TRANSPORTATION LAW REVIEWER 2.

Distinguished from ordinary loan

(F-H)
Distinctions between a Loan on Bottomry & Respondentia and A Simple
Loan
Bottomry & Respondentia Simple Loan
F. LOANS ON BOTTOMRY AND RESPONDENTIA As to Marine Risk
Duly established existence of a marine Marine risk is not necessary.
1. Definition (Art. 719, CC) risk is necessary.
As to Form
Article 719 Must be execute din accordance with Formal requisites of an ordinary
A loan on bottomry or respondentia shall be considered that which the repayment the form and manner prescribed by the contract will suffice
of the sum loaned and the premium stipulated, under any condition whatsoever, code of commerce.
depends on the safe arrival in port of the goods on which it is made, or of their As to Registration
value in case of accident. Must be recorded in the registry of No such registration is required.
vessels to be binding to third persons
Bottomry As to Preference
A contract by which the owner of a ship borrows for the use, equipment or Preference is extended to the last Preference is extended to the first
repair of the vessel, and for a definite term and pledges the ship as security lender lender.
it being stipulated that if the ship be lost in the specified voyage or during
the limited time, by any of the perils enumerated, the lender shall lose his When loan on bottomry and respondentia is regarded as simple loan:
money. 1. Lender loaned an amount larger than the value of the object due to
fraudulent means employed by the borrower.
Respondentia
A contract by which a cargo, or some part thereof is hypothecated as 2. Full amount of the loan is not used for the cargo or given on the
security for loan, the repayment of which is dependent on maritime risks. foods if all of them could not have been loaded, the balance will be
considered as simple loan.
Loan on Bottomry v. Loan on Respondentia 3. Of the effects on money is taken not subjected to any risk.
As to definition
Loan made by the shipowner or ship Loan taken on security of the cargo
3. Parties to the loan
agent guaranteed by vessel itself and laden on a vessel, and repayable upon
Borrower
repayable upon arrival of the vessel at safe arrival of cargo at destination.
Lender
destination.
Note: No loan on bottomry may
however be made, in any case, on the
4. Formalities needed
salaries of crew, nor the profits which
A loan on bottomry or respondentia may be executed by means of a (a) public
be expected.
instrument, (b) policy signed by the contracting parties and the broker
As to Who May Contract taking part therein, or (c)Private instrument. The contract should be registered
Shipowner or ship agent. Outside of the Only the owner of the cargo otherwise the loan shall not have the preference, in relation to other credits, which
residence of the owners – the captain. it should have. (Art. 720, Code of Commerce)

5. Effect of loss of on loan (Art. 731, CC); exceptions

The actions pertaining to the lender shall be extinguished by the absolute loss of
the effects on which the loan was made, if it arose from an accident of the sea at
the time and during the voyage designated in contract, and it is proven that the
cargo was on board;

Exceptions;
 but this shall not take place if the loss was caused by the inherent defect
of the thing, or through the fault or malice of the borrower, or through
barratry on the part of the captain, or
 if it was caused by damages suffered by the vessel as a consequence of
being engaged in contraband, or
 if it arose from having loaded the goods on a vessel different from that
designated in the contract, unless this change should have been made by
reason of force majeure.

Proof of the loss as well as the existence in the vessel of the effects declared
to the lender as the object of the loan, is incumbent upon him who received the
loan.

6. Cases where loan is regarded as simple loan

1. Lender loaned an amount larger than the value of the object due to fraudulent
means employed by the borrower (Art. 726 Code of Commerce).
2. Full amount of the loan is not used for the cargo or given on the goods if all of
them could not have been loaded, the balance will be considered a simple loan
(Art. 727 Code of Commerce).
3. If the vessel or cargo on which the money is taken is not subjected to any risk
(Art. 729 Code of Commerce).
 Simple or Particular General or Gross
As to liability Owner of the goods All persons having an
G. Averages which gave rise to the interest in the vessel
expense or suffered and cargo therein at
1.) Average includes: the damage shall bear the time of the
1. All extraordinary or accidental expenses which may be incurred the simple or occurrence of the
during the navigation for the preservation of the vessel or cargo, or both; particular averages average shall
and (Art. 810 CC) contribute (Art. 812)
2. All damages or deterioration the vessel may suffer from the time
she puts to sea from the port of departure until she casts anchor in the port In absence of an Lenders on bottomry
of destination, and those suffered by the merchandise from the time it is express agreement or respondentia shall
loaded in the port of shipment until it is unloaded in the port of between the suffer in proportion to
consignment. (Art. 806 CC) contracting parties, their respective
the lender on interest (Art. 732 CC)
2.) Classes of Average bottomry or
1. Simple or Particular Average- as a general rule, all the respondentia shall Underwriters of the
expenses and damages caused to the vessel or to her cargo which have also contribute in vessel, freight, and
not redounded to the benefit and common profit of all the persons proportion to his cargo (Art. 859 CC)
interested in the vessel and her cargo. (Art. 809 CC) respective interest,
2. General or Gross Average - as a general rule, all the damages should it not belong
and expenses which are deliberately caused in order to save the vessel, to the kind of loss
her cargo, or both at the same time, from a real and known risk. (Art. 811 arising from an
CC) accident of the sea at
Requisites of General or Gross Average (Magsaysay, Inc. vs. Agan) the time and during
1. There must be a common danger; the voyage
2. That for the common safety part of the vessel or of the cargo or designated in the
both is sacrificed deliberately; contract (Art. 731-732
3. From the expenses or damages caused follows the successful CC)
saving of the vessel and cargo; and As to number of Only 1 interest Several interests
4. The expenses or damages should have been incurred or inflicted interests
after taking proper legal steps and authority. As to share in the 100% share In proportion to the
damage or expense value of the owner’s
Legal Steps Required property saved
1. Deliberation with the sailing mate and other vessel officers. As to right of recovery No reimbursement Reimbursement may
2. Hearing of persons interested in the cargo, who may be present. exist
3. Resolution of the captain adopted after deliberation and hearing.
4. Resolution in the logbook. 1. Jettison - act of throwing overboard from a vessel part of the
5. Minutes signed by all persons who could so before taking action, if cargo, in case of extreme danger, to lighten the ship. In order that
possible. If not possible, the first opportunity by the captains and other the goods jettisoned may be included in the gross average and the
officers. owners thereof be entitled to indemnity, it shall be necessary in so
6. Deliver minutes to maritime judicial authority of the 1 st port within far as the cargo is concerned that their existence on board be
24 hours after arrival and to ratify by oath. proven by means of the bill of lading.; and with regard to those
belonging to the vessel, by means of the inventory made up before
the departure, in accordance with the first paragraph of Art. 612.
(Art. 816 CC)
 2. York-Antwerp Rules on Determining Liability for averages ART. 852. If the captain does not comply with the provisions of the preceding
with Regard to Deck Cargo –Although the Code of Commerce article, the ship agent or the shippers shall demand the liquidation, without
provisions on averages are still in force, the parties may, by stipulation in prejudice to the action they may bring to demand indemnity from him.
the charter party or any written agreement, agree that the York-Antwerp
Rules shall be applied. In addition, the York-Antwerp Rules may also be ART. 853. After the experts have been appointed by the persons interested,
used to solve controversies where no provision in the Code of or by the court, and after the acceptance, they shall proceed to the
Commerce is in point because said rules embody the custom of maritime examination of the vessel and of the repairs required and to the appraisal of
states [AQUINO (2016)]. their cost, separating these damages from those arising from the inherent
defect of the things.
No jettison of deck cargo shall be made good as general average, unless
such cargo is carried in accordance with the recognized custom of the The experts shall also declare whether the repairs may be made immediately,
trade. (Rule 1 York-antwerp) or whether it is necessary to unload the vessel in order to examine and
repair her.
Reason: Deck cargo is in an extra-hazardous position and, if on a sailing
vessel, its presence is likely to obstruct the free action of the crew in With regard to the goods, if the average should be visible at a mere glance,
managing the ship. Moreover, especially in the case of small vessels, it the examination thereof must be made before they are delivered. Should it
renders the boat top-heavy and thus may have to be cast overboard not be visible at the time of unloading, said examination may be made after
sooner than would be necessary if it were in the hold; and naturally it is the delivery, provided that it is done within forty-eight hours from the
always the first cargo to go over in case of emergency.  unloading, and without prejudice to the other proofs which the experts may
deem proper.
- IF deck cargo is loaded with the consent of the shipper on
coastwise shipping, it must always contribute to the general average, and ART. 854. The valuation of the objects which are to contribute to the gross
if jettisoned would be entitled to reimbursement average, and that of those which constitute the average, shall be subject to the
- IF deck cargo is loaded with consent of shipper on overseas trade, following rules:
it must always contribute to general average, but should the same be
jettisoned, it would not be entitled to reimbursement because there is 1. The goods saved which are to contribute to the payment of the gross
violation of the york-antwerp rules. average shall be valued at the current price at the port of unloading,
deducting the freight, customs duties, and expenses of unloading, as may
3.) Liquidation of Averages appear from a material inspection of the same, without taking the bills of
ART. 851. At the instance of the captain, the adjustment, liquidation, and lading into consideration, unless there is an agreement to the contrary.
distribution of gross averages shall be held privately, with the consent of all 2. If the liquidation is to be made in the port of departure, the value of the
the parties in interest. goods loaded shall be determined by the purchase price, including the
expenses until they are placed on board, the insurance premium excluded.
For this purpose, within forty-eight hours following the arrival of the vessel 3. If the goods should be damaged, they shall be appraised at their time
at the port, the captain shall convene all the persons interested in order that value.
they may decide as to whether the adjustment or liquidation of the gross 4. If the voyage having been interrupted, the goods should have been sold in
average is to be made by experts and liquidators appointed by themselves, a foreign port, and the average cannot be estimated, the value of the goods
in which case it shall be so done if the interested parties agree. in the port of arrival, or the net proceeds obtained at the sale thereof, shall
be taken as the contributing capital.
If an agreement is not possible, the captain shall apply to the competent 5. Goods lost, which constitute the gross average, shall be appraised at the
judge or court, who shall be the one in the port where these proceedings are value which goods of their kind may have in the port of unloading, provided
to be held in accordance with the provisions of this Code, or to the Filipino that their kind and quality appear in the bill of lading; and should they not
consul should there be one, and should there be none, to the local authority appear, the value shall be that stated in the invoices of the purchase issued
when they are to be held in a foreign port.
in the port of shipment, adding thereto the expenses and freight the average, the appraisement, expert examinations, and accounts of repairs
subsequently arising. made. If, as a result of this examination, he should find any defect in the
6. The masts cut down, the sails, cables, and other equipments of the vessel procedure, which might injure the rights of the persons interested or affect
rendered useless for the purpose of saving her, shall be appraised at the the liability of the captain, he shall call attention thereto in order that it may
current value, deducting one-third by reason of the difference between new be corrected, if possible, and otherwise he shall include it in the exordial of
and old. the liquidation.
This deduction shall not be made with respect to anchors and chains.
7. The vessel shall be appraised at her true value in the condition in which Immediately thereafter he shall proceed with the distribution of the amount of the
she is found. average, for which purpose he shall fix:
8. The freight shall represent 50 percent by way of contributing capital. 1. The contributing capital, which he shall determine by the value of the
cargo, in accordance with the rules established in Article 854.
ART. 855. The goods loaded on the upper deck of the vessel shall contribute 2. That of the vessel in her actual condition, according to a statement of
the gross average should they be saved; but there shall be no right to experts.
indemnity if they should be lost by reason of having been jettisoned for 3. The 50 percent of the amount of the freight, deducting the remaining
common safety except when the marine ordinances allow their shipment in 50 percent for wages and maintenance of the crew.
this manner in coastwise navigation.
After the amount of the gross average has been determined in accordance with the
The same shall take place with that which are on board and are not included in the provisions of this code, it shall be distributed pro rata among the goods, which are
bills of lading or inventories, according to the cases. to cover the same.

In any case the shipowner and the captain shall be liable to the shippers for the ART. 859. The insurers of the vessel, of the freight, and of the cargo shall be
damages from the jettison, if the storage on the upper deck was made without the obliged to pay for the indemnification of the gross average, in so far as is
consent of the latter. required of each one of these objects respectively.

ART. 856. Provisions and ammunitions of war, which the vessel may have on ART. 860. If, notwithstanding the jettison of goods, breakage of masts,
board, and the clothing used by the captain, officers, and crew, shall not ropes, and equipment, the vessels should be lost running the same risk, no
contribute to the gross average. contribution whatsoever by reason of gross average shall be proper.
The owners of the goods saved shall be liable for the indemnification of
The clothing used by the shippers, supercargoes, and passengers, who may those jettisoned, lost, or damaged.
be on board at the time of the jettison, shall also be accepted.
ART. 861. If, after the vessel has been saved from the risk which gave rise to
Neither shall the goods jettisoned contribute to the payment of the gross the jettison, she should be lost through another accident taking place during
averages, which may occur to the goods saved in a different and subsequent the voyage, the goods saved and existing from the first risk shall continue
risk. liable to contribution by reason of the gross average according to their value
in the condition in which they may be found, deducting the expenses
ART. 857. After the appraisement of the goods saved and of those lost which incurred in saving them.
constitute the gross average, has been concluded by the experts, the
repairs, if any, made on the vessel, and in this case, the accounts of the ART. 862. If, in spite of having saved the vessel and the cargo in
same approved by the persons interested or by the judge or court, the entire consequence of the cutting down of masts or of any other damage
record shall be turned over to the liquidator appointed, in order that he may deliberately done to the vessel for said purpose, the goods should
proceed with the distribution of the average. subsequently be lost or stolen, the captain cannot demand of the shippers of
consignees that they contribute to the indemnity for the average, unless the
ART. 858. In order to effect the liquidation, the liquidator shall examine the loss should occur by reason of an act of the owner or consignee himself.
protest of the captain, comparing it, if necessary, with the logbook, and all
the contracts, which may have been made among the persons interested in
ART. 863. If the owner of the jettisoned goods should recover them after H. COLLISIONS
having received the indemnity for gross average, he shall be obliged to
return to the captain and to the other persons interested in the cargo the Definition:
amount he may have received, deducting the amount of the damage caused  Collision - refers to the contact/impact of two moving vessels.
by the jettison and of the expenses incurred in their recovery.  Allision – impact between one moving vessel and ofanother that is
stationary.
In this case, the amount returned shall be distributed among the vessel and  Nevertheless, for purposes of applying the provisions of the Code,
the persons interested in the cargo in the same proportion in which they collision includes per se and allision.
contributed to the payment of the average.

ART. 864. If the owner of the goods jettisoned should recover them without  The International Regulations for Preventing Collisions at Sea
having demanded any indemnity, he shall not be obliged to contribute to the (COLREGS) – is the existing international agreement with respect to
payment of the gross average, which may have been suffered by the rest of collisions in the high seas.
the cargo after the jettison.

ART. 865. The distribution of the gross average shall not be final until it has Nautical Rules to determine Negligence:
been agreed to, or in the absence thereof, until it has been approved by the 1. When two vessels are about to enter the port, the farther one must
judge or court, after an examination of the liquidation and a hearing of the allow the nearer to enter first; if they collide, the fault is presumed to
persons interested who may be present or of their representatives. be imputable to the one who arrived later, unless it can be proved
that there was no fault on its part.
ART. 866. After the liquidation has been approved, it shall be the duty of the 2. When two vessels meet, the smaller should give the right of way to
captain to collect the amount of the contribution, and he shall be liable to the the larger one.
owners of the goods averaged for the damage they may suffer through his 3. A vessel leaving port should leave the way clear for another which
delay or negligence. may be entering the same port.
4. The vessel which leaves later is presumed to have collided against
ART. 867. If the persons contributing should not pay the amount of the one which has left earlier.
contribution at the end of the third day after having been required to do so, 5. There is a presumption against the vessel which sets sail in the
the goods saved shall be proceeded against, at the request of the captain, night.
until payment has been made from their proceeds. 6. There is a presumption against the vessel with spread sails which
collides with another which is at anchor and cannot move, even
ART. 868. If the person interested in receiving the goods saved should not when the crew of the latter has received word to lift anchor, when
give security sufficient to answer for the amount corresponding to the gross there was no sufficient time to do so or there was fear of a greater
average, the captain may defer the delivery thereof until payment has been damage or other legitimate reason.
made. 7. There is a presumption against an improperly moored vessel.
8. There is a presumption against a vessel which has no buoys to
ART. 869. The experts whom the court or the persons interested may indicate the location of its anchors to prevent damage to vessels
appoint, as the case may be, shall proceed with the examination and which may approach it.
appraisement of the averages in the manner prescribed in articles 853 and 9. Vessels must have “proper look-outs” or persons trained as such
854, rules 2 to 7, insofar as they are applicable. and who have no other duty aside therefrom.
Zones in Collision of Vessels: Doctrine of inscrutable fault- where fault is established but it cannot be
1. First zone – covers all time up to the moment when risk of collision determined which of the two vessels were at fault, both shall be deemed to
begins. have been at fault.
 No rule is yet applicable for none is necessary
2. Second zone – covers the time between moment when risk of collision 4. Force Majeure- If a vessel should collide with another by reason of an
begins and moment it becomes a practical certainty. accident or through force majeure, each vessel and her cargo shall be
 It is the period where conduct of the vessels is primordial liable for their own damage. (Art. 830 of CC)
 It is in the zone that vessels must strictly observe nautical rules,
unless a departure therefrom becomes necessary to avoid 5. Third vessel at fault- If a vessel should be forced to collide with another
imminent danger
one by a third vessel, the owner of the third vessel shall indemnify for
 The burden is on the vessel required to keep away and avoid the
the losses and damages caused, the captain thereof being civilly liable to
danger
3. Third zone – covers the time between the moment when collision is said owner. (Art. 831 of CC)
certain and the moment of actual impact.
 It covers the period of which error in extremis occur If, by reason of a storm or other cause of force majeure, a vessel which is
o Error in Extremis – the sudden movement made by a properly anchored and moored should collide with those in her immediate
faultless vessel during the third zone of collision with vicinity, causing them damage, the injury occasioned shall be looked upon
another vessel which is at fault during the second zone. as particular average to the vessel run into. (Art. 832 of CC)
Even if such sudden movement is wrong, no responsibility
will fall on said faultless vessel.
 The rule is that the vessel which was forced the
privileged vessel into danger is responsible even if Maritime Protest
the privileged vessel has committed an error The action for the recovery of losses and damages arising from collisions cannot
within that zone. An error in this zone would no be admitted if a protest or declaration is not presented within twenty-four hours
longer be legally consequential. before the competent authority of the point where the collision took place, or that of
the first port of arrival of the vessel, if in Philippine Territory, and to the Filipino
consul if it should have occurred in a foreign country.
Rules on liability
When protest is required
1. One vessel at fault- If a vessel should collide with another through the 1. Collisions
fault, negligence, or lack of skill of the captain, sailing mate, or any other 2. Arrival under stress
3. Shipwrecks
member of the complement, the owner of the vessel at fault shall
4. When the vessel has gone through hurricane or when the captain believes
indemnify the losses and damages suffered, after an expert appraisal.
that the cargo has suffered damages or averages
(Art. 826 of CC)
Protest required under Article 835 of the Code of Commerce does not apply
2. Both vessels at fault- If both vessels may be blamed for the collision, to collision of minor crafts engaged in river and bay traffic
each one shall be liable for his own damages, and both shall be jointly  The article in question found in the section dealing with collisions, and the
responsible for the losses and damages suffered by their cargoes. (Art. context shows the collisions intended are collisions of sea-going vessels.
827 of CC)  The third Book of the Code of Commerce, dealing with Maritime
Commerce was evidently intended to define the law relative to merchant
3. Vessel at fault unknown-The provisions of the foregoing article (Art. 827) vessels and marine shipping; and the vessels intended are run by masters
are applicable to the case in which it cannot be decided which of the two having special training, with the elaborate apparatus of crew and
vessels was the cause of the collision. (Art. 828 of CC) equipment indicated in the Code.
  Other vessels of a minor nature not engaged in maritime commerce, such 3. If the injury to the vessel should have been caused by reason
as river boats and those carrying passengers from ship to shore, must be of her not being repaired, rigged, equipped, and arranged in a
governed, as to their liability to passengers, by the provisions of the Civil convenient manner for the voyage, or by reason of some
Code or other appropriate special provisions of law. Augusto Lopez v. erroneous order of the captain.
Juan Duruelo and Alino Sison G.R. No. 29166, October 23,1928
4. Whenever malice, negligence, want of foresight, or lack of
Excuses for not filing Protest skill on the part of the captain is the reason for the act
1. Where the interested person is not on board the vessel causing the damage.
2. With respect to damages caused may not prejudice the persons interested
who were not in a condition to make known their wish. 3. Expenses (Art. 821-822, CC)
Article 821
TRANSPORTATION LAW REVIEWER
(I-J) The expenses caused by the arrival under stress shall always be for the
account of the shipowner or agent, but the latter shall not be liable for
I. Arrival under stress the damage which may be caused the shippers by reason of the arrival
Inter-Orient Maritime Enterprises vs. CA, 235 SCRA 267; under stress, provided the latter is legitimate. Otherwise, the shipowner
1. Concept (Art. 819, CC) or agent and the captain shall be jointly liable.

If the captain during the navigation should believe that the vessel Article 822
cannot continue the voyage to the port of destination on account of
the lack of provisions, well founded fear of seizure, privateers or If in order to make repairs to the vessel or because there should be danger
pirates, or by reason of any accident of the sea disabling her to of the cargo suffering damage it should be necessary to unload, the captain
navigate, he shall assemble the officers and shall call the persons must request authorization of the judge or court of competent jurisdiction to
interested in the cargo who may be present, and who may attend the lighten the vessel, and do so with the knowledge of the person interested or
meeting without the right to vote; and if, after examining the representative of the cargo, should there be one.
circumstances of the case, the reasons should be considered well
founded, it shall be decided to make the nearest and most In a foreign port, it shall be the duty of the Spanish * consul, where there is
convenient port drafting and entering in the log book the proper one, to give the authorization.
minutes, which shall be signed by all.
In the first case, the expenses shall be defrayed by the ship agent or owner,
The captain shall have the deciding vote and the persons interested and in the second, they shall be for the account of the owners of the
in the cargo may make the objections and protests they may deem merchandise, for whose benefit the act took place.
proper, which shall be entered in the minutes in order that they may
make use thereof in the manner they may consider advisable.
If the unloading should take place for both reasons, the expenses shall be
2. When improper (Art. 820, CC) defrayed in proportion to the value of the vessel and that of the cargo.

The arrival under stress shall not be considered legal in the following cases: 4. Custody of cargo (Art. 823-824, CC)
1. If the lack of provisions should arise from the failure to take the Article 823 The care and preservation of the cargo which has been unloaded shall
necessary provisions for the voyage, accord ing to usage and be in charge of the captain, who shall be responsible for the same, except in cases
custom, or if they should have been rendered useless or lost of force majeure.
through bad stowage or negligence in their care.
2. If the risk of enemies, privateers, or pirates should not have been Article 824 If the entire cargo or part thereof should appear to be damaged, or
well known, manifest, and based on positive and justifiable facts. there should be imminent danger of its being damaged, the captain may request of
the judge or court of competent jurisdiction or the consul, in a proper case, the sale Article 843
of all or of part of the former, and the person taking cognizance of the matter shall
authorize it after an examination and declaration of experts, advertisements, and If several vessels navigate under convoy, and any of them should be
other formalities required by the case and an entry in the book, in accordance with wrecked, the cargo saved shall be distributed among the rest in the
the provisions of Article 624. proportion to the amount each one can receive.

The captain shall, in a proper case, justify the legality of the procedure, under If any captain should refuse, without sufficient cause, to receive what may
the penalty of answering to the shipper for the price the merchandise would have correspond to him, the captain of the wrecked vessel shall enter a protest
brought if it should have arrived at the port of its destination in good condition. against him before two sea officials of the losses and damages resulting
therefrom, ratifying the complaint within twenty-four hours after arrival at the
5. Captain’s liability (Art. 825, CC) first port, and including it in the proceedings he must institute in accordance
with the provisions contained in Article 612.
Article 825
Should it not be possible to transfer to the other vessels the entire cargo of
The captain shall answer for the damages caused by his delay, if the reason the one wrecked, the goods of the highest value and smallest volume shall
for the arrival under stress having ceased, he should not continue the be saved first, the designation thereof being made by the captain, in
voyage. concurrence with the officers of his vessel.
Article 844
If the reason for said arrival should have been the fear of enemies,
privateers, or pirates, before sailing, a discussion and resolution of a A captain who may have taken on board the goods saved from the wreck
meeting of the officers of the vessel and persons interested in the cargo who shall continue his course to the port of destination, and on arrival shall
may be present shall take place, in accordance with the provisions contained deposit the same, with judicial intervention, at the disposal of their legitimate
in Article 819. owners.

6. Rules in case of shipwreck (Art. 840-845, CC) In case of changing his course, should he be able to unload them at the port
to which they were consigned, the captain may make said port if the
Article 840 shippers or supercargoes present consent thereto, as well as the officers
and passengers of the vessel; but he can not do so, even with said consent,
The losses and deteriorations suffered by a vessel and her cargo by reason
in time of war or when the port is difficult to make and dangerous.
of shipwreck or stranding shall be individually for the account of the owners,
the part of the wreck which may be saved belonging to them in the same All the expenses of this arrival shall be defrayed by the owners of the cargo,
proportion. as well as the payment of the freight, which, taking into consideration the
circumstances of the case, are fixed by agreement or by a judicial decision.
Article 841
Article 845
If the wreck or stranding should arise through the malice, negligence, or lack
of skill of the captain, or because the vessel put to sea insufficiently repaired If there should not be on the vessel any person interested in the cargo to pay
and prepared, the owner or the freighters may demand indemnity of the the expenses and freight corresponding to the salvage, the judge or court of
captain for the damages caused to the vessel or cargo by the accident, in competent jurisdiction may order the sale of the part necessary to cover the
accordance with the provisions contained in Articles 610, 612, 614, and 621. same. This shall also be done when its preservation is dangerous, or when
in the period of one year it should not have been possible to ascertain who
Article 842
are its legitimate owners.
The goods saved from the wreck shall be specially liable for the payment of
In both cases the proceedings regarding publicity and formalities prescribed
the expenses of the respective salvage, and the amount thereof must be paid
in Article 579 shall be observed, and the net proceeds of the sale shall be
by the owners of the former before they are delivered to them, and with
deposited in a safe place, in the judgment of the judge or court, in order to
preference to any other obligation, if the merchandise should be sold.
be turned over to the legitimate owners thereof.
 3. If sold (No claim being made within 3 months from publication), the
proceeds, after deducting expenses and the salvage claim, shall go
J. Salvage to the owner, if the latter does not claim it within 3 years, 50% of the
1.Two concepts of Salvage:
said proceeds shall go to the salvors, who shall divide it equitably,
1. Service - a service which one person renders to the owner of a
ship or goods, by his own labor, preserving the goods or the ship and the other half to the government.
which the owner or those entrusted with the care of them have either 4. If a vessel is the salvor, the reward shall be distributed as follows:
abandoned in distress at sea, or are unable to protect and secure.  a. 50% to the shipowner;
b. 25% to the captain; and
2. Compensation - allowed to persons by whose assistance a ship c. 25% to the officers and crew in proportion to their
or her cargo has been saved, in whole or in part, from impending peril salaries.
on the sea, or in recovering such property from actual loss, as in case
of shipwreck, derelict, or recapture.
4. Salvage v. Towage
Requisites for a valid salvage claim
1. A marine peril; Salvage Towage
2. Service voluntarily rendered when not required as an
As to governing law
existing duty or from a special contract;
3. Success, in whole or in part, or that the service rendered
Governed by Special law (Act No. Governed by Civil Code on Contract
contributed to such success. 2616) of lease

2.Rights and obligations of salvors and owners As to requisite of Success

Rights and obligations of salvors Rights and obligations of owners Requires success, otherwise no Success not required
 To a reward for the salvage;  To pay, or give a bond to secure, payment
 To convey and deliver such the expenses and the proper
As to consent
vessel or merchandise, as reward;
soon as possible, to the  To the delivery of the vessel or Must be done with the consent of the Must be done with the consent
captain/crewmen ONLY of the tugboat owner
Collector of Customs, if the things saved;
port has a collector, and  If vessel is at the disposition of As to involvement of the vessel in the accident
otherwise to the provincial the authorities, to claim them. Vessel must be involved in an Vessel need not be involved in an
treasurer or municipal mayor. accident accident

3. Salvage Reward As to fees

Rules on Salvage reward
1.The reward is fixed by the RTC judge in the absence of agreement or Fees distributed among crewmen Fees belong to the tugboat owner
where the latter is excessive.
2. The reward should constitute a sufficient compensation for the
outlay and effort of the salvors and should be liberal enough to
induce others to render services in similar emergencies in the future.