!ed the passengers hae a right to remain on
#oard and to #e furnished with food for the account of the essel, unless the dela! is due
to an accidental cause or to force ma/eure. If the dela! should e(ceed ten da!s, the
passengers who re-uest it shall #e entitled to the return of the passage$ and if it were due
e(clusiel! to the captain or agent the! ma! furthermore demand indemnit! for losses
and damages.
A essel which is e(clusiel! destined to the transportation of passengers must ta.e them
directl! to the port or ports of destination, no matter what the num#er of passengers ma!
#e, ma.ing all the stops indicated in her itinerar!.
ARTICLE /33. After the contract has #een rescinded, #efore or after the commencement
of the o!age, the captain shall hae a right to claim pa!ment for what he ma! hae
furnished the passengers.
ARTICLE 0%%. In all that relates to the preseration of order and police on #oard the
essel the passengers shall conform to the orders gien #! the captain, without an!
distinction whatsoeer.
ARTICLE 0%1. The conenience or the interest of the passengers shall not o#ligate nor
empower the captain to stand in shore or enter places which ma! ta.e the essel out of
her course, nor to remain in the ports he must or is under the necessit! of touching for a
period longer than that re-uired for the #usiness of the naigation.
ARTICLE 0%". In the a#sence of an agreement to the contrar!, it shall #e understood that
the maintenance of the passengers during the o!age is included in the price of the
passage$ #ut should said maintenance #e for the account of the latter, the captain shall #e
under the o#ligation, in case of necessit!, to furnish them the ictuals at a reasona#le
price necessar! for their maintenance.
ARTICLE 0%'. A passenger shall #e loo.ed upon as a shipper in so far as the goods he
carries on #oard are concerned, and the captain shall not #e lia#le for what said passenger
ma! presere under his immediate and special custod! unless the damage arises from an
act of the captain or of the crew.
ARTICLE 0%). The captain, in order to collect the price of the passage and e(penses of
maintenance, ma! retain the goods #elonging to the passenger, and in case of the sale of
the same he shall #e gien preference oer the other creditors, acting in the same wa! as
in the collection of freight.
ARTICLE 0%&. In case of the death of a passenger during the o!age the captain is
authori1ed, with regard to the #od!, to ta.e the steps re-uired #! the circumstances, and
shall carefull! ta.e care of the papers and goods there ma! #e on #oard #elonging to the
passenger, o#sering the proisions of Case Bo. 1% of Article /1" with regard to
mem#ers of the crew.
/. Bills of %ading
ARTICLE 0%/. The captain and the freighter of the essel are o#liged to draft the #ill of
lading, in which there shall #e stated:
1. The name, registr!, and tonnage of the essel.
". The name of the captain and his domicile.
'. The port of loading and that of unloading.
). The name of the shipper.
&. The name of the consignee, if the #ill of lading is issued to order.
/. The -uantit!, -ualit!, num#er of pac.ages, and mar.s of the
merchandise.
0. The freight and the primage stipulated.
The #ill of lading ma! #e issued to #earer, to order, or in the name of a specific person,
and must #e signed within twent!+four hours after the cargo has #een receied on #oard,
the freighter #eing a#le to re-uest the unloading thereof at the e(pense of the captain
should he not sign it, and in eer! case indemnit! for the losses and damages suffered
there#!. cdasia
ARTICLE 0%0. :our true copies of the original #ill of lading shall #e made, all of which
shall #e signed #! the captain and #! the freighter. <f these copies the freighter shall .eep
one and send another to the consignee$ the captain shall ta.e two, one for himself and
another for the agent.
There ma!, furthermore, #e made as man! copies of the #ill of lading as ma! #e
considered necessar! #! the persons interested$ #ut when the! are issued to order or to
the #earer there shall #e stated in all the copies, #e the! either of the first four or of the
su#se-uent ones, the destination of each one, stating whether it is for the agent, for the
captain, for the freighter, or for the consignee. If the cop! sent to the latter should #e
duplicated there must #e stated in said duplicate this fact, and that it is not alid e(cept in
case of the loss of the first one.
ARTICLE 0%2. The #ills of lading issued to the #earer sent to the consignee shall #e
transfera#le #! the actual delier! of the instrument$ and #! irtue of an indorsement,
those issued to order.
In either case, the person to whom the #ill of lading is transferred shall ac-uire all the
rights and actions of the assignor or indorser with regard to the merchandise mentioned in
the same.
ARTICLE 0%3. A #ill of lading drawn up in accordance with the proisions of this title
shall #e proof as #etween all those interested in the cargo and #etween the latter and the
underwriters, proof to the contrar! #eing resered #! the latter.
ARTICLE 01%. 7hould the #ills of lading not agree, and there should not #e o#sered an!
correction or erasure in an! of them, those possessed #! the freighter or consignee signed
#! the captain shall #e proof against the captain or agent in faor of the consignee or
freighter$ and those possessed #! the captain or agent signed #! the freighter shall #e
proof against the freighter or consignee in faor of the captain or agent.
ARTICLE 011. The legitimate holder of a #ill of lading who does not present it to the
captain of the essel #efore her unloading, o#liging the latter there#! to unload it and
place it in deposit, shall #e lia#le for the cost of warehousing and other e(penses arising
therefrom.
ARTICLE 01". The captain can not himself change the destination of merchandise. In
admitting this change at the instance of the freighter, he must first ta.e up the #ills of
lading he ma! hae issued, under the penalt! of #eing lia#le for the cargo to the
legitimate holder of the same.
ARTICLE 01'. If #efore deliering the cargo a new #ill of lading should #e demanded of
the captain, it #eing alleged that the preious ones are not presented on account of their
loss or for an! other sufficient cause, he shall #e o#liged to issue it, proided securit! for
the alue of the cargo is gien to his satisfaction$ #ut without changing the consignment
and stating therein the circumstances prescri#ed in the last paragraph of Article 0%0,
when the #ills of lading referred to therein are in -uestion, under the penalt! otherwise to
#e lia#le for said cargo if not properl! deliered through his fault.
ARTICLE 01). If #efore the essel puts to sea the captain should die or should
discontinue in his position through an! accident, the freighters shall hae a right to
demand of the new captain the ratification of the first #ills of lading, and the latter must
do so, proided all the copies preiousl! issued #e presented or returned to him, and it
should appear from an e(amination of the cargo that the! are correct.
The e(penses arising from the e(amination of the cargo shall #e defra!ed #! the agent,
without pre,udice to the right of action of the latter against the first captain, if he ceased
to #e such through his own fault. 7hould said e(amination not #e made, it shall #e
understood that the new captain accepts the cargo as it appears from the #ills of lading
issued.
ARTICLE 01&. Cills of lading will gie rise to a most summar! action or to ,udicial
compulsion, according to the case, for the delier! of the cargo and the pa!ment of the
freightage and proper e(penses.
ARTICLE 01/. If seeral persons should present #ills of lading issued to #earer or to
order, indorsed in their faor, demanding the same merchandise, the captain shall prefer
in deliering the same, the person presenting the cop! first issued, with the e(ception of
the case when the latter one was issued on account of the loss of the first one, and if the!
are held #! different persons.
In such case, as well as when onl! second or su#se-uent copies issued without this proof
are presented, the captain shall appl! to the ,udge or court, so that he ma! order the
deposit of the merchandise, and that through him it ma! #e deliered to the proper
person.
ARTICLE 010. The delier! of the #ill of lading shall effect the cancellation of all the
proisional receipts of prior date gien #! the captain or his su#alterns for partial
delieries of the cargo which ma! hae #een made.
ARTICLE 012. After the cargo has #een deliered, the #ills of lading which the captain
signed shall #e returned to him, or at least the cop! #! reason of which the delier! is
made, with the receipt for the merchandise mentioned therein.

The dela! on the part of the consignee shall ma.e him lia#le for the damages which ma!
#e caused the captain there#!.
SECTION II
%oans on Bottomr& and Respondentia
ARTICLE 013. A loan on #ottomr! or respondentia shall #e considered that which the
repa!ment of the sum loaned and the premium stipulated, under an! condition
whatsoeer, depends on the safe arrial in port of the goods on which it is made, or of
their alue in case of accident.
ARTICLE 0"%. Loans on #ottomr! or respondentia ma! #e e(ecuted:
1. C! means of a pu#lic instrument.
". C! means of a #ond signed #! the contracting parties and the #ro.er
who too. part therein. cdt
'. C! means of a priate instrument.
>nder whicheer of these forms the contract is e(ecuted, it shall #e entered in the
certificate of the registr! of the essel and shall #e recorded in the commercial registr!,
without which re-uisites the credits originating from the same shall not hae, with regard
to other credits, the preference which, according to their nature, the! should hae,
although the o#ligation shall #e alid #etween the contracting parties.
The contracts made during a o!age shall #e goerned #! the proisions of Articles &2'
and /11, and shall #e effectie with regard to third persons from the date of their
e(ecution, if the! should #e recorded in the commercial registr! of the port of registr! of
the essel #efore eight da!s hae elapsed from the date of her arrial. If said eight da!s
should elapse without the record haing #een made in the commercial registr!, the
contracts made during the o!age of a essel shall not hae an! effect with regard to third
persons, e(cept from the da! and date of their entr!.
In order that the #onds of the contracts cele#rated in accordance with Bo. " ma! hae
legal force, the! must conform to the registr! of the #ro.er who too. part therein. In
those cele#rated in accordance with Bo. ' the ac.nowledgment of the signature must
precede.
Contracts which are not reduced to writing shall not #e the #asis for a ,udicial action.
ARTICLE 0"1. In a #ottomr! or respondentia #ond there must #e stated:
1. The .ind, name, and registr! of the essel.
". The name, surname, and domicile of the captain.
'. The names, surnames, and domicile of the person giing and of the
person receiing the loan.
). The amount of the loan and the premium stipulated.
&. The time for repa!ment.
/. The goods pledged to secure repa!ment.
0. The o!age for which the ris. is run.
ARTICLE 0"". The #onds ma! #e issued to order, in which case the! shall #e
transfera#le #! indorsement, and the assignee shall ac-uire all the rights and run all the
ris.s corresponding to the indorser.
ARTICLE 0"'. Loans ma! #e made in goods and in merchandise, their alue #eing fi(ed
in order to determine the amount of the loan.
ARTICLE 0"). The loans ma! #e constituted ,ointl! or separatel!:
1. <n the hull of the essel.
". <n the rigging.
'. <n the e-uipment, proisions, and fuel.
). <n the engine, if the essel is a steamer.
&. <n the cargo.
If the loan is constituted on the hull of the essel, there shall #e understood as also su#,ect
to the lia#ilit! of the loan, the rigging, e-uipment and other goods, proisions, fuel, steam
engines, and the freight earned during the o!age su#,ect to the loan. cdta
If the loan is made on the cargo, all that constitutes the same shall #e su#,ect to the
repa!ment$ and if on a particular o#,ect of the essel or of the cargo, the o#,ect
e(clusiel! and specificall! mentioned onl! shall #e lia#le.
ARTICLE 0"&. Bo loans can #e made on the salaries of the crew, nor on the profits which
it is e(pected to earn.
ARTICLE 0"/. If the lender should proe that he loaned a larger amount than the alue
of the article lia#le for the #ottomr! loan, #! reason of fraudulent measures emplo!ed #!
the #orrower the loan shall onl! #e alid for the amount at which said o#,ect is appraised
#! e(perts.
The surplus principal shall #e returned with legal interest for the whole period of the
duration of the dis#ursement.
ARTICLE 0"0. If the full amount of the loan contracted to load the essel should not #e
made use of for the cargo, the surplus shall #e returned #efore clearing.
The same procedure shall #e o#sered with regard to the goods ta.en as a loan if the!
could not all hae #een loaded.
ARTICLE 0"2. The loan which the captain ta.es at the point of residence of the owners
of the essel shall onl! affect that part of the latter which #elongs to the captain, if the
other owners or their agents should not hae gien their e(press authori1ation thereto or
should not hae ta.en part in the transaction.
If one or more of the owners should #e re-uested to furnish the amount necessar! to
repair or proision the essel, and should not do so within twent!+four hours, the interest
which the parties in default ma! hae in the essel shall #e lia#le for the loan in the
proper proportion.
<utside of the residence of the owners the captain ma! contract loans in accordance with
the proisions of Articles &2' and /11.
ARTICLE 0"3. 7hould the goods on which mone! is ta.en not #e su#,ected to an! ris.,
the contract shall #e considered an ordinar! loan, the #orrower #eing under the o#ligation
to return the principal and interest at the legal rate, if the interest stipulated should not
hae #een lower.
ARTICLE 0'%. Loans made during the o!age shall hae preference oer those made
#efore the clearing of the essel, and the! shall #e graduated #! the inerse order to that
of their dates.
The loans for the last o!age shall hae preference oer prior ones.
7hould seeral loans hae #een made at a port made under stress and for the same
purpose, all of them shall #e paid pro rata.
ARTICLE 0'1. The actions which ma! #e #rought #! the lender shall #e e(tinguished #!
the a#solute loss of the goods on which the loan was made, if said loss arose from an
accident of the sea at the time and during the o!age designated in the contract, and
should it #e proen that the cargo was on #oard$ #ut this shall not ta.e place if the loss
were caused #! the inherent defect of the thing or through the fault or malice of the
#orrower, or through #arratr! on the part of the captain, or if it were caused #! damages
suffered #! the essel as a conse-uence of #eing engaged in contra#and, or if it arose
through loading the merchandise on a essel other than that designated in the contract,
unless this change should hae #een made #! reason of force ma/eure.
The proof of the loss is incum#ent upon the person who receied the loan, as well as the
proof of the e(istence in the essel of the goods declared to the lender as the o#,ect
thereof.
ARTICLE 0'". Lenders on #ottomr! or respondentia shall suffer in proportion to their
respectie interest, the general aerage which ma! ta.e place in the goods on which the
loan was made.
In particular aerages, in the a#sence of an e(press agreement #etween the contracting
parties, the lender on #ottomr! or respondentia shall also contri#ute in proportion to his
respectie interest, should it not #elong to the .ind of ris.s e(cepted in the foregoing
article.
ARTICLE 0''. 7hould it not hae #een stated in the contract for what period the lender
runs the ris., the said ris. shall last with regard to the essel, engines, rigging, and
e-uipment from the moment said essel puts to sea until she drops anchor in the port of
destination, and with regard to the merchandise, from the time it is loaded on the shore or
wharf of the port of shipment until unloaded in the port of consignment. aisadc
ARTICLE 0'). In case of shipwrec. the amount lia#le for the return of the loan shall #e
reduced to the proceeds of the goods saed, after the costs of the salage hae #een
deducted.
If the loan were on the essel or an! of her parts, the freightage earned during the o!age
for which said loan was contracted shall also #e lia#le for its pa!ment, as far as it is
aaila#le.
ARTICLE 0'&. If the same essel or cargo should #e the o#,ect of a loan on #ottomr! or
respondentia and marine insurance, the alue of what ma! #e saed shall #e diided, in
case of shipwrec., #etween the lender and the underwriter, in proportion to the legitimate
interest of each one, ta.ing into consideration, for this purpose onl!, the principal with
relation to the loan, and without pre,udice to the right of preference of other creditors in
accordance with Article &2%.
ARTICLE 0'/. If there should #e dela! in the repa!ment of the principal or premiums of
the loan, the former onl! shall #ear legal interest.
SECTION III
Marine (nsurance
1. !orm of Contract
ARTICLE 0'0. In order that a marine insurance contract #e alid, it must #e reduced to
writing in a polic! signed #! the contracting parties.
This polic! shall #e drafted and signed in duplicate, one cop! #eing .ept #! each of the
contracting parties.
ARTICLE 0'2. The polic! of the insurance contract shall contain, #esides the conditions
unrestrictedl! esta#lished #! the persons interested, the following re-uisites:
1. =ate of the contract, stating the time it is consummated.
". Bames, surnames, and domiciles of the underwriter and of the insured.
'. Capacit! in which the insured acts, stating whether for himself or for
the account of another.
In the latter case the name, surname, and domicile of the person in whose
name he ta.es out the insurance.
). Bame, port, flag, and registr! of the essel insured, or of the essel
carr!ing the goods insured.
&. Bame, surname, and domicile of the captain.
/. *ort or roadstead where the merchandise insured has #een or is to #e
loaded.
0. *ort whence the essel left or is to leae.
2. *orts or roadsteads where the essel is to load, unload, or stop for an!
reason whatsoeer.
3. Bature and .ind of the goods insured.
1%. Bum#er of #ales or pac.ages, of whatsoeer claim, and their mar.s,
should the! hae an!.
11. Time of the #eginning and conclusion of the ris..
1". Amount insured.
1'. *rice agreed upon for the insurance, and place, time, and manner of
pa!ment thereof.

1). Amount of the premium corresponding to the o!age out, and amount
to the return o!age, if the insurance were for the round trip.
1&. <#ligation of the underwriter to pa! the damage caused to the goods
insured.
1/. The place, period, and manner in which pa!ment is to #e made.
ARTICLE 0'3. Insurance contracts and policies authori1ed #! consular agents a#oard, if
the contracting parties or an! of them should #e 7paniards, shall hae the same legal
alue as though the! were drafted with the interention of a #ro.er. aLtoam
ARTICLE 0)%. There ma! #e included in the same contract and polic! the insurance of
the essel and that of the cargo fi(ing the alue of either and mentioning the amount of
insurance on each o#,ect, without which statement the insurance shall #e null.
=ifferent premiums for each article insured ma! #e fi(ed in the polic!.
7eeral underwriters ma! sign the same polic!.
ARTICLE 0)1. In the insurance of merchandise the specific declaration of the same ma!
#e omitted, as well as of the essel to carr! it, when these details are not .nown #! the
insured.
If the essel in such case should suffer an accident on the seas, the insured shall #e under
the o#ligation to proe, #esides the loss of the essel, her departure from the port of
loading, the shipment for his account of the goods insured, and the alue thereof, to
demand indemnit!.
ARTICLE 0)". The insurance policies ma! #e issued to the order of the insured, in which
case the! shall #e negotia#le.
". Goods ,hich Can Be (nsured and Their $ppraisement
ARTICLE 0)'. The following can #e the su#,ect of marine insurance:
1. The hull of a essel in #allast or loaded, in a port or on a o!age.
". The rigging.
'. The engine, should the essel #e a steamer.
). All the e-uipment and articles which constitute the fittings.
&. *roisions and fuel.
/. The amounts secured on #ottomr! or respondentia.
0. The amount of the freights and the pro#a#le profit.
2. All the commercial goods su#,ect to the ris. of naigation the alue of
which can #e specificall! fi(ed.
ARTICLE 0)). All or a part of the goods mentioned in the foregoing article ma! #e
insured ,ointl! or separatel!, in time of peace or during war, for a o!age or for a definite
time, for a single o!age or for a round trip, on good or #ad adices.
ARTICLE 0)&. If it should #e generall! stated in the polic! that the insurance is ta.en on
the essel, there shall #e understood therein the engines, rigging, e-uipment, and all that
#elongs to the essel$ #ut her cargo shall not #e included een thought it #elongs to the
shipowner.
In a general insurance of merchandise, there shall not #e included therein coined metals,
or metals in ingots, precious stones, nor munitions of war.
ARTICLE 0)/. The insurance of the freight ma! #e ta.en #! the shipper, #! the ship
owner, or #! the captain, #ut the latter can not insure the adance the! ma! hae receied
on account of their freight unless the! hae e(pressl! stipulated that, in case the freight is
not earned #! reason of shipwrec. or loss of the cargo, the! shall return the amount
receied.
ARTICLE 0)0. In freight insurance the amount thereof must #e stated, which can not
e(ceed the amount appearing in the agreement.
ARTICLE 0)2. The insurance of profits shall #e goerned #! the stipulations agreed to
#! the contracting parties, #ut there shall #e stated in the polic!:
1. The specific amount at which the insurer fi(es the profit, after the cargo
has arried safel! and #een sold at the port of destination.
". The o#ligation of reducing the insurance if, comparing the amount
o#tained at the sale, after discounting the e(penses and freights,
with the purchase price, it should appear less than that fi(ed in the
insurance.
ARTICLE 0)3. The underwriter ma! hae the goods insured #! him reinsured #! others,
in whole or in part, with the same or with a different premium. The insured ma! li.ewise
insure the cost of the insurance and the ris. he ma! run in collecting the insurance from
the first underwriter.
ARTICLE 0&%. If the captain should ta.e out the insurance, or the owner of the goods
insured should #e on the same essel which carries them, 1% per cent shall alwa!s #e left
to his ris. should there #e no agreement to the contrar!.
ARTICLE 0&1. In the insurance of a essel there shall alwa!s #e understood that the
insurance onl! coers four+fifths of her alue, and that the insured runs the ris. for the
remaining fifth, unless an e(press agreement to the contrar! is included in the polic!.
In such case, and in that of the foregoing article, there shall #e discounted from the
insurance the amount of the loans ta.en on #ottomr! or respondentia.
ARTICLE 0&". The signing of the polic! shall constitute a legal presumption that the
underwriters accepted the appraisement made therein of the goods insured as correct,
e(cepting cases of malice or fraud.
If the appraisement should appear to #e e(aggerated, the proceedings shall #e according
to the cases, i1:
1. If the e(aggeration should hae arisen from error, and not from malice
imputa#le to the insured, the insurance shall #e reduced to its true
alue, fi(ed #! the contracting parties #! common consent, or
through an e(pert opinion. The insurer shall return the e(cess of
the premium receied, retaining, howeer, one+half per cent of said
e(cess.
". If the e(aggeration should hae #een fraudulent on the part of the
insured, and the underwriter proes it, the insurance shall #e null
for the insured, and the underwriter shall gain the premium without
pre,udice to the criminal action which he ma! #ring.
ARTICLE 0&'. Reduction to the alue of the national currenc!, if the alue were fi(ed in
foreign mone!, shall #e made at the current rate at the place and on the da! on which the
polic! was signed.
ARTICLE 0&). If, at the time of ma.ing the contract, the alue of the goods insured has
not #een specificall! fi(ed, it shall #e determined:
1. C! the inoices of consignment.
". C! a statement of #ro.ers or e(perts, who shall act, ta.ing as a #asis of
their ,udgment the price of the goods in the port of departure,
adding thereto the e(penses of shipment, freight, and customs.
If the insurance is on goods returning from a countr! where commerce is onl! e(change,
the alue shall #e fi(ed according to that of the goods e(changed in the port of departure,
with all the e(penses.
'. Obligations of the 5nder1riter and of the (nsured
ARTICLE 0&&. The underwriters shall indemnif! the loss and damage which the articles
insured ma! suffer for an! of the following causes:
1. 7tranding or em#a!ment of the essel, with or without #rea.age.
". 8ales.
'. 7hipwrec..
). Accidental collision.
&. Change of course during the o!age of the essel.
/. Hettison.
0. :ire or e(plosion, if it occurs in merchandise, whether on #oard or on
land, proided it has #een remoed #! order of a competent
authorit! to repair the essel or to #enefit the cargo, or, fire #!
reason of spontaneous com#ustion in the coal #un.ers of the
essel.
2. Capture.
3. 7poliation.
1%. =eclaration of war.
11. Em#argo #! order of the goernment.
1". Retention #! order of a foreign power.
1'. Reprisals.
1). An! other accidents of the sea or ris.s.
The contracting parties ma! stipulate the e(ceptions the! ma! deem proper, mentioning
them in the polic!, without which re-uisite the! shall hae no effect.
ARTICLE 0&/. The underwriters shall not #e lia#le for the loss and damage suffered #!
goods insured #! reason of an! of the following causes, unless the! hae #een e(cluded
in the polic!:
1. Ioluntar! change in the o!age or in the essel, without the e(press
consent of the underwriters.
". Ioluntar! separation from a cono!, when it was stipulated that she
would trael with one.
'. E(tension of the o!age to a port farther off than that designated in the
insurance.
). Ar#itrar! proisions and contrar! to the charter part! or to the #ill of
lading, adopted #! order of the shipowner, freighters or charterers.
&. Carratr! on the part of the master, unless it is the o#,ect of insurance.
/. ;aste, lea.age, and e(penses arising from the nature of the goods
insured.
0. A#sence of the instruments prescri#ed in this Code, in the marine
ordinances and regulations, or those of naigation, or omissions of
an! other class whatsoeer on the part of the captain, in
contraention to administratie proisions, unless the #arratr! of
the master should hae #een ta.en for the account of the
underwriter.
In an! of these cases the underwriters shall collect the premium, proided the! #egan to
run the ris..
ARTICLE 0&0. In the insurance of cargo ta.en for a round trip, if the insured should not
find an! freight for the return o!age or should onl! #e a#le to get less than two+thirds
the return premium shall #e reduced in proportion to the cargo #rought, the underwriter
#eing furthermore granted one+half per cent for the part he does not carr!.
Aoweer, no reduction shall #e allowed if the cargo was lost on the o!age out, unless
there is a special agreement modif!ing the proisions of this article.
ARTICLE 0&2. If the cargo should hae #een insured #! seeral underwriters for
different amounts, #ut without specificall! mentioning the o#,ects of the insurance,
indemnification shall #e paid, in case of loss or damage, #! all the underwriters in
proportion to the amount insured #! each one.
ARTICLE 0&3. If different essels should #e designated to carr! the goods insured, #ut
without stating the amount to #e shipped on each essel, the insured ma! distri#ute the
cargo as ma! #e most conenient for him, or ship it on one essel, onl!, the lia#ilit! of
the underwriter not #eing annulled there#!. Cut if e(press mention should hae #een
made of the amount insured on each essel, and the cargo should #e put on #oard in
different amounts to those fi(ed for each one, the underwriter shall not hae an! further
lia#ilit! than that he ma! hae contracted for each essel. Aoweer, he shall charge one+
half per cent of the e(cess oer the amount stipulated which ma! hae #een loaded
thereon.

If a essel should #e left without an! cargo, the insurance with regard to the same shall #e
understood as annulled #! means of the aforementioned pa!ment of one+half per cent on
the e(cess shipped #! the other ones.
ARTICLE 0/%. If #! reason of the disa#ilit! of the essel #efore leaing the port, the
cargo should #e transferred to another one, the underwriters shall #e allowed to choose
#etween continuing or annulling the contract and pa!ing the damages which ma! hae
occurred$ #ut if the disa#ilit! should ta.e place after the #eginning of the o!age, the
underwriters shall run the ris., een though the essel should hae a different tonnage
and flag than that designated in the polic!.
ARTICLE 0/1. If the time during which the ris.s are to run for the account of the
underwriter is not fi(ed in the polic!, the proisions of Article 0'' with regard to loans
on #ottomr! and respondentia shall #e o#sered.
ARTICLE 0/". In insurance for a fi(ed period, the lia#ilit! of the underwriter shall cease
at the time the period fi(ed e(pires.
ARTICLE 0/'. If for the conenience of the insured the merchandise should #e unloaded
at a port closer than that designated as the destination of the o!age, the underwriter shall
collect the premium stipulated without an! reduction.
ARTICLE 0/). There shall #e understood as included in the insurance, if not e(pressl!
e(cluded in the polic!, the stopping places which it is re-uired to ma.e for the
preseration of the essels or of her cargo.
ARTICLE 0/&. The insured shall communicate to the underwriter #! the first mail
following that #! which he receies them, and #! telegraph, should there #e one, the
notices referring to the course of the naigation of the essel insured, and the damages or
losses suffered #! the goods insured, and shall answer for the losses and damages which
ma! arise through his omission.
ARTICLE 0//. If merchandise insured for the account of the certain who commands the
essel on which it was loaded should #e lost, the former must proe its purchase to the
underwriters #! means of the inoices of the endors$ and the shipment and
transportation on the essel, #! means of a certificate of the 7panish consul, or competent
authorit!, where there is one, of the port where it was loaded, and #! means of the other
documents of entr! and clearance of the custom+houses.
The insured who carr! their own merchandise shall hae the same o#ligations, unless
there is an agreement to the contrar!.
ARTICLE 0/0. If an increase in the premium in case of war should hae #een stipulated,
and said increase should not hae #een fi(ed, the latter shall #e determined in the a#sence
of agreement #etween the parties interested #! e(perts appointed in the manner
esta#lished in the law of ciil procedure, ta.ing the circumstances of the insurance and
the ris.s run into considerations.
ARTICLE 0/2. The gratuitous restitution of the essel or of the cargo to the captain #!
the captures shall redound to the #enefit of the respectie owners without the o#ligation
on the part of the underwriters to pa! the amounts the! insured.
ARTICLE 0/3. All claims arising from insurance contracts must #e accompanied with
the documents proing:
1. The o!age of the essel, with the oath of the captain or a certified
cop! of the log #oo..
". The shipment of the goods insured, with the inoice and documents of
discharge of the custom+house.
'. The insurance contract, with the polic!.
). The loss of the goods insured, with the documents of Bo. 1, and a
statement of the crew, if necessar!.
The discount of the goods insured shall furthermore #e fi(ed after an e(amination #!
e(perts.
The underwriters ma! contradict the claim and the! shall #e permitted to adduce proof in
court.
ARTICLE 00%. After the said documents hae #een presented, the underwriter shall, if he
finds them correct and the loss proen, pa! the insured the indemnit! within the period
stipulated in the polic!, and in the a#sence of an! fi(ed period, within ten da!s after the
claim.
Cut if the underwriter should den! the claim and ,udiciall! contest it, he ma! deposit the
amount appearing from the proofs, or delier it to the insured on giing sufficient
securit!, either #eing decided #! the ,udge or court according to the cases.
ARTICLE 001. If the essel insured should suffer damage #! reason of an accident at sea,
the underwriter shall pa! onl! two+thirds of the e(penses of repairing, should the! #e
made or not. In the first case, the amount of the e(penses shall #e proen #! the means
recogni1ed in law, and in the second case it shall #e appraised #! e(perts.
<nl! the agent or captain authori1ed therefor ma! decide not to repair the essel.
ARTICLE 00". If #! reason of the repair the alue of the essel should #e increased #!
more than one+third of that fi(ed in the insurance, the underwriter shall pa! two+thirds of
the cost of repairs, discounting the greatest alue which the latter ma! hae gien the
essel.
Cut if the insured should proe that the greater alue of the essel does not arise from the
repairs, #ut #ecause the essel is a new one and the damage occurred on the first o!age,
or that the engines or rigging and e-uipment were #ro.en, the deduction of the increase in
alue shall not #e made, and the underwriter shall pa! the two+thirds of the costs of
repair, in accordance with Rule / of Article 2&).
ARTICLE 00'. If the cost of the repairs should e(ceed three+fourths of the alue of the
essel, it shall #e understood that she is disa#led to naigate, and her a#andonment shall
#e proper$ and should this declaration not #e made the underwriters shall pa! the amount
of the insurance, after deducting the alue of the essel damaged or of her remains.
ARTICLE 00). ;hen indemnit! arising from general aerages is in -uestion at the
termination of the ad,ustment, li-uidation, and pa!ment of the same, the insured shall
turn oer to the underwriter all the accounts and documents proing the same produced to
claim the indemnit! of the amounts which ma! hae #een due him. The underwriter shall
e(amine the li-uidation in his turn, and should he find it in accordance with the
conditions of the polic!, he shall #e o#liged to pa! the insured the proper amount within
the period stipulated or, in the a#sence thereof, within the period of eight da!s.
The sum due shall earn interest from this date.
If the underwriter should not find the li-uidation in accordance with the stipulation of the
polic!, he ma! #ring an action #efore the ,udge or court of competent ,urisdiction within
the said period of eight da!s, depositing the amount claimed.
ARTICLE 00&. In no case can a claim #e #rought against the underwriter for a sum
higher than the total amount of insurance, een though the essel saed, after an arrial
under stress for the repair of damages should #e lost, or that the amount to #e paid #!
reason of general aerage amounts to more than the insurance, or that the cost of different
aerages and repairs on one o!age or within the period of the insurance, e(ceeds the
amount insured.
ARTICLE 00/. In cases of particular aerage to the merchandise insured, the following
rules shall #e o#sered:
1. All that which ma! hae disappeared #! reason of theft, loss, sale on
the o!age, deterioration, or #! reason of an! of the marine
accidents included in the insurance contract, shall #e proen in
accordance with the alue of the inoice, or in the a#sence thereof,
#! the alue gien the same in the insurance, and the underwriter
shall pa! the amount thereof.
". If the essel haing safel! arried in port, the merchandise should #e
damaged totall! or in part, the e(perts shall state the alue it would
hae had if it arried in good condition, and the alue thereof in its
damaged condition.
The difference #etween #oth net amounts, after deducting furthermore the customs duties,
freights, and other similar e(penses, shall constitute the alue or amount of the aerage,
adding thereto the e(penses for the e(perts and others, should there #e an!.
If the aerage should hae inoled the entire cargo insured the underwriter shall pa! the
loss resulting$ #ut if it onl! inoles part, the insured shall #e paid in the proper
proportion.
If the pro#a#le profit of the freighter should hae #een the o#,ect of a special insurance it
shall #e li-uidated separatel!.
ARTICLE 000. After the particular aerage of the essel has #een fi(ed #! e(perts, the
underwriter shall ,ustif! his right in accordance with the proisions at the end of Bo. 3 of
Article &2%, and the insured shall pa! in accordance with the proisions contained in
Articles 2&2 and 2&3.
ARTICLE 002. The underwriter can not o#lige the insured to sell the o#,ect of the
insurance in order to fi( its alue.
ARTICLE 003. If the appraisement of the goods insured should #e made in a foreign
countr!, the laws, usages, and customs of the place where it is to #e made shall #e
o#sered, without pre,udice to su#mitting to the proisions of this Code for the proof of
the facts.
ARTICLE 02%. After the amount underwritten has #een paid #! the insurer he shall #e
su#rogated in the place of the insured to all the rights and actions which ma! #e #rought
against the persons who ma! hae caused the loss of the goods insured through their
malice or fault.
). Cases in 1hich (nsurance Contracts are $nnulled" Rescinded or Modified
ARTICLE 021. An insurance contract inoling the following shall #e oid:
1. A essel or merchandise su#,ect to a preious loan on #ottomr! or
respondentia, for their full alue.
If the loan on #ottomr! or respondentia should #e for the full alue of the
essel or merchandise, the insurance with regard to the part oer
and a#oe the amount of the loan ma! #e allowed to continue in
force.
". The lies of the crew and passengers.
'. The pa! of the crew.
). 8oods of illicit commerce in the countr! of the flag of the essel.
&. Iessels customaril! dedicated to contra#and, the damage or loss arising
therefrom, in which case the underwriter shall #e paid one+half per
cent of the amount insured.

/. A essel which, without the occurrence of an! force ma/eure preenting
it, does not put to sea within si( months following the date of the
polic!, in which case, #esides the annulment, a pa!ment of one+
half per cent to the underwriter of the sum insured shall #e proper.
0. A essel which does not underta.e the o!age contracted for, or goes to
a different port from that stipulated, in which case the pa!ment to
the underwriter of one+half per cent of the amount insured shall #e
proper.
2. Articles in the appraisement of which intentional fraud was committed.
ARTICLE 02". If different insurance contracts hae #een made with regard to the same
article without fraud, the first one onl! shall #e alid, proided it coers the full alue
thereof.
The underwriters of a su#se-uent date shall #e e(empted from all lia#ilit! and shall
receie one+half per cent of the amount insured.
If the first contract should not coer the full alue of the article insured, the lia#ilit! for
the e(cess shall #e insured #! su#se-uent underwriters in order of dates.
ARTICLE 02'. The insured shall not #e e(empted from pa!ing the full premium to the
different underwriters if he should not inform the su#se-uent ones of the rescission of
their contracts #efore the article insured has arried at the port of destination.
ARTICLE 02). An insurance ta.en out after the loss, aerage, or safe arrial of the
insured article at the port of destination, shall #e oid wheneer it can #e reasona#l!
presumed that one or the other had arried to the .nowledge of an! of the contracting
parties.
This presumption shall e(ist when the notice has #een pu#lished in a place and the time
necessar! to communicate it #! mail or #! telegraph to the place where the insurance was
underwritten has elapsed, without pre,udice to the other proofs which ma! #e #rought #!
the parties.
ARTICLE 02&. An insurance contract on good or #ad adices shall not #e annulled unless
the .nowledge of the occurrence e(pected or feared #! an! of the contracting parties at
the time of ma.ing the contract is proen.
In case of proing the same the defrauder shall pa! the underwriter one+fifth of the
amount insured, without pre,udice to the criminal lia#ilit! which ma! #e proper.
ARTICLE 02/. If the person ta.ing the insurance, with the .nowledge of the total or
partial loss of the goods insured, should #e acting for the account of another, he shall #e
personall! lia#le for the act as if he had acted for his own account, and if, on the contrar!,
the agent should #e innocent of the fraud committed #! the owner insured, all the
lia#ilities shall #e incurred #! the latter, who shall alwa!s #e o#liged to pa! the
underwriters the premium agreed upon.
7imilar proisions shall goern with regard to the insurer when he underwrites the
insurance through an agent and has .nowledge of the saing of the articles insured.
ARTICLE 020. If the ris. the goods insured is pending and the underwriter or the insured
are declared in #an.ruptc!, either shall #e entitled to demand securit!, the latter to coer
the lia#ilit! of the ris. and the former to o#tain the pa!ment of the premium$ and if the
receiers should refuse to gie said securit! within three da!s following the demand the
contract shall #e rescinded.
7hould an accident occur within said three da!s without the securit! haing #een gien,
there shall #e no right to the indemnit! nor to the premium of the insurance.
ARTICLE 022. If an insurance has #een underwritten fraudulentl! #! seeral
underwriters, and one or more of the same acted in good faith, the latter shall #e entitled
to receie the full premium of their insurance of those who ma! hae acted in #ad faith,
the insured #eing e(empted from all lia#ilit!.
7imilar procedure shall #e o#sered with regard to the insured with the underwriters,
when an! of the former should #e guilt! of the fraudulent insurance.
&. $bandonment of Goods (nsured
ARTICLE 023. The insured ma! a#andon for the account of the underwriter the goods
insured, demanding of the underwriter the amount stipulated in the polic!:
1. In case of shipwrec..
". In case of disa#ilit! of the essel to naigate, #! reason of stranding,
#rea. down, or an! other accident of the sea.
'. In case of capture, em#argo, or detention #! order of the national or a
foreign goernment.
). In case of the total loss of the goods insured, #! such #eing understood
an accident reducing the alue insured #! three+-uarters.
<ther damages shall #e considered aerages and shall #e suffered #! the proper persons,
according to the conditions of the insurance and the proisions of this Code.
An a#andonment shall not #e proper in either of the first two cases when a shipwrec.ed,
stranded, or disa#led essel was floated and repaired to continue the o!age to the port of
destination, unless the cost of the repair e(ceeds three+-uarters of the alue for which
said essel was insured.
ARTICLE 03%. If the essel should #e repaired, the underwriters shall #e lia#le onl! for
the e(penses arising from the grounding or other damage the essel ma! hae suffered.
ARTICLE 031. In cases of shipwrec. and capture the insured shall #e o#liged to
personall! ta.e the steps adisa#le under the circumstances, in order to sae or recoer
the goods lost, without pre,udice to the a#andonment he ma! ma.e at the proper time$
and the underwriter shall #e o#liged to reim#urse him for the legitimate e(penses caused
#! the saing, to the alue of the goods saed, which ma! #e attached for nonpa!ment of
said e(penses.
ARTICLE 03". If the essel should #e totall! disa#led to naigate the insured shall #e
o#liged to inform the underwriter thereof, #! telegraph if possi#le, and otherwise #! the
first mail following the receipt of the news. The persons interested in the cargo who ma!
#e present, or in their a#sence the captain, shall adopt all the measures possi#le to ta.e
the cargo to the port of destination in accordance with the proisions of this Code, in
which case all the ris.s and cost of unloading, storage, reshipment or transfer, e(cess of
freight, and all other e(penses, until the goods insured are unloaded at the point
designated in the polic!, shall #e for the account of the underwriter.
ARTICLE 03'. ;ithout pre,udice to the proisions of the foregoing article, the
underwriter shall #e allowed a period of si( months in which to transport the merchandise
to its destination, if the disa#ilit! should hae occurred in the seas around the *hilippines
from the ports of China, in the sea of the same name, to those of the Jellow 7ea and
7traits of 7unda and 9alacca, and one !ear if it occurred at a more distant point. 7aid
period shall #egin to #e counted from the da! the insured informed him of the accident.
ARTICLE 03). If, notwithstanding the efforts made #! the persons interested in the
cargo, #! the captain and #! the underwriters, to transport the merchandise to the port of
its destination, in accordance with the proisions of the foregoing articles, no essel
should #e found on which to transport it, the owner and insured ma! a#andon the same.
ARTICLE 03&. In case of the interruption of the o!age #! reason of em#argo or forced
detention of the essel, the insured shall #e o#liged to inform the underwriters thereof as
soon as he receies notice of the same, and he can not a#andon it until the periods fi(ed
in Article 03' hae elapsed.
Ae shall furthermore #e o#liged to assist the underwriters, in so far as ma! #e in his
power, to o#tain the raising of the em#argo, and must personall! ta.e all the steps
necessar! for the purpose, if the underwriters, #eing in a remote countr!, can not act in
concurrence with him.
ARTICLE 03/. There shall #e understood as a#andoned with the essel the freight of the
merchandise which ma! #e saed, een though paid in adance, it #eing considered as
#elonging to the underwriters, resering the rights of other creditors in accordance with
the proisions of Article &2%.
ARTICLE 030. The notice shall #e understood as receied for the limitation of the
periods fi(ed in Article 03', from the time it is made pu#lic, either through the
newspapers, or as a confirmed rumor among the merchants of the residence of the
insured, or when it can #e proen that the latter receied notice of the accident from the
captain, consignee, or an! correspondent #! mail or telegraph.
ARTICLE 032. The insured shall also hae a right to ma.e the a#andonment after one
!ear has elapsed in ordinar! o!ages and two in long ones without receiing news of the
essel.
In such case he ma! demand of the underwriter the indemnit! for the alue of the amount
insured without #eing o#liged to proe the loss, #ut he must proe the a#sence of news
#! means of a certificate of a consul or marine authorit! of the port of departure, and
another from the consuls or marine authorities of the ports of destination of the essel and
of her registr!, stating that said essel has not arried at said ports during the period
fi(ed.
In order to ma.e use of this action, the period stated in Article 2%) shall #e allowed, short
o!ages #eing considered those made to the coast of the *hilippines and ports of China in
the China 7ea, stopping places in the Jellow 7ea, and ports in the 7trait of 9alacca,
Indian <cean, Red 7ea, Europe, and the European islands.
ARTICLE 033. If the insurance should hae #een ta.en for a limited period, a legal
presumption that the loss too. place within the period agreed upon shall e(ist, unless
proof is adduced #! the underwriter to the effect that the loss too. place after his lia#ilit!
had terminated.
ARTICLE 2%%. The insured, at the time of ma.ing the a#andonment, must declare all the
insurances ta.en out on the goods a#andoned, as well as of the loans on respondentia
made on the same, and until this declaration has #een made the period within which he is
to #e reim#ursed for the alue of the goods shall not #egin to #e counted.
7hould he commit fraud in this declaration, he shall lose all the rights he ma! hae to the
insurance, and shall #e lia#le for the loans he ma! hae secured on the goods insured,
notwithstanding their loss.

ARTICLE 2%1. In case of the capture of the essel, and should the insured not hae time
to act in concurrence with the underwriter, nor to await instructions from him, he in
person, or the captain, in his a#sence, ma! redeem the goods insured, informing the
underwriter at his first opportunit!.
The latter ma! or ma! not accept the agreement made #! the insured or #! the captain,
communicating his decision within the twent!+four hours following the notification of the
agreement.
7hould he accept it, he shall immediatel! delier the amount agreed upon as redemption,
and the su#se-uent ris.s of the o!age shall #e for his account, in accordance with the
stipulations of the polic!. 7hould he not accept it, he shall pa! the insurance, losing all
rights to the goods redeemed$ and if within the period fi(ed he does not render his
decision, it shall #e understood that he refuses to accept the agreement.
ARTICLE 2%". If #! reason of the recapture of the essel the insured should regain
possession of his goods, all the costs and damages caused #! the loss shall #e considered
aerage, and shall #e suffered #! the underwriters$ and if, #! reason of the recapture, the
goods insured should pass into the possession of a third person, the insured ma! ma.e use
of the right of a#andonment.
ARTICLE 2%'. After the a#andonment has #een admitted or declared admissi#le in a suit,
the ownership of the goods a#andoned, with the increase or deterioration suffered #! the
same from the time of a#andonment, shall #e ested in the underwriter, without #eing
e(empted from the pa!ment of the repair of the essel legall! a#andoned.
ARTICLE 2%). A#andonment shall not #e admissi#le:
1. If the loss should hae ta.en place #efore the #eginning of the o!age.
". If the a#andonment is made in a partial or conditional manner, without
including therein all the goods insured.
'. If the intention of a#andonment is not #rought to the notice of the
underwriters within four months following the da! on which the
insured ma! hae had .nowledge of the loss, and if the
a#andonment is not effected within ten months, counted in the
same manner with regard to accidents occurring in the ports of the
*hilippines, China, China 7ea, stopping places in the Jellow 7ea
and ports in the 7traits of 9alacca, Indian <cean, Red 7ea, and in
Europe and the European island.
). If it does not ta.e place through the owner himself, or #! a person
speciall! authori1ed #! him, or #! the one authori1ed to ta.e out
the insurance.
ARTICLE 2%&. In case of a#andonment the underwriter shall #e o#liged to pa! the
amount of the insurance within the period fi(ed in the polic!, and should no period hae
#een stated therein, within si(t! da!s from the admission of the a#andonment, or from the
date of the declaration mentioned in Article 2%'.
TITLE IV
Risks" *amages and $ccidents of Maritime Commerce
SECTION I
$verages
ARTICLE 2%/. :or the purposes of this Code the following shall #e considered aerages:
1. All e(traordinar! or accidental e(penses which ma! #e incurred during
the naigation for the preseration of the essel or cargo, or #oth.
". All damages or deterioration the essel ma! suffer from the time she
puts to sea from the port of departure until she casts anchor in the
port of destination, and those suffered #! the merchandise from the
time it is loaded in the port of shipment until it is unloaded in the
port of consignment.
ARTICLE 2%0. The pett! and ordinar! e(penses of naigation, such as pilotage of coasts
and ports, lighterage and towage, anchorage dues, inspection, health, -uarantine,
la1aretto, and other so+called port e(penses, costs of #arges, and unloading, until the
merchandise is placed on the wharf, and an! other e(penses common to naigation shall
#e considered ordinar! e(penses to #e defra!ed #! the shipowner, unless there is a special
agreement to the contrar!.
ARTICLE 2%2. Aerages shall #e:
1. 7imple or particular.
". 8eneral or gross.
ARTICLE 2%3. 7imple or particular aerages shall #e, as a general rule, all the e(penses
and damages caused to the essel or to her cargo which hae not redounded to the #enefit
and common profit of all the persons interested in the essel and her cargo, and especiall!
the following:
1. The damages suffered #! the cargo from the time of its em#ar.ation
until it is unloaded, either on account of the nature of the goods or
#! reason of an accident at sea or force ma/eure, and the e(penses
incurred to aoid and repair the same.
". The damages suffered #! the essel in her hull, rigging, arms, and
e-uipment, for the same causes and reasons, from the time she puts
to sea from the port of departure until she anchored in the port of
destination.
'. The damages suffered #! the merchandise loaded on dec., e(cept in
coastwise naigation, if the marine ordinances allow it.
). The wages and ictuals of the crew when the essel should #e detained
or em#argoed #! a legitimate order or force ma/eure, if the charter
should hae #een for a fi(ed sum for the o!age.
&. The necessar! e(penses on arrial at a port, in order to ma.e repairs or
secure proisions.
/. The lowest alue of the goods sold #! the captain in arrials under
stress for the pa!ment of proisions and in order to sae the crew,
or to coer an! other re-uirement of the essel against which the
proper amount shall #e charged.
0. The ictuals and wages of the crew during the time the essel is in
-uarantine.
2. The damage suffered #! the essel or cargo #! reason of an impact or
collision with another, if it were accidental and unaoida#le. If the
accident should occur through the fault or negligence of the
captain, the latter shall #e lia#le for all the damage caused.
3. An! damage suffered #! the cargo through the faults, negligence, or
#arratr! of the captain or of the crew, without pre,udice to the right
of the owner to recoer the corresponding indemnit! from the
captain, the essel, and the freight.
ARTICLE 21%. The owner of the goods which gae rise to the e(pense or suffered the
damage shall #ear the simple or particular aerages. cd
ARTICLE 211. 8eneral or gross aerages shall #e, as a general rule, all the damages and
e(penses which are deli#eratel! caused in order to sae the essel, her cargo, or #oth at
the same time, from a real and .nown ris., and particularl! the following:
1. The goods or cash inested in the redemption of the essel or cargo
captured #! enemies, priateers, or pirates, and the proisions,
wages, and e(penses of the essel detained during the time the
arrangement or redemption is ta.ing place.
". The goods ,ettisoned to lighten the essel, whether the! #elong to the
essel, to the cargo, or to the crew, and the damage suffered
through said act #! the goods .ept.
'. The ca#les and masts which are cut or rendered useless, the anchors
and the chains which are a#andoned in order to sae the cargo, the
essel, or #oth.
). The e(penses of remoing or transferring a portion of the cargo in
order to lighten the essel and place her in condition to enter a port
or roadstead, and the damage resulting therefrom to the goods
remoed or transferred.
&. The damage suffered #! the goods of the cargo through the opening
made in the essel in order to drain her and preent her sin.ing.
/. The e(penses caused through floating a essel intentionall! stranded
for the purpose of saing her.
0. The damage caused to the essel which it is necessar! to #rea. open,
scuttle, or smash in order to sae the cargo.
2. The e(penses of curing and maintaining the mem#ers of the crew who
ma! hae #een wounded or crippled in defending or saing the
essel.
3. The wages of an! mem#er of the crew detained as hostage #! enemies,
priateers, or pirates, and the necessar! e(penses which he ma!
incur in his imprisonment, until he is returned to the essel or to
his domicile, should he prefer it.
1%. The wages and ictuals of the crew of a essel chartered #! the month
during the time it should #e em#argoed or detained #! force
ma/eure or #! order of the 8oernment, or in order to repair the
damage caused for the common good.
11. The loss suffered in the alue of the goods sold at arrials under stress
in order to repair the essel #ecause of gross aerage.
1". The e(penses of the li-uidation of the aerage.
ARTICLE 21". In order to satisf! the amount of the gross or general aerages, all the
persons haing an interest in the essel and cargo therein at the time of the occurrence of
the aerage shall contri#ute.
ARTICLE 21'. In order to incur the e(penses and cause the damages corresponding to
gross aerage, a preious resolution of the captain, adopted after deli#eration with the
sailing mate and other officers of the essel, and with a hearing of the persons interested
in the cargo who ma! #e present, shall #e re-uired.
If the latter shall o#,ect, and the captain and officers, or a ma,orit!, or the captain, if
opposed to the ma,orit!, should consider certain measures necessar!, the! ma! #e
e(ecuted under his lia#ilit!, without pre,udice to the freighters e(ercising their rights
against the captain #efore the ,udge or court of competent ,urisdiction, if the! can proe
that he acted with malice, lac. of s.ill, or negligence.
If the persons interested in the cargo, #eing on the essel, should not #e heard, the! shall
not contri#ute to the gross aerage, which contri#ution shall #e paid #! the captain,
unless the urgenc! of the case should #e such that the time necessar! for preious
deli#eration was lac.ing.
ARTICLE 21). The resolution adopted to cause the damages which constitute a general
aerage must necessaril! #e entered in the log #oo., stating the moties and reasons
therefor, the otes against it, and the reasons for the disagreement should there #e an!,
and the irresisti#le and urgent causes which moed the captain if he acted of his own
accord.
In the first case the minutes shall #e signed #! all the persons present who could do so
#efore ta.ing action if possi#le, and if not at the first opportunit!$ in the second case #!
the captain and #! the officers of the essel.

In the minutes and after the resolution there shall #e stated in detail all the goods cast
awa!, and mention shall #e made of the in,uries caused to those .ept on #oard. The
captain shall #e o#liged to delier one cop! of these minutes to the maritime ,udicial
authorit! of the first port he ma! ma.e within twent!+four hours after his arrial, and to
ratif! it immediatel! #! an oath.
ARTICLE 21&. The captain shall superise the ,ettison, and shall order the goods cast
oer#oard in the following order:
1. Those which are on dec., #eginning with those which em#arrass the
handling of the essel or damage her, preferring, if possi#le, the
heaiest ones and those of least utilit! and alue. cda
". Those in the hold, alwa!s #eginning with those of the greatest weight
and smallest alue, to the amount and num#er a#solutel!
indispensa#le.
ARTICLE 21/. In order that the goods ,ettisoned ma! #e included in the gross aerage
and the owners thereof #e entitled to indemnit!, it shall #e necessar! in so far as the cargo
is concerned that their e(istence on #oard #e proen #! means of the #ill of lading$ and
with regard to those #elonging to the essel, #! means of the inentor! made up #efore
the departure, in accordance with the first paragraph of Article /1".
ARTICLE 210. If in lightening a essel on account of a storm, in order to facilitate her
entr! into a port or roadstead, part of her cargo should #e transferred to lighters or #arges
and #e lost, the owner of said part shall #e entitled to indemnit!, as if the loss has
originated from a gross aerage, the amount thereof #eing distri#uted #etween the entire
essel and cargo which caused the same.
If, on the contrar!, the merchandise transferred should #e saed and the essel should #e
lost, no lia#ilit! can #e demanded of the salage.
ARTICLE 212. If, as a necessar! measure to e(tinguish a fire in a port$ roadstead$ cree.,
or #a!, it should #e decided to sin. an! essel, this loss shall #e considered gross aerage,
to which the essels saed shall contri#ute.
SECTION II
$rrivals 5nder #tress
ARTICLE 213. If the captain during the naigation should #eliee that the essel can not
continue the o!age to the port of destination on account of the lac. of proisions, well
founded fear of sei1ure, priateers or pirates, or #! reason of an! accident of the sea
disa#ling her to naigate, he shall assem#le the officers and shall call the persons
interested in the cargo who ma! #e present, and who ma! attend the meeting without the
right to ote$ and if, after e(amining the circumstances of the case, the reasons should #e
considered well founded, it shall #e decided to ma.e the nearest and most conenient port
drafting and entering in the log #oo. the proper minutes, which shall #e signed #! all.
The captain shall hae the deciding ote and the persons interested in the cargo ma!
ma.e the o#,ections and protests the! ma! deem proper, which shall #e entered in the
minutes in order that the! ma! ma.e use thereof in the manner the! ma! consider
adisa#le.
ARTICLE 2"%. The arrial under stress shall not #e considered legal in the following
cases:
1. If the lac. of proisions should arise from the failure to ta.e the
necessar! proisions for the o!age, according to usage and
custom, or if the! should hae #een rendered useless or lost
through #ad stowage or negligence in their care.
". If the ris. of enemies, priateers, or pirates should not hae #een well
.nown, manifest, and #ased on positie and ,ustifia#le facts.
'. If the in,ur! to the essel should hae #een caused #! reason of her not
#eing repaired, rigged, e-uipped, and arranged in a conenient
manner for the o!age, or #! reason of some erroneous order of
the captain.
). ;heneer malice, negligence, want of foresight, or lac. of s.ill on the
part of the captain is the reason for the act causing the damage.
ARTICLE 2"1. The e(penses caused #! the arrial under stress shall alwa!s #e for the
account of the shipowner or agent, #ut the latter shall not #e lia#le for the damage which
ma! #e caused the shippers #! reason of the arrial under stress, proided the latter is
legitimate.
<therwise, the shipowner or agent and the captain shall #e ,ointl! lia#le.
ARTICLE 2"". If in order to ma.e repairs to the essel or #ecause there should #e danger
of the cargo suffering damage it should #e necessar! to unload, the captain must re-uest
authori1ation of the ,udge or court of competent ,urisdiction to lighten the essel, and do
so with the .nowledge of the person interested or representatie of the cargo, should there
#e one. aeIsaE
In a foreign port, it shall #e the dut! of the 7panish
*
consul, where there is one, to gie
the authori1ation.
In the first case, the e(penses shall #e defra!ed #! the ship agent or owner, and in the
second, the! shall #e for the account of the owners of the merchandise, for whose #enefit
the act too. place.
If the unloading should ta.e place for #oth reasons, the e(penses shall #e defra!ed in
proportion to the alue of the essel and that of the cargo.
ARTICLE 2"'. The care and preseration of the cargo which has #een unloaded shall #e
in charge of the captain, who shall #e responsi#le for the same, e(cept in cases of force
ma/eure.
ARTICLE 2"). If the entire cargo or part thereof should appear to #e damaged, or there
should #e imminent danger of its #eing damaged, the captain ma! re-uest of the ,udge or
court of competent ,urisdiction or the consul, in a proper case, the sale of all or of part of
the former, and the person ta.ing cogni1ance of the matter shall authori1e it after an
e(amination and declaration of e(perts, adertisements, and other formalities re-uired #!
the case and an entr! in the #oo., in accordance with the proisions of Article /").
The captain shall, in a proper case, ,ustif! the legalit! of the procedure, under the penalt!
of answering to the shipper for the price the merchandise would hae #rought if it should
hae arried at the port of its destination in good condition.
ARTICLE 2"&. The captain shall answer for the damages caused #! his dela!, if the
reason for the arrial under stress haing ceased, he should not continue the o!age.
If the reason for said arrial should hae #een the fear of enemies, priateers, or pirates,
#efore sailing, a discussion and resolution of a meeting of the officers of the essel and
persons interested in the cargo who ma! #e present shall ta.e place, in accordance with
the proisions contained in Article 213.
SECTION III
Collisions
ARTICLE 2"/. If a essel should collide with another through the fault, negligence, or
lac. of s.ill of the captain, sailing mate, or an! other mem#er of the complement, the
owner of the essel at fault shall indemnif! the losses and damages suffered, after an
e(pert appraisal. aisadc
ARTICLE 2"0. If #oth essels ma! #e #lamed for the collision, each one shall #e lia#le
for his own damages, and #oth shall #e ,ointl! responsi#le for the losses and damages
suffered #! their cargoes.
ARTICLE 2"2. The proisions of the foregoing article are applica#le to the case in which
it can not #e decided which of the two essels was the cause of the collision.
ARTICLE 2"3. In the cases a#oe mentioned the ciil action of the owner against the
person lia#le for the damage is resered, as well as the criminal lia#ilities which ma! #e
proper.
ARTICLE 2'%. If a essel should collide with another #! reason of an accident or
through force ma/eure, each essel and her cargo shall #e lia#le for their own damage.
ARTICLE 2'1. If a essel should #e forced to collide with another one #! a third essel,
the owner of the third essel shall indemnif! for the losses and damages caused, the
captain thereof #eing ciill! lia#le to said owner.
ARTICLE 2'". If, #! reason of a storm or other cause of force ma/eure, a essel which is
properl! anchored and moored should collide with those in her immediate icinit!,
causing them damage, the in,ur! occasioned shall #e loo.ed upon as particular aerage to
the essel run into. "%%&letcd
ARTICLE 2''. A essel shall #e presumed as lost thru a collision which, upon #eing run
into, sin.s immediatel!, and also an! essel which is o#liged to ma.e a port to repair the
damages caused #! the collision should #e lost during the o!age, or should #e o#liged to
#e stranded in order to #e saed. iatdc"%%&
ARTICLE 2'). If the essels colliding should hae pilots on #oard discharging their
duties at the time of the collision, their presence shall not e(empt the captains from the
lia#ilities the! incur$ #ut the latter shall hae the right to #e indemnified #! the pilots
without pre,udice to the criminal lia#ilit! which the latter ma! incur.
ARTICLE 2'&. The action for the recoer! of losses and damages arising from collisions
can not #e admitted if a protest or declaration is not presented within twent!+four hours to
the competent authorit! of the point where the collision too. place, or that of the first port
of arrial of the essel, if in 7pain,
*
and to the consul of 7pain
*
if it should hae
occurred in a foreign countr!.
ARTICLE 2'/. In so far as the damages caused to persons or to the cargo are concerned,
the a#sence of a protest can not pre,udice the persons interested who were not on #oard or
were not in a condition to ma.e .nown their wishes.
ARTICLE 2'0. The ciil lia#ilit! contracted #! the shipowners in the cases prescri#ed in
this section, shall #e understood as limited to the alue of the essel with all her
appurtenances and all the freight earned during the o!age.
ARTICLE 2'2. ;hen the alue of the essel and her appurtenances should not #e
sufficient to coer all the lia#ilities, the indemnit! due #! reason of the death or in,ur! of
persons shall hae preference.
ARTICLE 2'3. If the collision should occur #etween 7panish
*
essels in foreign waters,
or if it should ta.e place in open waters, and the essels should ma.e a foreign port, the
7panish
*
consul in said port shall hold a summar! inestigation of the accident,
forwarding the proceedings to the captain+general of the nearest department
*
for
continuation and conclusion. aisadc

SECTION IV
#hip1recks
ARTICLE 2)%. The losses and deteriorations suffered #! a essel and her cargo #! reason
of shipwrec. or stranding shall #e indiiduall! for the account of the owners, the part of
the wrec. which ma! #e saed #elonging to them in the same proportion.
ARTICLE 2)1. If the wrec. or stranding should arise through the malice, negligence, or
lac. of s.ill of the captain, or #ecause the essel put to sea insufficientl! repaired and
prepared, the owner or the freighters ma! demand indemnit! of the captain for the
damages caused to the essel or cargo #! the accident, in accordance with the proisions
contained in Articles /1%, /1", /1), and /"1.
ARTICLE 2)". The goods saed from the wrec. shall #e speciall! lia#le for the pa!ment
of the e(penses of the respectie salage, and the amount thereof must #e paid #! the
owners of the former #efore the! are deliered to them, and with preference to an! other
o#ligation, if the merchandise should #e sold. cd%&LET
ARTICLE 2)'. If seeral essels naigate under cono!, and an! of them should #e
wrec.ed, the cargo saed shall #e distri#uted among the rest in the proportion to the
amount each one can receie.
If an! captain should refuse, without sufficient cause, to receie what ma! correspond to
him, the captain of the wrec.ed essel shall enter a protest against him #efore two sea
officials of the losses and damages resulting therefrom, ratif!ing the complaint within
twent!+four hours after arrial at the first port, and including it in the proceedings he
must institute in accordance with the proisions contained in Article /1".
7hould it not #e possi#le to transfer to the other essels the entire cargo of the one
wrec.ed, the goods of the highest alue and smallest olume shall #e saed first, the
designation thereof #eing made #! the captain, in concurrence with the officers of his
essel.
ARTICLE 2)). A captain who ma! hae ta.en on #oard the goods saed from the wrec.
shall continue his course to the port of destination, and on arrial shall deposit the same,
with ,udicial interention, at the disposal of their legitimate owners.
In case of changing his course, should he #e a#le to unload them at the port to which the!
were consigned, the captain ma! ma.e said port if the shippers or supercargoes present
consent thereto, as well as the officers and passengers of the essel$ #ut he can not do so,
een with said consent, in time of war or when the port is difficult to ma.e and
dangerous.
All the e(penses of this arrial shall #e defra!ed #! the owners of the cargo, as well as
the pa!ment of the freight, which, ta.ing into consideration the circumstances of the case,
are fi(ed #! agreement or #! a ,udicial decision.
ARTICLE 2)&. If there should not #e on the essel an! person interested in the cargo to
pa! the e(penses and freight corresponding to the salage, the ,udge or court of
competent ,urisdiction ma! order the sale of the part necessar! to coer the same. This
shall also #e done when its preseration is dangerous, or when in the period of one !ear it
should not hae #een possi#le to ascertain who are its legitimate owners.
In #oth cases the proceedings regarding pu#licit! and formalities prescri#ed in Article
&03 shall #e o#sered, and the net proceeds of the sale shall #e deposited in a safe place,
in the ,udgment of the ,udge or court, in order to #e turned oer to the legitimate owners
thereof.
TITLE V
Proof and %i-uidation of $verages
SECTION I
Provisions Common to $ll )inds of $verages
ARTICLE 2)/. The persons interested in the proof and li-uidation of aerages ma!
mutuall! agree and #ind themseles at an! time with regard to the lia#ilit!, li-uidation,
and pa!ment thereof. cdt
In the a#sence of agreements, the following rules shall #e o#sered:
1. The proof of the aerage shall ta.e place in the port where the repairs
are made, should an! #e necessar!, or in the port of unloading.
". The li-uidation shall ta.e place in the port of unloading should it #e a
7panish
*
port.
'. 7hould the aerage hae occurred outside of the waters under the
,urisdiction of the *hilippines or the cargo should hae #een sold in
a foreign port #! reason of an arrial under stress, the li-uidations
shall #e made in the port of arrial.
). If the aerage should hae occurred near the port of destination, so that
said port can #e made, the proceedings treated of in Rules 1 and "
shall #e held there.
ARTICLE 2)0. In case of ma.ing the li-uidation of the aerages priatel! #! irtue of
agreement, as well as when a ,udicial authorit! ta.es part therein at the re-uest of an! of
the parties interested who do not agree thereto, all of them shall #e cited and heard,
should the! not hae renounced this right.
7hould the! not #e present or not hae a legitimate representatie, the li-uidation shall #e
made #! the consul in a foreign port, and where there is none, #! the ,udge or court of
competent ,urisdiction, according to the laws of the countr!, and for the account of the
proper person.
;hen the representatie is a person well .nown in the place where the li-uidation ta.es
place, his interention shall #e admitted and produce legal effects, een though he #e
authori1ed onl! #! a letter of the shipowner, freighter, or underwriter. L*Ecd"%%&
ARTICLE 2)2. Claims for aerages shall not #e admitted if the! do not e(ceed & per cent
of the interest which the claimant ma! hae in the essel or cargo if it is gross aerage,
and 1 per cent of the goods damaged if particular aerage, deducting in #oth cases the
e(penses of appraisal, unless there is an agreement to the contrar!.
ARTICLE 2)3. The damages, aerages, loans on #ottomr! and respondentia, and their
premiums, and an! other losses, shall not earn interest #! reason of dela! until the period
of three+da!s has elapsed, to #e counted from the da! on which the li-uidation ma! hae
#een concluded and communicated to the persons interested in the essel, in the cargo, or
in #oth at the same time.
ARTICLE 2&%. If #! reason of one or more accidents of the sea particular and gross
aerages of the essel or the cargo, or of #oth, should ta.e place on the same o!age, the
e(penses and damages corresponding to each one shall #e determined separatel! in the
port where the repairs are made or where the cargo is discharged, or sold, or the
merchandise is #enefited.
:or this purpose the captains shall #e o#liged to demand of the e(pert appraisers and of
the contractors ma.ing the repairs, as well as of those appraising and ta.ing part in the
unloading, repair, sale, or the #enefiting of the merchandise, that the! separate and detail
e(actl! in their appraisements or estimates and accounts all the e(penses and damages
#elonging to each aerage, and in those of each aerage those corresponding to the essel
and to the cargo, stating also separatel! whether there are or not an! damages proceeding
from the nature of the goods, and not #! reason of a sea accident$ and in case there should
#e e(penses common to the different aerages and to the essel and her cargo, there must
#e calculated the amount corresponding to each and stated distinctl!.
SECTION II
%i-uidation of Gross $verages
ARTICLE 2&1. At the instance of the captain, the ad,ustment, li-uidation, and
distri#ution of gross aerages shall #e held priatel!, with the consent of all the parties in
interest.
:or this purpose, within fort!+eight hours following the arrial of the essel at the port,
the captain shall call all the persons interested, in order that the! ma! decide as to
whether the ad,ustment or li-uidation of the gross aerage is to #e made #! e(perts and
li-uidators appointed #! themseles, in which case this shall #e done should the persons
interested agree.
7hould an agreement not #e possi#le, the captain shall appl! to the ,udge or court of
competent ,urisdiction, who shall #e the one of the port where these proceedings are to #e
held in accordance with the proisions of this Code, or to the consul of 7pain,
*
should
there #e one, and otherwise to the local authorit! when the! are to #e held in a foreign
port. cdta
ARTICLE 2&". If the captain should not compl! with the proisions contained in the
foregoing article, the shipowner or agent or the freighters shall demand the li-uidation,
without pre,udice to the action the! ma! #ring to demand indemnit! from him.
ARTICLE 2&'. After the e(perts hae #een appointed #! the persons interested, or #! the
,udge or court, #efore the acceptance, an e(amination of the essel and of the repairs
re-uired shall #e made, as well as an estimate of their cost, separating these losses and
damages from those arising from the natural ice of the thing.
The e(perts shall also declare whether the repairs can #e made immediatel!, or whether it
is necessar! to unload the essel to e(amine and repair her.
;ith regard to the merchandise, if the aerage should #e isi#le at a mere glance, the
e(amination thereof must #e made #efore it is deliered. 7hould it not #e isi#le at the
time of unloading, said e(amination ma! #e held after the delier! proided it is done
within fort!+eight hours from the unloading and without pre,udice to the other proofs
which the e(perts ma! deem necessar!.
ARTICLE 2&). The appraisement of the goods which are to contri#ute to the gross
aerage, and that of those which constitute the aerage, shall conform to the following
rules:
1. The merchandise saed which is to contri#ute to the pa!ment of the
gross aerage shall #e alued at the current price thereof at the port
of unloading, deducting the freights, customs duties, and charges
for unloading, as ma! appear from a material inspection of the
same, not ta.ing into consideration the #ills of lading, unless there
is an agreement to the contrar!.
". If the li-uidation is to ta.e place in the port of sailing, the alue of the
merchandise loaded shall #e fi(ed #! the purchase price, including
the e(penses until the! are put on #oard, e(cluding the insurance
premium.
'. If the merchandise should #e damaged, it shall #e appraised at its true
alue.

). If the o!age should #e interrupted, the merchandise haing #een sold
in a foreign port and the aerage can not #e estimated, there shall
#e ta.en as the contri#uting capital the alue of the merchandise in
the port of arrial, or the net proceeds o#tained at the sale thereof.
&. 9erchandise lost, which should constitute the gross aerage, shall #e
appraised at the alue merchandise of its .ind ma! hae in the port
of unloading, proided its .ind and -ualit! appears in the #ill of
lading$ and should this not #e the case, the inoices of the purchase
issued in the port of shipment shall #e ta.en as a #asis, adding to
its alue the e(penses and freights su#se-uentl! arising. cd
/. The masts cut down, the sails, ca#les, and other e-uipment of the essel
rendered useless for the purpose of saing her, shall #e appraised at
the current alue, deducting one+third #! reason of the difference
#etween new and old.
This deduction shall not #e made in regard to anchors and chains.
0. The essel shall #e appraised at her real alue in her condition at the
time.
2. The freights shall represent &% per cent #! wa! of contri#uting capital.
ARTICLE 2&&. The merchandise loaded on the upper dec. of the essel shall contri#ute
to the gross aerage should it #e saed$ #ut there shall #e no right to indemnit! if it
should #e lost #! reason of #eing ,ettisoned for general safet!, e(cept when the marine
ordinances allow its shipment in this manner in coastwise naigation.
The same shall ta.e place with that which is on #oard and is not included in the #ills of
lading or inentories, according to the cases.
In an! case the shipowner and the captain shall #e lia#le to freighters for the loss of the
,ettison, if the storage on the upper dec. too. place without the consent of the latter.
ARTICLE 2&/. *roisions and munitions of war which the essel ma! hae on #oard
shall not contri#ute to the gross aerage, nor the clothing used #! the captain, officers,
and crew.
There shall also #e e(cepted the clothing used #! the freighters, supercargoes, and
passengers who ma! #e on #oard at the time of the ,ettison.
Beither shall the goods ,ettisoned contri#ute to the pa!ment of the gross aerages which
ma! occur to those saed in a different and su#se-uent ris.. "%%&cdasia
ARTICLE 2&0. After the appraisement of the goods saed has #een concluded #! the
e(perts, as well as that of the goods lost which constitute the gross aerage, and after the
repairs hae #een made to the essel, should an! hae to #e made, and in such case after
the approal of the accounts of the same #! the persons interested or #! the ,udge or
court, the entire record shall #e turned oer to the li-uidator appointed, in order that he
ma! proceed with the distri#ution of the aerage.
ARTICLE 2&2. In order to effect the li-uidation the li-uidator shall e(amine the sworn
statement of the captain, comparing it, if necessar!, with the log #oo. and all the
contracts which ma! hae #een made #etween the persons interested in the aerage, the
appraisements, e(pert e(aminations, and accounts of repairs made. If, as a result of this
e(amination, he should find an! defect in this procedure which might in,ure the rights of
the persons interested or affect the lia#ilit! of the captain, he shall call attention thereto in
order that it #e corrected, if possi#le, and otherwise he shall include it in the preliminaries
of the li-uidation.
Immediatel! thereafter he shall proceed with the distri#ution of the amount of the
aerage, for which purpose he shall fi(:
1. The contri#uting capital, which he shall determine #! the alue of the
cargo, in accordance with the rules esta#lished in Article 2&).
". That of the essel in her actual condition, according to a statement of
e(perts.
'. The &% per cent of the amount of the freight, deducting the remaining
&% per cent for wages and maintenance of the crew.
After the amount of the gross aerage has #een determined in accordance with the
proisions of this Code, it shall #e distri#uted pro rata among the goods which are to
coer the same. cdasia
ARTICLE 2&3. The underwriters of the essel, of the freight, and of the cargo shall #e
o#liged to pa! for the indemnit! of the gross aerage in so far as is re-uired of each one
of these o#,ects respectiel!.
ARTICLE 2/%. If, notwithstanding the ,ettison of the merchandise, #rea.age of masts,
ropes, and e-uipment, the essel should #e lost running said ris., no contri#ution
whatsoeer #! reason of gross aerage shall #e proper.
The owners of the goods saed shall not #e lia#le for the indemnit! of those ,ettisoned,
lost, or damaged.
ARTICLE 2/1. If, after the essel haing #een saed from the ris. which gae rise to the
,ettison, she should #e lost through another accident ta.ing place during the o!age, the
goods saed and e(isting from the first ris. shall continue lia#le to contri#ution #! reason
of the gross aerage according to their alue in their condition at the time, deducting the
e(penses incurred in saing them.
ARTICLE 2/". If, notwithstanding the saing of the essel and of her cargo in
conse-uence of the cutting down of masts or of an! other damage deli#eratel! done to the
essel for said purpose, the merchandise should su#se-uentl! #e lost or stolen, the
captain can not demand of the shippers or consignees that the! contri#ute to indemnit!
for the aerage unless the loss should occur #! an act of the owner or consignee.
ARTICLE 2/'. If the owner of the ,ettisoned goods should recoer them after haing
receied the indemnit! for gross aerage, he shall #e o#liged to return to the captain and
to other persons interested in the cargo the amount he ma! hae receied, deducting the
damage caused #! the ,ettison and the e(penses incurred in their recoer!. cd%&LET
In the latter case, the amount returned shall #e distri#uted #etween the essel and the
persons interested in the cargo in the same proportion in which the! contri#uted to the
pa!ment of the aerage.
ARTICLE 2/). If the owner of the goods ,ettisoned should recoer them without haing
demanded an! indemnit! he shall not #e o#liged to contri#ute to the pa!ment of the gross
aerage which ma! hae #een suffered #! the rest of the cargo after the ,ettison.
ARTICLE 2/&. The distri#ution of the gross aerage shall not #e final until it has #een
agreed to, or in the a#sence thereof, until it has #een approed #! the ,udge or court after
an e(amination of the li-uidation and a hearing of the persons interested who ma! #e
present, or of their representaties.
ARTICLE 2//. After the li-uidation has #een approed it shall #e the dut! of the captain
to collect the amount of the distri#ution, and he shall #e lia#le to the owners of the goods
aeraged for the losses the! suffer through his dela! or negligence. LET%&cd
ARTICLE 2/0. If the contri#utors should not pa! the amount of the assessment within
the third da! after haing #een re-uested to do so, the goods saed shall #e attached, at
the re-uest of the captain, and shall #e sold to coer the pa!ment.
ARTICLE 2/2. If the persons interested in receiing the goods saed should not gie
securit! sufficient to answer for the amount corresponding to the gross aerage, the
captain ma! defer the delier! thereof until pa!ment has #een made. aisadc
SECTION III
%i-uidation of Ordinar& $verages
ARTICLE 2/3. The e(perts which the ,udge or court or the persons interested ma!
appoint, according to the cases, shall proceed with the appraisement and e(amination of
the aerages in the manner prescri#ed in Article 2&' and in Article 2&), Rules " to 0, in
so far as the! are applica#le.
BOOK IV
#uspension of Pa&ments" Bankruptcies" and Prescriptions
TITLE I
#uspension of Pa&ments and Bankruptcies in General
SECTION I
#uspension of Pa&ments and its Effects
ARTICLE 20%. A merchant who, possessing sufficient propert! to coer all his de#ts,
foresees the impossi#ilit! of meeting them when the! respectiel! fall due, ma! suspend
pa!ments, which shall #e declared #! the ,udge of first instance of his domicile in iew of
his declaration.
ARTICLE 201. A merchant who possesses sufficient propert! to coer all his lia#ilities
ma! also suspend pa!ments within fort!+eight hours following the falling due of an
o#ligation which he ma! not hae met. cd%&LET
ARTICLE 20". A merchant who desires to suspend pa!ments must attach to his petition
the #alance of his assets and lia#ilities and the proposal of the e(tension he re-uests of his
creditors, which can not e(ceed three !ears. If in an! manner whatsoeer a discharge or
reduction of the credits is desired, the ,udge shall refuse to hear the petition of suspension
of pa!ment.
ARTICLE 20'. The proceedings for the suspension of pa!ments shall conform to the
proisions indicated in the special law. If the e(tension should #e refused #! the #oard,
the proceedings shall #e concluded.
The proisions of Articles 20% to 20' shall #e applica#le to the suspension of pa!ments
of associations and enterprises not included in Article 3'%.
In order that said associations not included in Article 3'% ma! declare a suspension of
pa!ments, an agreement of the mem#ers shall #e indispensa#le, adopted at a general
meeting, speciall! called for the purpose, within the period fi(ed in Article 201. :or the
calling of the meeting the shortest possi#le periods shall #e fi(ed which are allowed #!
the association #!+laws or articles.
SECTION II
General Provisions Regarding Bankruptcies
ARTICLE 20). A merchant shall #e considered in a state of #an.ruptc! who does not
meet his current o#ligations.
ARTICLE 20&. The declaration of #an.ruptc! shall #e proper:
1. ;hen the #an.rupt re-uests it in person.
". <n a well+#ased re-uest of a legitimate creditor.
ARTICLE 20/. :or the declaration of #an.ruptc! at the instance of the creditor it shall #e
necessar! that the re-uest #e #ased on a title #! irtue of which an e(ecution or writ of
attachment was issued, and that the results of the attachment should not #e sufficient to
coer the pa!ment.

The declaration of #an.ruptc! at the instance of creditors shall also #e proper, who,
although the! hae not o#tained a writ of attachment, proe their credits and that the
merchant has generall! defaulted in the pa!ment of his current o#ligations, or that he has
not presented his proposition of settlement in the case of suspension of pa!ments within
the period fi(ed in Article 20".
ARTICLE 200. In case of the flight or concealment of a merchant, together with the
closing of his offices, warehouses, or dependencies, without haing left an! person to
manage his #usiness for him and to meet his o#ligations, for the declaration of
#an.ruptc! at the instance of a creditor it shall #e sufficient that the latter proes his title
and proes said facts #! means of a statement which he ma! present to the ,udge or court.
The ,udges shall furthermore officiall!, in case of the well+.nown flight or of which the!
hae authentic information, ta.e charge of the esta#lishments of the said fugitie, and
shall prescri#e the measures re-uired for their preseration until the creditors ma.e use of
their right with regard to the declaration of #an.ruptc!. "%%&cdasia
ARTICLE 202. After the #an.ruptc! has #een declared the #an.rupt shall #e dis-ualified
to administer his propert!.
All his acts of ownership and administration su#se-uent to the period to which the effects
of the #an.rupt retroact shall #e null.
ARTICLE 203. The amounts which the #an.ruptc! ma! hae paid in cash, securities, or
certificates of credit in the fifteen da!s preceding the declaration of #an.ruptc! #! reason
of direct de#ts and o#ligations, which fell due after the latter shall #e returned to the
assets #! the persons who receied the same.
The discount of his priate propert! made #! the merchant within the same period shall
#e considered as a pa!ment in adance.
ARTICLE 22%. Contracts cele#rated #! the #an.rupt within the thirt! da!s preceding his
#an.ruptc! shall #e considered fraudulent and oid with regard to his creditors, if the!
are of the following .ind:
1. Transfers of real estate made without consideration.
". Constitutions of dowries made of his priate propert! to his daughters.
'. Concessions and transfers of real estate in pa!ment of de#ts not due at
the time of the declaration of #an.ruptc!.
). Conentional mortgages on o#ligations of a prior date which do not
hae this -ualit!, or for loans of mone! or merchandise the
delier! of which had not ta.en place at the time of contracting the
o#ligation #efore a notar! and the witnesses ta.ing part therein.
&. 8ifts inter vivos, which hae not the well+.nown character of
remunerations, which hae ta.en place after the #alance preceding
the #an.ruptc!, if it should show lia#ilities greater than the assets
of the #an.rupt.
ARTICLE 221. The following ma! #e annulled at the instance of the creditors #! proing
that the #an.rupt acted with the intention of defrauding them of their rights:
1. The alienation for a alua#le consideration of real propert! made in the
month preceding the declaration of the #an.ruptc!.
". The creation of dowries, made within the same time, of propert! of the
con,ugal partnership in faor of the daughters or an! other transfer
of said propert! for no consideration.
'. The creation of dowries or ac.nowledgment of haing receied mone!s
made #! a merchant spouse in faor of the other spouse in the si(
months preceding the #an.ruptc! proided the! do not consist of
real propert! which was inherited #! the latter from his or her
ascendants or ac-uired or possessed preiousl! #! the spouse in
whose faor the assignment of the dowr! or receipt of mone!s was
made.
). All ac.nowledgments of the receipt of mone! or of instruments as
eidence of loans, which, haing #een made si( months #efore the
#an.ruptc! in a pu#lic instrument, are not proen as haing ta.en
place #! means of a notarial statement$ or if, haing #een made in
a priate instrument, the! should not conform to the entries in the
#oo.s of the contracting parties.
&. All contracts, o#ligations, and commercial transactions of the #an.rupt
which are not prior to the declaration of #an.ruptc! #! ten da!s at
least.
ARTICLE 22". An! gift or contract made in the two !ears preceding the #an.ruptc! ma!
#e reo.ed at the instance of the creditors if it should #e proen that an! supposition or
simulation has #een made to defraud the former.
ARTICLE 22'. In irtue of the declaration of #an.ruptc!, the pending de#ts of the
#an.rupt shall #e considered as falling due on the date of the same.
If the pa!ment should #e made #efore the time fi(ed in the o#ligation, it shall #e made
with the proper discount.
ARTICLE 22). :rom the date of the declaration of #an.ruptc! all the de#ts of the
#an.rupt shall cease to earn interest, with the e(ception of the mortgage and pledge
credits, in so far as coered #! the respectie guarant!.
ARTICLE 22&. A merchant who o#tains the reocation of the declaration of #an.ruptc!
re-uested #! his creditors ma! #ring an action for loss and damage against the latter, if it
too. place with manifest malice, falsit!, or in,ustice.
SECTION III
)inds of Bankruptcies and Parties Thereto
ARTICLE 22/. :or legal purposes three different .inds of #an.ruptcies shall #e
distinguished, i1.:
1. Accidental insolenc!.
". Culpa#le insolenc!.
'. :raudulent insolenc!.
ARTICLE 220. An accidental #an.ruptc! shall #e considered that of a merchant who is
the ictim of misfortunes which, haing to #e considered accidental in the regular and
prudent order of a good commercial administration, reduce his capital to such a point that
he can not meet his de#ts in full or in part.
ARTICLE 222. A culpa#le #an.ruptc! shall #e considered that of merchants who are
em#raced in an! of the following cases:
1. If the household and personal e(penses of the #an.rupt should hae
#een e(cessie and not in proportion with his net profits, ta.ing
into consideration the circumstances of his standing and famil!.
"%%&cdasia
". If he should hae suffered losses at an! .ind of pla! which e(ceed that
which a diligent father of a famil! should ris. in this .ind of
entertainments.
'. If the losses should hae occurred #! reason of imprudent wagers and
inoling large amounts, or from sales or purchases or other
transactions, the purpose of which should #e to dela! the
#an.ruptc!.
). If in the si( months preceding the declaration of #an.ruptc! he should
hae sold at a loss or for less than their current price goods #ought
on credit and which were not as !et paid for.
&. If it should appear in the period which has elapsed from the last
inentor! until the declaration of the #an.ruptc! that there was a
time when the #an.rupt owed, #! reason of direct o#ligations,
dou#le the amount of the net credit appearing in the inentor!.
ARTICLE 223. The following shall also #e considered culpa#le #an.rupts in law,
resering the e(ceptions the! ma! propose and proe in order to proe the innocence of
the #an.ruptc!:
1. Those who hae not .ept their #oo.s of accounts in the manner and
with all the essential and indispensa#le re-uisites prescri#ed in title
' of Coo. I, and those who, een though the! .eep said #oo.s with
all these conditions, should hae made errors in the same which
ma! hae caused losses to a third person.
". Those who hae not made their declaration of #an.ruptc! in the period
and manner prescri#ed in Article 20).
'. Those who, haing a#sented themseles at the time of the declaration
of #an.ruptc! or during the progress of the suit, should not appear
in person in the cases in which the law re-uires it of them, unless
there is a legitimate o#stacle.
ARTICLE 23%. A fraudulent #an.ruptc! shall #e considered the one of merchants who
are included in an! of the following conditions:
1. :light with all or a part of their propert!.
". The inclusion in the #alance, memoranda, #oo.s, or other documents
relating to their #usiness or transactions, of fictitious propert!,
credits, de#ts, losses, or e(penses.
'. If the! hae not .ept #oo.s, or, if the! hae done so, the! include
therein, to the pre,udice of a third person, entries not made in the
proper place and at the proper time.
). If the! erase, #lot, or change in an! other manner the contents of the
#oo.s, to the pre,udice of a third person.
&. If the result or e(istence of the assets of their last inentor! does not
appear from the #oo.s, and the cash, securities, personal propert!,
and goods of an! .ind whatsoeer which appear or are proen to
hae come into the possession of the #an.rupt su#se-uentl!.
/. If the! do not insert in the #alance an! amount of cash, credits, goods,
or other .inds of propert! or rights.
0. If the! hae used and applied to their own #usiness funds or goods
#elonging to another which ma! hae #een left with them on
deposit for administration or commission.
2. If the! negotiate, without authorit! of the owner, drafts of another4s
account which are in their possession for collection, transmission,
or other purpose than negotiation, should the! not hae forwarded
the former the amount thereof.
3. If, haing #een commissioned to sell some goods or to negotiate credits
or commercial securities, the! should not hae informed the owner
thereof for an! period of time.
1%. If the! falsif! transfers of whatsoeer .ind.
11. E(ecute, sign, consent to, or ac.nowledge fictitious de#ts, presuming
as such, unless there is proof to the contrar!, all those which hae
no foundation or determined alue.
1". If the! purchase real estate, goods, or credits, placing them in the
name of a third person to the pre,udice of their creditors.
1'. If the! hae adanced pa!ments to the pre,udice of their creditors.
1). If the! negotiate, after the last #alance, drafts drawn #! them on other
persons in whose hands the! hae no funds or open credit, or
authorit! to do so.
1&. If, the declaration of #an.ruptc! haing #een made, the! should hae
collected and applied to their personal use mone!, cash, or credits
from the assets or ta.en from the latter an! of their #elongings.

ARTICLE 231. The #an.ruptc! of a merchant, whose true condition can not #e seen from
his #oo.s, shall #e considered fraudulent unless there is proof to the contrar!.
ARTICLE 23". The #an.ruptc! of commercial agents shall #e considered fraudulent
when it is proen that the! made some transaction of draft or traffic for their own account
in their own name or in that of another, een though the reason for the #an.ruptc! does
not arise from said acts.
If the #an.ruptc! should hae occurred #! reason of the agent haing constituted himself
securit! for the transactions in which he too. part, the #an.ruptc! shall #e considered
fraudulent, unless there is proof to the contrar!.
ARTICLE 23'. *arties to fraudulent #an.ruptcies shall #e considered:
1. Those who assist in the remoal of propert! of the #an.rupt.
". Those who haing conspired with the #an.rupt to suppose credits
against him, or to increase the amount of those the! ma! actuall!
hae against securities or propert!, and who sustain this
supposition in the proceedings of e(amination or classification of
the credits, or at an! meeting of creditors of the #an.ruptc!.
'. Those who in order to place themseles in preference to others to the
pre,udice of other creditors, #! consent of the #an.rupt, alter the
nature or the date of the credit, een though this should #e done
#efore the declaration of #an.ruptc!.
). Those who deli#eratel! and after the #an.rupt suspended pa!ments
should assist him in concealing or remoing a portion of his
propert! or credits.
&. Those who, #eing the holders of an! propert! of the #an.rupt at the
time the declaration of #an.ruptc! #! the ,udge or court ta.ing
cogni1ance thereof is made .nown, delier it to the former and not
to the legitimate administrators of the assets, unless, #eing a nation
or proince different from that of the domicile of the #an.rupt,
the! proe that in the town of their residence the #an.ruptc! was
un.nown.
/. Those who refuse to delier to the receiers of the #an.ruptc! the
goods #elonging to the #an.rupt which ma! #e in their possession.
0. Those who after the pu#lication of the #an.ruptc! should admit
indorsements of the #an.rupt.
2. The legitimate creditors who, to the pre,udice and in fraud of the assets,
should ma.e priate or secret settlements with the #an.rupt.
3. The agents who ta.e part in a transaction of traffic or drafts which the
merchant who has #een declared #an.rupt ma.es.
ARTICLE 23). The parties to the #an.ruptcies shall #e condemned, without pre,udice to
the penalties the! ma! incur in accordance with the criminal laws:
1. To lose an! right the! ma! hae to the assets of the #an.ruptcies to
which the! are declared parties.
". To return to the said assets the propert!, rights, and actions with regard
to which the declaration of their complicit! was rendered, with
interest and indemnit! for loss and damage.
ARTICLE 23&. The classification of the #an.ruptc!, in order to demand the criminal
lia#ilit! of the de#tor, shall alwa!s #e made in a separate proceeding, which shall #e
instituted with a hearing of the department of pu#lic prosecution, of the receiers and of
the #an.rupt himself.
The creditors shall hae the right to ta.e part in the proceedings and to #ring actions
against the #an.rupt, #ut the! shall do so at their own e(pense, without an! right of
action to #e reim#ursed from the assets for the e(penses of the suit or for the costs, no
matter what ma! #e the result of their actions.
ARTICLE 23/. In no case, neither at the instance of a part! nor officiall!, shall
proceedings with regard to the crimes of culpa#le or fraudulent #an.ruptc! #e instituted
#efore the ,udge or court has made the declaration of #an.ruptc! and that there are
grounds to proceed criminall!.
ARTICLE 230. The classification of an accidental #an.ruptc! #! means of a final
,udgment shall not #e an o#stacle to a criminal action when, from the pending suits on
settlements, admission of credits, or an! other matter, there should appear to #e signs of
acts punisha#le in the *enal Code, which shall #e #rought to the .nowledge of the ,udge
or court of competent ,urisdiction. In such cases the department of pu#lic prosecution
must preiousl! #e heard. L*Ecd"%%&
SECTION IV
#ettlements of Bankrupts 1ith their Creditors
ARTICLE 232. At an! stage of the proceedings, after the e(amination of the credits and
after the classification of the #an.ruptc! has #een made, the #an.rupt and his creditors
ma! ma.e the settlements the! ma! deem proper.
:raudulent #an.rupts shall not en,o! this right, nor those who flee during the proceedings
in #an.ruptc!.
ARTICLE 233. The settlements #etween the creditors and the #an.rupt must #e made at a
meeting of creditors dul! called.
*riate ad,ustments #etween the #an.rupt and an! of his creditors shall #e oid$ the
creditor who ma.es them shall lose his right in the #an.ruptc! and the #an.rupt through
this act alone, shall #e classified as culpa#le, when he does not desere to #e considered
as a fraudulent #an.rupt.
ARTICLE 3%%. The creditors speciall! preferred, the preferred creditors, and the
mortgage creditors need not ta.e part in the resolution of the #oard with regard to the
ad,ustment, and should the! not ta.e part therein, the! shall not #e in,ured #! reason
thereof in their respectie rights.
If, on the contrar!, the! should prefer to ta.e part and ote on the settlement proposed,
the! shall #e included in the e(tensions and discharges which the #oard ma! decide upon,
without pre,udice to the place and degree corresponding to their credit.
ARTICLE 3%1. The draft of the settlement shall #e discussed and su#mitted to ote, the
ote of a num#er of creditors composing one oer one+half of those present #eing
sufficient to adopt resolutions, proided their interest in the #an.ruptc! coers three+
fifths of the total lia#ilities, after haing deducted the amount of the credits of the
creditors included in the first paragraph of the foregoing article who ma! hae made use
of the right granted them therein. "%%&letcd
ARTICLE 3%". ;ithin the eight da!s following the holding of the meeting at which the
settlement was accepted, the dissenting creditors and those who hae not ta.en part in the
meeting ma! o#,ect to the approal of the same.
ARTICLE 3%'. The onl! reasons on which the o#,ection to the settlement ma! #e #ased
shall #e the following:
1. Errors in the procedure prescri#ed for the calling, holding, and
deli#erations of the meeting.
". Lac. of -ualifications or representation in one of the oters, if his ote
decides the ma,orit! in num#er or amount.
'. :raudulent understandings #etween the de#tor and one or more
creditors, or of the creditors among themseles to ote in faor of
the settlement.
). :raudulent e(aggerations of credits in order to o#tain the ma,orit! in
amount.
&. :raudulent error in the general #alance of the transactions of the
#an.rupt, or in the reports of the receiers, in order to facilitate the
admission of the proposals of the de#tor.
ARTICLE 3%). After the settlement has #een approed, and, with the e(ception of the
proisions contained in Article 3%%, it shall #e #inding upon the #an.rupt and for all the
creditors whose credits are of a date prior to the declaration of #an.ruptc!, should the!
hae #een cited in a legal manner, or if, haing #een notified of the approal of the
settlement, the! should not hae proceeded against the latter in the manner prescri#ed in
the law of ciil procedure, een though the! are not included in the #alance and hae not
ta.en part in the proceeding.
ARTICLE 3%&. C! irtue of the settlement, should there not #e an e(press stipulation to
the contrar!, the credits shall #e e(tinguished in the part from which the #an.rupt was
discharged, een though there should remain a surplus from the assets of the #an.ruptc!,
or he should su#se-uentl! improe his fortune.
ARTICLE 3%/. If the de#tor with regard to whom the settlement has #een drawn should
not compl! therewith an! of his creditors ma! demand the rescission of the settlement
and the continuation of the #an.ruptc! #efore the ,udge or court which ma! hae ta.en
cogni1ance thereof.
ARTICLE 3%0. In case there should not hae #een the special agreement mentioned in
Article 3%& the creditors who are not full! paid with the amount the! receie from the
assets of the #an.ruptc! until the conclusion of the li-uidation of the same shall presere
the right of action for the amount still due them on the propert! which the #an.rupt ma!
or is a#le to ac-uire su#se-uentl!. iatdc"%%&
SECTION V
Rights of Creditors in Cases of Bankruptc& and their Respective Classification
ARTICLE 3%2. The merchandise, goods, and an! other .ind of propert! which ma!
compose the assets of the #an.ruptc!, the ownership of which ma! not hae #een
transferred to the #an.rupt legall! and irreoca#l!, shall #e considered as another4s
propert! and shall #e placed at the disposal of its legitimate owners after an
ac.nowledgment of their right at a meeting of creditors or in a final ,udgment, the assets
retaining the rights which the #an.rupt ma! hae in said propert!, in whose place the
former shall #e su#stituted, proided the proper o#ligations are complied with.
ARTICLE 3%3. There shall #e considered as included in the proisions of the foregoing
article for the purposes indicated therein:
1. The unappraised and appraised dowr! propert! which ma! remain in
the possession of the hus#and if its receipt appears in a pu#lic
instrument recorded in accordance with Articles "1 and "0 of this
Code. "%%&cda
". The paraphernal propert! which the wife ma! hae ac-uired #! reason
of inheritance, legac!, or gift, either in the manner in which it was
receied or if it has #een su#rogated or inerted into other
propert!, proided the inersion or su#rogation was recorded in the
commercial registr! in accordance with the proisions contained in
the articles cited in the foregoing num#er.
'. The propert! and goods the #an.rupt ma! hae on deposit, under
administration, leased, rented, or of which he en,o!s the usufruct.

). The merchandise the #an.rupt ma! hae in his possession ordered to #e
sold, purchased, transferred, or deliered.
&. The drafts or promissor! notes which without indorsement or an!
statement which transfers their ownership should hae #een sent
the #an.rupt for collection, and those he ma! hae grained
possession of for the account of another, drawn or indorsed directl!
in faor of the principal.
/. The mone!s forwarded outside of account current to the #an.rupt for
delier! to a determined person in the name and for the account of
the principal, or to satisf! o#ligations which are to #e met in the
domicile of the former.
0. The amounts which are owed the #an.rupt #! reason of sales made for
the account of another, and the drafts or promissor! notes of the
same character which are in his possession, een though the! are
not drawn in faor of the owner of the merchandise sold, proided
it is proen that the o#ligation arises therefrom and that the! were
in the possession of the #an.rupt for the account of the owner in
order to #e cashed, and the amounts thereof to #e forwarded at the
proper time, which shall #e legall! presumed if the amount should
not hae #een entered on account current #etween #oth.
2. The goods sold to the #an.rupt for cash, the price of which has not
#een paid at all or onl! in part, while the! remain pac.ed in the
warehouses of the #an.rupt or in the manner in which the delier!
was made, and when the! are in such condition as to #e
specificall! distinguished #! the mar.s and num#ers of the
pac.ages or #ales.
3. The merchandise which the #an.rupt ma! hae purchased on credit,
until the material delier! of the same has not #een made to him in
his warehouses or in a place agreed upon, and that the #ills of
lading or shipping receipts which ma! hae #een forwarded to
him, after #eing shipped, #! order and for the account and ris. of
the purchasers.
In the cases of this num#er and of Bo. 2 the receiers ma! retain the goods purchased or
demand them for the assets pa!ing the price thereof to the endor.
ARTICLE 31%. There shall also #e considered as included in the proisions of Article
3%2, for the purposes determined therein, the amount of the #an. notes in circulation of
#an.s of issue, in case of the #an.ruptc! of these institutions.
ARTICLE 311. :rom the proceeds of the propert! of the #an.ruptc!, after ma.ing the
deductions prescri#ed in the foregoing articles, the creditors shall #e paid in accordance
with the proisions contained in the following articles.
ARTICLE 31". The graduation of the credits shall #e made #! diiding them into two
sections. The first one shall include the credits which are to #e paid from the proceeds of
the personal propert! of the #an.ruptc!, and the second those which are to #e paid from
the proceeds of the real estate.
ARTICLE 31'. The preference of the creditors of the first section shall #e esta#lished in
the following order:
1. The creditors speciall! preferred in this order:
a. The creditors #! reason of #urial, funeral and pro#ate e(penses.
#. The creditors #! reason of furnishing support to the #an.rupt or
to his famil!.
c. The creditors #! reason of personal serices, including the
commercial emplo!ees, for the si( months immediatel!
preceding the #an.ruptc!.
". The preferred creditors who are gien a preferred right in this Code.
'. The creditors preferred #! common law, and the legal mortgage
creditors in the cases in which, in accordance with the said law,
the! are preferred with regard to personal propert!. "%%&cdtai
). The creditors, appearing to #e such #! pu#lic instruments, together with
those who are such #! reason of commercial instruments or
contracts in which an agent or #ro.er has ta.en part.
The common creditors through commercial transactions.
&. The common creditors according to the ciil law.
ARTICLE 31). The preference to #e o#sered in the pa!ment of the creditors of the
second section shall conform to the following order:
1. The creditors with a propert! right, in the terms and in the order
esta#lished in the mortgage law.
". The creditors speciall! preferred and the others mentioned in the
foregoing article, in accordance with the order esta#lished therein.
ARTICLE 31&. The amounts which the legal mortgage creditors ma! receie from the
personal propert! after it has #een sold, shall #e credited on account of what the! are to
receie through the sale of the real propert!$ and should the! hae receied the full
amount of their credit, it shall #e considered as canceled, and the creditors following in
order of dates shall then #e paid.
ARTICLE 31/. The creditors shall receie their credits without distinction as to date, pro
rata within each class, and in accordance with the order indicated in Articles 31' and
31).
E(ceptions are:
1. The mortgage creditors, who shall collect in the order of the dates of
the record of their instruments.
". The creditors whose credits appear in pu#lic or commercial
instruments, in which agents or #ro.ers hae ta.en part, who shall
also collect in the order of the dates of their instruments.
There are resered, notwithstanding the foregoing proisions, the preferences esta#lished
on a determined article, in which case, should seeral creditors of the same class appear,
the general rule shall #e o#sered.
ARTICLE 310. The proceeds of the sale shall not #e distri#uted among the creditors of
one grade, letter, or num#er of those designated in Articles 31' and 31), unless all the
creditors of that grade, letter, or num#ers of the said articles are entirel! paid, according
to order of preference.
ARTICLE 312. The creditors haing a securit! esta#lished in a pu#lic instrument or in a
certificate in which an agent or #ro.er has ta.en part, shall not #e o#liged to turn into the
assets the securities or o#,ects the! ma! hae receied as securit!, unless the receiers in
#an.ruptc! should desire to recoer the same #! pa!ing the credit in -uestion in full. lpe"%%&cda
7hould the receiers not ma.e use of this right, the creditors haing securit! which can #e
-uoted on e(change ma! sell the same when the de#t falls due, in accordance with the
proisions of Article '"' of this Code$ and should the pledges #e of a different .ind, the!
ma! alienate them with the interention of a licensed #ro.er or agent, should there #e
an!, and otherwise at a pu#lic auction held #efore a notar!.
The surplus which there ma! #e after the credit has #een e(tinguished shall #e turned
oer to the assets.
If, on the contrar!, there should still remain a #alance against the #an.rupt, the creditor
shall #e considered as a creditor whose credit appears in a pu#lic instrument, in the place
corresponding to him according to the date of the contract.
ARTICLE 313. The mortgage creditors, either oluntar! or legal, whose credits are not
coered #! the sale of the real estate which ma! hae #een mortgaged in their faor, shall
#e considered with regard to the #alance as creditors whose credits appear in a pu#lic
instrument, #eing included in the rest of this grade according to the date of their
instruments.
SECTION VI
*ischarge of Bankrupts
ARTICLE 3"%. :raudulent #an.rupts can not #e discharged.
ARTICLE 3"1. The #an.rupts not included in the foregoing article ma! o#tain their
discharge #! proing that the! hae full! complied with the approed ad,ustment the!
ma! hae made with their creditors.
7hould there hae #een no agreement, the! shall #e o#liged to proe that all the
o#ligations ac.nowledged in the #an.ruptc! proceedings were li-uidated with the assets
of the same or through su#se-uent pa!ments.
ARTICLE 3"". ;ith the discharge of the #an.rupt all the legal interdictions which a
declaration of #an.ruptc! gies rise to shall cease.
SECTION VII
General Provisions Regarding the Bankruptc& of Commercial $ssociations in General
ARTICLE 3"'. The #an.ruptc! of a general or limited copartnership includes that of the
mem#ers who ma! hae a ,oint lia#ilit! therein, in accordance with Articles 1"0 and 1)2
of this Code, and shall produce with regard to all of said partners the effects inherent in
the declaration of #an.ruptc!, #ut the respectie li-uidations alwa!s #eing .ept separated.
ARTICLE 3"). The #an.ruptc! of one or more partners shall set in itself produce the
#an.ruptc! of the copartnership.
ARTICLE 3"&. If the partners in limited copartnerships or stoc.holders of corporations
should not hae deliered at the time of the #an.ruptc! the full amount the! #ound
themseles to contri#ute to the association, the receier or receiers of the #an.ruptc!
shall hae a right to demand of them the lia#ilities which ma! #e necessar! within the
limit of their respectie lia#ilit!.
ARTICLE 3"/. The special partners, the stoc.holders of corporations and those of ,oint+
stoc. companies, who are at the same time creditors of the #an.ruptc!, shall not appear in
the lia#ilities of the same e(cept for the difference appearing in their faor after the
amounts the! were o#liged to contri#ute as such mem#ers should #e proided for.
ARTICLE 3"0. In general copartnerships the priate creditors of the partners whose
credits should #e prior to the constitution of the association shall #e placed in the same
categor! as the creditors of the latter, and in their proper place and grade, in accordance
with the proisions contained in Articles 31', 31), and 31& of this Code.
7u#se-uent creditors shall onl! #e entitled to recoer their credits from the #alance,
should there #e an!, after the de#ts of the association hae #een satisfied, the preference
granted #! law to preferred and to mortgage credits alwa!s #eing resered.
ARTICLE 3"2. The settlement in cases of the #an.ruptc! of corporations which are not
in li-uidation ma! hae for an o#,ect the continuation or the transfer of the enterprise,
with the conditions fi(ed in the said settlement. iatdclet
ARTICLE 3"3. The association shall #e represented during the #an.ruptc! in the manner
which ma! hae #een foreseen for such cases in the #!+laws, and in the a#sence thereof,
#! the #oard of directors$ and the! ma! at an! stage thereof su#mit to the creditors the
propositions of settlement which the! ma! consider proper, which must #e decided in
accordance with the proisions contained in the following section.

SECTION VIII
#uspension of Pa&ments and Bankruptc& of Railroad and Other Public'1ork
Companies or Enterprises
ARTICLE 3'%. Railroads companies and others deoted to wor.s of general, proisional,
or municipal pu#lic serice, which find themseles una#le to meet their o#ligations, ma!
appeal to the ,udge or court, re-uesting a declaration of suspension of pa!ments.
The declaration of suspension of pa!ments ma! also #e made at the instance of one or
more legitimate creditors, as such #eing understood, for the effects of this Article, those
mentioned in Article 20/.
ARTICLE 3'1. The serice of the operation of railroads or an! other pu#lic wor.s can
not #e interrupted through an! ,udicial or administratie action.
ARTICLE 3'". The compan! or enterprise which desires to suspend pa!ments re-uesting
a settlement with its creditors must accompan! their petition with the #alance of the
assets and lia#ilities.
:or the effects relating to the settlement, the creditors shall #e diided into three groups.
The first shall include the credits for personal serices and those proceeding from the
e(ercise of the right of eminent domain, and for wor.s and material$ the second, the
mortgage o#ligations issued for the capital which the! themseles represent, and for the
coupons and amorti1ation which hae fallen due and hae not #een paid, the coupons and
amorti1ation #eing computed for their full alue, and the o#ligations according to the rate
of issue, this group #eing diided into the num#er of sections e-ual to that of the issue of
mortgage o#ligations$ and the third$ all other credits, whateer #e their nature and order
of preference to each other and with regard to the preceding groups.
ARTICLE 3''. If the compan! or enterprise should not present the #alance in the manner
prescri#ed in the foregoing article, or if the declaration of suspension of pa!ments should
hae #een re-uested #! creditors proing the conditions re-uired in the second paragraph
of Article 3'%, the ,udge or court shall order that a #alance #e struc. within the period of
fifteen da!s, and if the same should elapse without the #alance #eing presented it shall #e
made officiall! within the same period and at the e(pense of the de#tor compan! or
enterprise.
ARTICLE 3'). The declaration or suspension of pa!ments made #! the ,udge or court
shall produce the following effects:
1. It shall suspend e(ecutions and ,udicial decrees.
". It shall o#ligate the companies and enterprises to deposit in the treasur!
or in the #an.s authori1ed to accept the same, the surplus, after
meeting the e(penses of management, operation, and construction.
'. It shall o#lige the companies or enterprises to present to the ,udge or
court, within the period of four months, a proposition of settlement
for the pa!ment of the creditors, preiousl! approed at an
ordinar! or e(traordinar! meeting of the shareholders, if the de#tor
compan! or enterprise should hae #een esta#lished on shares.
ARTICLE 3'&. The settlement shall #e approed if it is accepted #! those representing
three+fifths of each of the groups or sections mentioned in Article 3'".
It shall also #e considered as approed #! the creditors if there should not hae attended
within the first period fi(ed for the purpose a sufficient num#er to ma.e up the ma,orit!
which is a#oe referred to, and at a second call it should #e accepted #! the creditors who
represent two+fifths of the total of the first two groups and of their sections, proided
there is no o#,ection e(ceeding two+fifths of an! of said groups or of the total lia#ilities.
cdasia"%%&
ARTICLE 3'/. ;ithin the fifteen da!s following the counting of the otes, if the result
should hae #een faora#le to the settlement, the dissenting creditors and those who ma!
not hae attended ma! o#,ect to the settlement #! reason of defects in the call of the
creditors, and in the signatures of the latter, or for an! of the reasons stated in Bos. " to &
of Article 3%'.
ARTICLE 3'0. After the settlement has #een approed without o#,ection, or if said
o#,ection has #een disallowed #! a final ,udgment, it shall #e o#ligator! for the compan!
and for all the creditors whose credits are of a date prior to the suspension of pa!ments,
should the! hae #een cited in a legal manner, or, if haing #een notified of the
settlement the! should not hae o#,ected thereto in the terms prescri#ed in the law of
ciil procedure.
ARTICLE 3'2. The declaration of the #an.ruptc! of companies or enterprises shall #e
proper when the! re-uest it, or at the instance of a legitimate creditor, proided an! of the
following conditions is proen in the latter case:
1. If four months should elapse from the declaration of suspension of
pa!ments without the proposed settlement #eing presented to the
,udge or court.
". If the settlement should #e disapproed #! a final ,udgment or if
sufficient signatures to approe it should not meet within the two
periods referred to in Article 3'&.
'. If the settlement haing #een approed, it should not #e complied with
#! the de#tor compan! or enterprise, proided that in the latter
case it is re-uested #! creditors representing at least one+twentieth
of the lia#ilities.
ARTICLE 3'3. After the declaration of #an.ruptc! has #een made, if the concession
should still #e in force, the 8oernment or the corporation which granted it shall #e
informed thereof, and a #oard of receiers shall #e esta#lished, composed of a president
appointed #! said authorit!$ two mem#ers appointed #! the corporation or enterprise$ one
for each group or section of creditors and three mem#ers selected from among the latter.
ARTICLE 3)%. The #oard of receiers shall proisionall! organi1e the serice of the
pu#lic wor.. It shall administer and operate it, #eing furthermore o#liged:
1. To deposit the proceeds in the general treasur! as a necessar! deposit,
after deducting and pa!ing the e(penses of administration and
operation.
". To deposit in the same treasur!, and also as a necessar! deposit, the
cash on hand or securities the compan! or enterprise ma! hae at
the time of the receiership.
'. To e(hi#it the papers and #oo.s #elonging to the compan! or enterprise
when proper, or when ordered to do so #! the court.
ARTICLE 3)1. In the graduation and pa!ment of the creditors, the proisions contained
in the fifth section of this title shall #e o#sered.
TITLE II
Prescriptions
ARTICLE 3)". The periods fi(ed in this Code for #ringing the actions arising from
commercial contracts can not #e e(tended and are without recourse.
ARTICLE 3)'. The actions which #! irtue of this Code, do not hae a fi(ed period in
which to #e #rought ,udiciall! shall #e goerned #! the proisions of the common law.
ARTICLE 3)). The prescription shall #e interrupted through suit or an! ,udicial
proceeding #rought against the de#tor, through the ac.nowledgment of the o#ligations, or
through the renewal of the instrument on which the right of the creditor is #ased.
The prescription shall #e considered uninterrupted #! a ,udicial proceeding if the plaintiff
should discontinue it, or the case should lapse, or his o#,ection #e disallowed.
The period of the prescription shall #egin to #e counted again, in case of the
ac.nowledgment of the o#ligations, from the da! this is done$ in case of their renewal,
from the date of the new instrument, and if the period for meeting the o#ligation should
hae #een e(tended, from the date this e(tension has fallen due.
ARTICLE 3)&. The lia#ilit! of e(change #ro.ers, commercial #ro.ers, or ship+#ro.ing
interpreters in the o#ligations in which the! ta.e part #! reason of their office shall
prescri#e after three !ears.
ARTICLE 3)/. The real action against the securit! of agents shall onl! #e #rought within
si( months, counted from the date of the receipt of the pu#lic securities, commercial
#onds or funds which ma! hae #een deliered to them for negotiation, with the
e(ception of the case of interruption or suspension mentioned in Article 3)).
ARTICLE 3)0. The actions which ma! #e #rought #! a partner against the copartnership,
or ice ersa, shall prescri#e after three !ears, counted, according to the cases, from the
withdrawal of the partner, his e(clusion, or from the dissolution of the copartnership.
It shall #e necessar!, in order that this period ma! run, to record in the commercial
registr! the withdrawal of the partner, his e(clusion, or the dissolution of the
copartnership. The right to recoer the diidends or pa!ments which are declared #!
reason of profit or capital on the part or share which is due each partner in the association
funds, shall prescri#e after fie !ears, counted from the da! fi(ed to commence their
collection. L*rE%&
ARTICLE 3)2. The prescription in faor of a partner who withdrew from the
copartnership or who was e(cluded from the same if it appears in the manner indicated in
the foregoing article, shall not #e interrupted #! the ,udicial proceedings instituted against
the copartnership or against another partner.
The prescription in faor of the partner who was part of the copartnership at the time of
its dissolution shall not #e interrupted #! the ,udicial proceedings instituted against
another partner, #ut shall #e #! those instituted against the li-uidators.
ARTICLE 3)3. The actions against the managing and directing mem#ers of associations
shall terminate at the end of four !ears, to #e counted from the time the! cease to manage
the same for an! reason whatsoeer. iatdc"%%&
ARTICLE 3&%. Actions arising from drafts shall e(tinguish three !ears after the! hae
fallen due, should the! hae #een protested or not.
A similar rule shall #e applied to drafts and promissor! notes of commerce, to chec.s,
stu#s and other instruments of draft or e(change, and to the diidends, coupons, and the
amounts of the amorti1ation of o#ligations issued in accordance with this Code. "%%&L*rE
ARTICLE 3&1. The actions relating to the collection of transportation, freights, e(penses
inherent thereto, and the contri#utions of ordinar! aerages shall prescri#e si( months
after the goods which gae rise thereto were deliered.

The right to the collection of the passage shall prescri#e after a similar period, to #e
counted from the da! the traeler arried at his destination, or from the da! he should
hae paid the same.
ARTICLE 3&". The following shall prescri#e after one !ear:
1. The action arising from serices, wor.s, proisions, and furnishing of
goods or mone! for the construction, repair, e-uipment, or
proisioning of essels, or to support the crew, to #e counted from
the delier! of the goods and mone!, or from the period stipulated
for their pa!ment, and from the time the serices or la#or were
rendered, if the! should not hae #een engaged for a definite
period or o!age. 7hould this #e the case, the time of the
prescription shall #egin to #e counted from the end of the o!age
or from the date of the contract referring thereto, and should there
#e an! interruption therein, from the time of the definite
conclusion of the serice.
". The actions relating to the delier! of the cargo in maritime or land
transportation or to the indemnit! for dela!s and damages suffered
#! the goods transported, the period of the prescription to #e
counted from the da! of the delier! of the cargo at the place of its
destination, or from the da! on which it should hae #een deliered
according to the conditions of its transportation.
The actions for damages or defaults can not #e #rought if at the time of the
delier! of the respectie shipments or within the twent!+four hours following, when
damages which do not appear on the e(terior of the pac.ages receied are in -uestion, the
proper protests or reserations should not hae #een made.
'. The actions arising from e(penses of the ,udicial sale of essels,
cargoes or goods transported #! sea or #! land, as well as those
arising from their custod!, deposit, and preseration, and the
naigation and port e(penses, pilotage, rescues, assistance, and
salages, the period to #e counted from the time the e(penses were
incurred and the assistance gien, or from the conclusion of the
proceedings, if an! should hae #een instituted on the case.
ARTICLE 3&'. The action to demand indemnit! for collisions shall prescri#e after two
!ears from the accident.
These actions shall not #e admissi#le if the proper statement should not hae #een made
#! the captain of the essel damaged, or #! the persons e(ercising his duties, at the first
port which ma! #e made, in accordance with cases 2 and 1& of Article /1", when the!
ma! occur.
ARTICLE 3&). Actions arising from loans on #ottomr! or respondentia or from marine
ris.s shall prescri#e after three !ears from the period of the respectie contracts or from
the date of the accident which gies rise thereto.
ARTICLE 3&&. In cases of war, officiall! declared epidemic, or reolution, or geological
distur#ances of great conse-uence, the 8oernor+8eneral of the *hilippines ma!, after a
resolution adopted at a meeting of authorities, suspend the action of the periods fi(ed #!
this Code for the purposes of commercial transactions, fi(ing the points or places where
the suspension is considered adisa#le when the latter is not to #e general for the entire
*hilippine Archipelago. The order of suspension must #e communicated immediatel! #!
ca#le to the colonial secretar! in order to #e su#mitted to the approal of the
8oernment. In case of the #rea.ing or interruption of the ca#le, the most rapid means of
communication possi#le shall #e made use of.
:or a #etter understanding and application of this Code there shall #e considered as
7paniards all persons who, according to the constitution of the 9onarch!, are thus
considered