CHAPTER 11 -LOANS ON BOTTOMRY AND

RESPONDENTIA
BOTTOMRY
- It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be pledged in this case
- The whole vessel can be a subject of a security or collateral
- PD. 1521: (is this different) --- loan is the principal, mortgage is the accessory.
- The contract of bottomry is principal, the mortgage under pd 1521 is merely a security
- In pd 1521 under section 4 it is a requirement that the whole of the vessel must be mortgaged
- In bottomry the whole or the part of the vessel can be the subject
- IF the part of the vessel can be pledged, is it necessary that there should be goods? No. no need for goods.
RESPONDENTIA
- The vessel should have goods. The goods must be laden in the vessel
- Is it necessary that the boat is on voyage? The vessel must be in the actual course of voyage because this is the
objective of the law. Because if the vessel is docked in the port the owner can simply obtain loans. And besides there is
no risk when the vessel is docked .
LOAN ON BOTTOMRY loan made by shipowner or ship agent guaranteed by vessel itself and repayable upon arrival of
vessel at destination; vessel/portion
LOAN ON RESPONDENTIA loan made by the cargo owner, taken on security of the cargo laden on a vessel, and
repayable upon safe arrival of cargo at destination; cargo/goods
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS:
1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination.
Requisites of a Loan on Bottomry/Respondentia: B.T.S.A.E.
1. Shipowner borrows money for use, equipment or repair of vessel
2. For a definite term and with extraordinary interest called premium
3. Secured by pledged of vessel or portion thereof in the case on loan on Bottomry; or pledge of goods in case
of Respondentia
4. Loan repayment depends or conditioned on the safe arrival of goods for respondentia and obligation to
repay is extinguished if pledged goods are lost (Respondentia)
5. Obligation to repay is extinguished if vessel is lost due to specified marine perils in the course of voyage or
within limited time (Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
May be executed by means of:
1. public instrument
2. policy signed by the contracting parties and the broker taking part therein
3. private instrument (Art. 720 of CoC)
GR: The captain cannot contract loans on respondentia secured by the cargo, and should he do so, the
contract shall be void. Neither can he borrow money or Bottomry for his own transactions.
EXCEPTIONS:
1. On the portion of the vessel he owns, provided no money has been previously borrowed on the
whole vessel, nor exists any other kind of lien or obligation chargeable against her.
2. When he is permitted to do so, he must necessarily state what interest he has in the vessel.
WHO MAY CONTRACT:
1. Bottomry by the ship owner or ship agent; outside of the residence of the owners, the captain.
2. Respondentia only the owner of the cargo
DISTINCTIONS: BOTTOMRY/ RESPONDENTIA
1. Not subject to Usury Law
2. Liability of the borrower is contingent on the safe arrival
of the vessel or cargo at destination
3. The last lender is a preferred creditor
4. Must have a collateral
5. Collateral is the vessel or cargo subject to maritime risk
6. Must be in writing
7. To be binding on third person must be recorded in the
registry of vessels of port of registry of the vessel

ORDINARY LOAN
1. Subject to Usury Law
2. Not subject to any contingency
3. The first lender is a preferred creditor
4. May or may not have collateral
5. Maybe property, real or personal
6. Need not be in writing but interest shall not be due unless
expressly stipulated in writing
7. Need not be registered

8. Loss of collateral extinguishes the same

8. Does not extinguished if there is a loss of the collateral (if

any)

Consequences of loss of effects of the loans

1. Effects of loans be lost due to accident of the sea during the time, and on the occasion of the voyage which has been
designated in the contract and proven that the cargo was on board
- lender losses the right to institute the action which would pertain to him
Except: when the loss was
1. caused by inherent defect of the thing
2. through fault or malice of the borrower
3. through barratry on the part of the captain
4. caused by damages suffered by the vessel as a consequence of being engaged in a contraband
5. loaded the goods on a vessel different from that designated in the contract unless the change was caused by
force majeure
2. The lenders on bottomry or respondentia shall suffer in proportion to their respective interest, the general average which
may take place in the things upon which the loans were made.
3. In case of shipwreck, the amount for payment of the loan shall be deduced to the proceeds of the effects which have been
saved but only after deducting the costs of the salvage.
4. If the loan should be on the vessel or any of her parts, the freight earned during the voyage for which the loan was
contracted shall also be liable for its payment, as far as it may reach.
5. If the same vessel or cargo should be the object of the loan of Bottomry or respondentia and maritime insurance, the
value of what may be saved in case of shipwreck shall be divided between the lender and the insurer, in proportion to the
legitimate interest of each one, taking in consideration, for this purpose only, the principal with respect to the Maritime
contracts include charter parties and loans on bottomry and respondentia are considered maritime contracts

CHAPTER 12 - AVERAGES
ACCIDENTS IN MARITIME COMMERCE:
1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
* Averages an extra-ordinary or accidental expense incurred during the voyage in order to preserve the cargo,
vessel or both; and all damages or deterioration suffered by the vessel from departure to the port of destination, and to the
cargo from the port of loading to the port consignment. (Art. 806)
1. Averages is defined as damage deliberately caused or an expense deliberately incurred due to a marine peril
and which has resulted in saving both vessel and cargo or only the vessel or cargo.
2. Where both vessel and cargo are saved, it is general average; where only the vessel or only the cargo is
saved, it is particular average.
3. The person whose property has been saved must contribute to reimburse the damage caused or expense
incurred if the situation constitutes general average.
KINDS:OF AVERAGES: (NOT EXCLUSIVE, there are others especially used)
A. Particular or Simple Average
All damage or expenses caused to the vessel or cargo that did not inure to common benefit, and borne by
respective owners. (809)
The owner of the goods that suffered the damage bears the loss. (Art. 810) (res perit domino applies)
if the vessel or goods are hypothecated by loan on bottomry and respondentia, the lender shall bear the loss in
proportion to his interest.
Examples: see article 809 of the code of commerce
B. Gross or General Average
All damage or expenses deliberately caused in order to save the vessel, its cargo or both from real and
known risk. (Art. 811)
All the persons having an interest in the vessel and the cargo therein at the time of the occurrence of the
average shall contribute to satisfy this average. (Art. 812)
REQUISITES: C.A.PI.D.I.PL.
1. common danger present
2. arising from accidents of sea, disposition of authority
3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
5. intended to save vessel or cargo

6. proper legal steps and authority taken

Common danger
- means both the ship and the cargo, after has been loaded, are subject to the same danger, whether during
the voyage, or in the port of loading or unloading, that the danger arises from the accidents of the sea,
disposition of authority, or faults of men, provided that circumstances producing the peril should be
ascertained and imminent or may rationally be said to be certain and imminent
- When the measure of precaution adopted solely and exclusively for the preservation of the vessel from the danger
of seizure or capture and not for the common safety is not considered as common danger
-If one invokes general average then that person must prove what he allege. In standard oil since ship captain
invoked general average they should be the one to prove. Failure to prove, they cannot ask for contribution from
owners of the goods.
Deliberate Sacrifice
- Voluntary sacrifice of a part for the benefit of the whole in order to justify the average contribution
EXAMPLES OF GENERAL AVERAGES:
Voluntary Jettison- the casting away of some portion of the associated interests for the purpose of avoiding the common
peril from the whole to a particular portion of those interests
- the goods on board refer to in jettison should be proven by means of bill of lading(goods of passengers) and by means of
inventory prepared before the departure.(with regards to those belonging to vessel)
2 cases where there can also be general averages even if the sacrifice was not made during the voyage:
a. where the sinking of the vessel is necessary to extinguish a fire in a port, roadstead, creek or bay 818
b. where cargo is transferred to lighten the ship on account of a storm to facilitate entry into a port 817
Art. 816: in order that the goods jettisoned may be included in the gross average and the owners entitled to
indemnity it is necessary that the cargos existence on board be proven by a bill of lading; and with regard to
those belonging to the vessel, by means of an inventory prepared before departure.
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry to a port or roadstead, part of the
cargo should be transferred to barges or lighters and be lost, the owner of the said part is entitled to indemnity as if
the loss originated from a gross average, the amount being distributed between the vessel and cargo from which it
came.
If on the contrary the merchandise transferred should be saved and the vessel should be lost, no liability may be
demanded of the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, creek, or bay, it should be decided to
sink any vessel, this loss shall be considered gross average, to which the vessels saved should contribute.
Note: the loss or damage sustained by cutting away wreck or parts of the ship which have been previously carried
away or effectively lost by accident shall not be made good as general average
Sacrifice must be Successful
- no general contribution can be demanded if the vessel and other cargo that are sought to be saved were in fact
not saved (art. 860) (No Save, No Pay)
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)
1. There must be a resolution of the captain, adopted after a deliberation with the other officers of the vessel and after
hearing all persons interested in the cargoes. If the latter disagree, the decision of the captain should prevail but they shall
register their objections.
2. The resolution must be entered in the logbook, stating the reasons and motives for the dissent, and the irresistible and
urgent causes if he acted in his own accord. It must be signed, in the first case, by all persons present in the hearing. In the
second case, by the captain and all the officers of the vessel.
3. The minutes must also contain a detail of all the goods jettisoned and those injuries caused to those on board.
4. The captain shall deliver it to the maritime judicial authority of the first port he may make, within 24 hours after his
arrival, and to ratify it immediately under oath.
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:
1. those which are on the deck, preferring the heaviest one with the least utility and value;
2. those which are below the upper deck, beginning with the one with greatest weight and smallest value. (Art. 815)

Standard oil case the ship captain will not release goods to the shipper unless the shipper will contribute their
share. The issue was the duty of the captain to liquidate he did not file for the appropriate proceeding, you should

result to legal liquidation. Captain here failed TO INITIATE proper proceeding thus shipowner is liable for
actions of captain
Even if ship captain does not initiate, the shipowner can still file the appropriate proceeding in court.

Examples of General Average

Read Art 811 of the Code of Commerce
By Whom Borne
- shall be borne by those who benefited from the sacrifice; the shipowner and the owner of the cargoes that were saved.

Contribution may be imposed to;

a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross average provided that the liability shall be limited to
the proportion of contribution attaching to his policy value where this is less than the contributing value of the thing
insured
b. lenders of bottomry and respondentia (Code of Commerce)
-obliged to pay in proportion to their respective interest, the general average which may take place in the goods
which the loan is made
Who is entitled to indemnity?
Owner of the goods which were sacrificed is entitled to receive the general contribution
Except;
goods carried on desk unless the rule special law or customs of the place allow the same
goods that are not recorded in the books or records of the vessel
fuel of the vessel if there is more than sufficient fuel for the voyage
American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not exceed 5% of the interest which the claimant may
have in the vessels or cargo if it is general average, and 1% of the goods damaged if particular average
deducting in both cases the expenses of appraisal, unless there is an agreement to the contrary.
It is clear that the damage of the cargo is particular average since the loss is less than 1% to the value of the cargo
and there appears to be no allegations as to any agreement defendants and consignee of the goods to the contrary,
by express provision of law, plaintiff is barred from suing for recovery.
Law on averages does not apply if the CC is negligent.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION ON AVERAGES
- THIS CAN be stipulated in a contract that this rule will apply in respect to averages
- In the absence of stipulation in the contract in applying this rule, such rule is inapplicable
Under the rule, deck cargo is permitted in coastwise shipping but prohibited in overseas shipping
1. If deck cargo is loaded with the consent of the shipper on overseas trade, it must always contribute to
general average, but should the same be jettisoned, it would not be entitled to reimbursement because
there is violation of the Y-A Rules.
2. If deck cargo is loaded with the consent of the shipper on coastwise shipping, it must always contribute
to general average and if jettisoned would be entitled to reimbursement.

CHAPTER 13 - COLLISIONS
Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary one.
3 Zones of Time in the Collision of vessels:
First zone all time up to the moment when risk of collision begins;
Second zone time between moment when risk of collision begins and moment it becomes a practical certainty;
Third zone time when collision is certain and time of impact.
Error in Extremis - sudden movement made by a faultless vessel during the 3rd zone of collision with another vessel which
is at fault during the 2nd zone. Even if such sudden movement is wrong, no responsibility will fall on said faultless vessel.
(Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632).
Rules on Collision of Vessels under Code of Commerce:
1. The collision may be due to the fault, negligence or lack of skill of the captain, sailing mate, or any other member
of the complement of the vessel. The owner of the vessel at fault be liable for losses or damage. (Art. 826)
2. The collision may be due to the fault of both vessels. Each vessel shall suffer its own losses, but as regards the
owner of cargoes both vessels shall be jointly and severally liable. (Art. 827)

3. If it cannot be determined which vessel is at fault. Each vessel shall also suffer its own losses and both shall be
solidarily liable for losses o damages on the cargoes. (Art. 828)
4. The vessels may collide with each other through fortuitous event or force majeure. In this case each shall bear its
own damage. (Art. 830)
5. Two vessels may collide with each other without their fault by reason of a third vessel. The third vessel will be
liable for losses and damages. (Art. 831)
6. A vessel which is properly anchored and moored may collide with those nearby reasons of storm or other cause
of force majeure. The vessel run into shall suffer its own damage and expense. (Art. 832)
Cases covered by Collisions and Allisions
1. One vessel at fault such vessel is liable for damage caused to innocent vessel as well as damages suffered by the
owners of cargo of both vessels.
2. Both vessels at fault each vessel must bear its own loss, but the shippers of both vessels may go against the ship
owners who will be solidarily liable.
3. Vessel at fault not known each vessel must bear its own loss, shippers may go after shipowners(Doctrine of
Inscrutable Fault)
4. Third vessel at fault vessel is liable for damage caused to innocent vessel.
5. Fortuitous event no liability. Each bears its own loss.
Prerequisite to recovery:
Protest should be made within 24 hours before the competent authority at the point of collision or at the first port of
arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad. (Art. 835)
Injuries to persons and damage to cargo of owners not on board on collision time need not be protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT APPLICABLE.
DOCTRINE OF INSCRUTABLE FAULT
In case of collision where it cannot be determined which between the two vessels was at fault, both vessels bear
their respective damage, but both should be solidarily liable for damage to the cargo of both vessels.
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall be limited only to the value of the vessel
with all its appurtenances and freightage earned during the voyage. When the latter is not sufficient to cover all the
liabilities, the indemnity due by reason of the death or injury of persons shall have preference. (Arts. 837 and 838)

CHAPTER 14 - ARRIVAL UNDER STRESS

ARRIVAL UNDER STRESS arrival of a vessel at a port of destination on account of lack of provision, well founded fear of
seizure, privateers, pirates, or accidents of sea disabling navigation. (Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety of arrival under stress
1. Captain should determine during the voyage if there is a well-founded fear of seizure, privateers of other valid grounds
2. Captain shall then assemble the officers
3. Captain shall summon the persons interested in the cargo who may be present and who may attend but without right to
vote
4. The officers shall determine and agree if there is well founded reason after examining the circumstances; Captain shall
have the deciding vote
5. Agreement shall be drafted and the proper minutes shall be signed and entered into the log book
6. Objections and protests shall likewise be entered in the minutes
- Absence of one of the steps, can still be considered arrival under stress.
When not lawful:
1. Lack of provisions due to negligence to carry according to usage and customs;
2. Risk of enemy not well known or manifest
3. Defect of vessel due to improper repair; and
4. Malice, negligence, want of foresight or lack of skill of captain. (Art. 820)
Who bears expenses:
if arrival under stress is proper shipowner or ship agent will only be liable for the expenses of the arrival
if arrival under stress is improper shipowner and ship agent will be liable for the same expenses and, in
addition, they shall be solidarily liable for damages caused to the cargoes by such arrival under stress
(Art. 821)
NOTE:
- After cessation of the cause of the arrival under stress, captain should continue voyage or else he shall be
liable.
Unloading of cargoes to make repairs:
- In order to make repairs to the vessel or because there is danger that cargo may suffer damage necessary to unload;
captain must request authorization from competent judge or court for removal, and carry it out w/ knowledge of the person
interested in the cargo
- In a foreign port Philippine Consul

- In case of the vessel expenses shall be for the account of the ship owner or agent
- In case of the cargo chargeable against the owners of the merchandise for whose benefit the act was performed
- If both expenses to be divided proportionately between the value of the vessel and cargo
(Art. 822)
Custody of cargo:
Entrusted to the captain (except in cases of force majeure)
(Art. 823)
if entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged

Captain may request judge of competent court / consul, the sale of all or part of the cargo

Person taking cognizance shall authorize it (after examination and declaration)

Captain shall justify the legality of his conduct, answering to the shipper for the price of the merchandise would
have brought if they had arrived in good condition
(Art. 824)
Liability of captain:
captain responsible for the damages caused by his delay
if cause of arrival under stress ceases he should not continue the voyage
if cause of arrival should have been the fear of enemies deliberation and resolution (in a meeting of officers of the
vessel and persons interested in the cargo) shall precede the departure
(Art. 825)
* Shipwreck the demolition or shattering of a vessel caused by her driving ashore or on rocks and shoals in the midseas,
or by the violence of winds or waves in tempests
Loss of the vessel at sea as a consequence of its grounding, or running against an object in sea or on the coast
Loss or deteriorations of vessel or cargo caused by shipwreck or stranding individually account of the
owners; part which may be saved belonging to them, same proportion. (Art. 840)

If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the vessel may demand indemnity from
said captain. (Art. 841)

The goods saved from the wreck to be specially bound for the payment of the expenses of the respective salvage. (Art.
842)
If several vessels sail under convoy, and any of them should be wrecked, the cargo saved will be distributed among the
rest in proportion to the amount which each one is able to take. If any captain should refuse, without sufficient cause,
to receive what may correspond to him, the captain of the wrecked vessel to enter a marine protest against him. If it
is not possible to transfer to the other vessels the entire cargo of the vessel wrecked, the goods of the highest value and
smallest volume to be saved first. Designation to be made by the captain with concurrence of his officers. (Art. 843)
The captain taking on-board the goods saved from the wreck to continue his course to the port of destination and upon
arrival he should deposit the goods for disposal to their owners. In case the captain changes his course, and if he can
unload them at the port of which they were consigned, he may make said port if the shippers or supercargoes present
and the officers and passengers of the vessel consent thereto. But he is not required to do so even if he has the consent
during time of war or when the port is difficult and dangerous to make. The owners of the cargo to defray all the
expenses of this arrival and the payment of the freightage. (Art. 844)
If cannot be, proceed to judicial sale complying with the formalities and on publicity. (Art. 845)

CHAPTER 15 - SALVAGE LAW (Act No. 2616)

SALVAGE services one person renders to the owner of a ship or goods, by his own labor, preserving the goods or the
ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are
unable to protect or secure.
Kinds of Salvage:
Voluntary compensation is dependent on the success.
Under contract for a per diem or per horam wage payable at all events.
Under contract for compensation payable only in case of success.
Claim for valid salvage:
- Provides for a reward for voluntary salvage
- Other persons who assist in saving the vessel or its cargo from shipwreck shall be entitled to a similar award
Persons not entitled to salvage compensation:
1. Crew of the vessel shipwrecked or which was in danger of shipwreck
2. He who shall have commenced the salvage in spite of opposition of the captain or of his representatives
3. He who shall have failed to comply with the provisions of Section 3 (Section 3. Tthe salvor who saves or picks up a vessel
or merchandise at sea, in the absence of the ship captain, ship owner or a representative of either of them, they being
unknown, shall convey and deliver the vessel or merchandise ASAP to the collector of customs if the port has a collector and
otherwise to the provincial treasurer or municipal mayor.)
Requisites of compensation or salvage reward: Ex.Re.Su.Be.
1. Object must have been exposed to marine peril (fire, acts of pirate, thieves)
2. Salvage services rendered voluntarily and is not required as an existing duty or a form of contract (See Sec. 8)

* Pilots are not entitled to a reward

3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of the crew or shall have been abandoned (not necessary)
* Courts will not interfere in the agreement of the parties except but where there is no agreement or it is excessive the
reward is fixed by the RTC judge.
* Derelict a ship or cargo which is abandoned and deserted at sea by those who were in charge of it, without any hope of
recovering it or without any intention of returning to it
- determined by ascertaining what was the intention and expectation of those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the sea without hope or intention of recovery or return by the
master or the crew, whether resulting from wreck, accident, necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN:
Jetsam goods that were thrown off a ship which was in danger
Flotsam goods that floated off the ship while ship was in danger or when it sank
Ligan goods left at sea on the wreck or tied to a buoy so that they can be recovered later
Basis of entitlement to salvage reward (Circumstances to consider):
1. The labor expended by the salvors in rendering the salvage service
2. The promptitude, skill and energy displayed in rendering the service and saving the property
3. The value of the property employed by the salvors in rendering the service, and danger to which such property
was exposed
4. The risk incurred by the salvors in rescuing the property from the impending peril
5. The value of the property salved
6. The degree of danger which the property was rescued
Rights and obligations of salvors and owners:
Salvor is entitled to compensation for services rendered. He has, under the Salvage Law, a lien upon the property
salvaged.
On the other hand, the owner does not denounce his right to the property. There is no presumption of an intention to
abandon such property rights.
Maritime Lien
A salvor, in maritime law, has an interest in the property; called a lien, but it never goes, in the absence of a contract
expressly made, upon the idea of debt due from the owner to the salvor but upon the principle that the service creates a
property in the thing saved.
Rule on salvage reward:
1. The reward is fixed by the RTC judge in the absence of agreement or where the latter is excessive (Sec. 9).
2. If sold (no claim being made within 3 months from publication), the proceeds, after deducting expenses and
the salvage claim, shall go to the owner; if the latter does not claim it within 3 years, 50% of the said proceeds
shall go to the salvors, who shall divide it equitably, and the other half to the government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to their salaries
SALVAGE LAW
SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO SHALL BE BEYOND THE CONTROL OF THE CREW, OR
SHALL HAVE BEEN ABANDONED BY THEM, AND PICKED UP AND CONVEYED TO A SAFE PLACE BY OTHER PERSONS, THE
LATTER SHALL BE ENTITLED TO A REWARD FOR THE SALVAGE.
THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN SAVING A VESSEL OR ITS CARGO FROM
SHIPWRECK, SHALL BE ENTITLED TO A LIKE REWARD.
SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS STEAD, IS PRESENT, NO ONE SHALL TAKE FROM
THE SEA, OR FROM THE SHORES OR COAST MERCHANDISE OR EFFECTS PROCEEDING FROM A SHIPWRECK OR PROCEED TO
THE SALVAGE OF THE VESSEL, WITHOUT THE CONSENT OF SUCH CAPTAIN OR PERSON ACTING IN HIS STEAD.
SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT SEA, IN THE ABSENCE OF THE CAPTAIN OF THE
VESSEL, OWNER, OR A REPRESENTATIVE OF EITHER OF THEM, THEY BEING UNKNOWN, SHALL CONVEY AND DELIVER SUCH
VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE, TO THE COLLECTOR OF CUSTOMS, IF THE PORT HAS A COLLECTOR, AND
OTHERWISE TO THE PROVINCIAL TREASURER OR MUNICIPAL MAYOR.
SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS REPRESENTATIVE SHALL HAVE A RIGHT TO THE
DELIVERY OF THE VESSEL OR THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A BOND TO SECURE, THE EXPENSES AND
THE PROPER REWARD.
THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF AGREEMENT, SHALL BE DETERMINED BY THE
COLLECTOR OF CUSTOMS OR BY THE JUDGE OF THE COURT OF FIRST INSTANCE OF THE PROVINCE IN WHICH THE THINGS
SAVED MAY BE FOUND.
SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR MUNICIPAL MAYOR, TO WHOM A SALVAGE IS
REPORTED, SHALL ORDER:
A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.

B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN DANGER OF IMMEDIATE LOSS OR OF THOSE
WHOSE CONSERVATION IS EVIDENTLY PREJUDICIAL TO THE INTERESTS OF THE OWNER, WHEN NO OBJECTION IS MADE TO
SUCH SALE.
C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE SALVAGE, IN ONE OF THE LOCAL NEWSPAPERS OR
IN THE NEAREST NEWS-PAPER PUBLISHED, OF ALL THE DETAILS OF THE DISASTER, WITH A STATEMENT OF THE MARK AND
NUMBER OF THE EFFECTS REQUESTING ALL INTERESTED PERSONS TO MAKE THEIR CLAIMS.
SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF THE AUTHORITIES, THE OWNER OR HIS
REPRESENTATIVE SHALL CLAIM THEM, SUCH AUTHORITIES SHALL ORDER THEIR DELIVERY TO SUCH OWNER OR HIS
REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY OVER THEIR VALUE, AND A BOND IS GIVEN BY THE OWNER
OR HIS REPRESENTATIVE TO SECURE THE PAYMENT OF THE EXPENSES AND THE PROPER REWARD. OTHERWISE, THE
DELIVERY SHALL NOR BE MADE UNTIL THE MATTER IS DECIDED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.
SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS SUBSEQUENT TO THE PUBLICATION OF THE ADVERTISEMENT
PRESCRIBED IN SUB-SECTION (C) OF SECTION FIVE, THE THINGS SAVE SHALL BE SOLD AT PUBLIC AUCTION, AND THEIR
PROCEEDS, AFTER DEDUCTING THE EXPENSES AND THE PROPER REWARD SHALL BE DEPOSITED IN THE INSULAR TREASURY.
IF THREE YEARS SHALL PASS WITHOUT ANYONE CLAIMING IT, ONE-HALF OF THE DEPOSIT SHALL BE ADJUDGED TO HIM WHO
SAVED THE THINGS, AND THE OTHER HALF TO THE INSULAR GOVERNMENT.
SEC. 8. THE FOLLOWING SHALL HAVE NO RIGHT TO A REWARD FOR SALVAGE OR ASSISTANCE:
A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS DANGER OF SHIPWRECK;
B. HE WHO SHALL HAVE COMMENCED THE SALVAGE IN SPITE OF OPPOSITION OF THE CAPTAIN OR HIS REPRESENTATIVE; AND
C. HE WHO SHALL HAVE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION THREE.
SEC. 9. IF, DURING THE DANGER, AN AGREEMENT IS ENTERED INTO CONCERNING THE AMOUNT OF THE REWARD FOR
SALVAGE OR ASSISTANCE, ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS EXCESSIVE, AND IT MAY BE REQUIRED TO BE
REDUCED TO AN AMOUNT PROPORTIONATE TO THE CIRCUMSTANCES.
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING SECTION, AS WELL AS IN THE ABSENCE OF AN AGREEMENT, THE
REWARD FOR SALVAGE OR ASSISTANCE SHALL BE FIXED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE WHERE THE
THINGS SALVAGED ARE FOUND, TAKING INTO ACCOUNT PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE THE
VESSEL OR THE CARGO OR BOTH, THE ZEAL DEMONSTRATED, THE TIME EMPLOYED, THE SERVICES RENDERED, THE
EXCESSIVE EXPRESS OCCASIONED THE NUMBER OF PERSONS WHO AIDED, THE DANGER TO WHICH THEY AND THEIR
VESSELS WERE EXPOSED AS WELL AS THAT WHICH MENACED THE THINGS RECOVERED OR SALVAGED, AND THE VALUE OF
SUCH THINGS AFTER DEDUCTING THE EXPENSES.
SEC. 11. FROM THE PROCEEDS OF THE SALE OF THE THINGS SAVED SHALL BE DEDUCTED, FIRST, THE EXPENSES OF THEIR
CUSTODY, CONSERVATION, ADVERTISEMENT, AND AUCTION, AS WELL AS WHATEVER TAXES OR DUTIES THEY SHOULD PAY
FOR THEIR ENTRANCE; THEN THERE SHALL BE DEDUCTED THE EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT
REMAINING SHALL BE TAKEN THE REWARD FOR THE SALVAGE OR ASSISTANCE WHICH SHALL NOT EXCEED FIFTY PER CENT
OF SUCH AMOUNT REMAINING.
SEC. 12. IF IN THE SALVAGE OR IN THE RENDERING OF ASSISTANCE DIFFERENT PERSONS SHALL HAVE INTERVENED THE
REWARD SHALL BE DIVIDED BETWEEN THEM IN PROPORTION TO THE SERVICES WHICH EACH ONE MAY HAVE RENDERED,
AND, IN CASE OF DOUBT, IN EQUAL PARTS.
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO THE SAME DANGERS SHALL ALSO HAVE A RIGHT
TO PARTICIPATION IN THE REWARD.
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED, ENTIRELY OR PARTIALLY, BY ANOTHER VESSEL,
THE REWARD FOR SALVAGE OR FOR ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, THE CAPTAIN, AND THE
REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO GIVE THE OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL
THE REMAINDER OF THE CREW THE OTHER FOURTH OF THE REWARD, IN PROPORTION TO THEIR RESPECTIVE SALARIES, IN
THE ABSENCE OF AN AGREEMENT TO THE CONTRARY. THE EXPRESS OF SALVAGE, AS WELL AS THE REWARD FOR SALVAGE
OR ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR VALUE.

CHAPTER 16 - COGSA (CARRIAGE OF GOODS BY SEA

ACT)
- Adopted by the Philippines on October 22, 1936 through Commonwealth Act No. 65
- New Civil Code - primary law on goods that are being transported from a foreign port to the Philippines
- COGSA - remains to be a suppletory law for such type of transportation international shipping
ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH THE GOODS ARE TO BE TRANSPORTED SHALL GOVERN
THE LIABILITY OF THE COMMON CARRIER FOR THEIR LOSS, DESTRUCTION OR DETERIORATION.
* Goods includes goods, wares, merchandise, and articles of every kinds whatsoever
- does not include live animals and cargo which by the contract of carriage is stated as being carried on deck and is so
carried
Parties: Carrier, and Shipper
- They are given their respective rights and obligations under COGSA.
- Carrier (covered by COGSA)-not limited to the shipowner; includes charterer who enters into a contract of carriage with
the shipper
- Charterer- charters a vessel and conducts his own business for his own account
Duties of the carrier:

Civil Code requires international carriers to exercise extraordinary diligence in the performance of their contractual
obligations
Section 2 of COGSA carriers obligation and liabilities in relation to the loading, handling, stowage, carriage, custody,
care and discharge of such goods
Section 3 of COGSA responsibilities of the carrier under COGSA
Document of title required
- evidenced by the Bill of Lading
- BOL serves as prima facie evidence of the receipt by the carrier of the goods
Notice of claim and prescriptive period
* Notice of claim must be made within 3 days from delivery if the damage is not apparent; not mandatory
* Prescriptive period 1 year from delivery for the filing of the case is a condition precedent or mandatory; does not
apply to cases of misdelivery or conversion
Defenses and immunities
- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for loss or damages arising from unseaworthiness
- New Civil Code carrier will not be liable only if it can present proof that the unseaworthiness was caused exclusively by
any of the circumstances specified in Art. 1734 of the NCC
Waiver
- The shipowner and the ship agent may waive the benefit of any of the defenses in its favor provided not only under COGSA
but also under other laws
Limiting provision
- COGSA contains a provision that allows the shipper to recover only US$500 per package unless there is a special
declaration unless there the real value of the goods is declared
- declaration made by the shipper stating an amount bigger than $500 per package will make the carrier liable for
such bigger amount but only if the amount so declared is the real value of the goods
Right to discharge dangerous cargo
- COGSA allows the carrier to discharge the good of the carrier discovers that the goods are dangerous,
inflammable or are explosives

CHAPTER 19 - PUBLIC UTILITIES

Basis of regulation of Public Utilites- The police power of the State justifies the regulation of public utilities.; Whenever
private property is used for a public purpose, it ceases to be juris privanti and becomes subject to regulation.
Ownership of Public Utilities- is subject to the regulation by the state. ;Section 11 of Article XII of the Constitution grants
franchise to Philippines citizen or Filipino Corporations(60%)
Tatad vs Garcia- The limit imposed by the Constitution on foreign equity applies only to operation of a public utility and not to
ownership of facilities. There is a clear distinction between operation and the ownership of the facilities to serve the public.
Ownership- the thing pertaining to one person is completely subjected to his will in everything not prohibited by law.
Operation- may exist independently of ownership
Regulation of rates-To protect the public against arbitrary and excessive rates while maintaining the efficient and quality
of services rendered.
Public Service Act Section 15 provides the power to regulate to the Public Service Commission.
-Discrimination in charging of rates is not allowed.
-The rate must be REASONABLE AND JUST.-must not be so low as to be confiscatory and not high as to be oppressive.
For electric companies a.) rate of return, b.) rate of base, and c.) return itself.
-LTFRB has regulation of rates as one of its major functions(affordability and viability without detriment to public safety)
Authority to operates as public utility
The power to authorize and control the operation of a public utility is a prerogative of the legislature. Franchises are
legislative grant.
However, in PAL vs CAB- Congress has granted certain administrative agencies the power to grant licenses for, or to
authorize operation of certain public utilities. Modern legislation vests the Public Service Commissioner with the power to
regulate and control the operation of public services under reasonable rules and regulations. THE COURT will NOT INTERFERE
with the exercise of that discretion when it is just and reasonable.