Quick Notes - TRANSPORTATION

Lyceum of the Philippines University – College of Law

4-6pm, Fridays/ / 2nd Semester, SY 2017-18

Loans on bottomry & respondentia

(1) Concept:

1.1 Bottomry - Loan that uses vessel (bottom of the ship or keel) as
security. If specific marine perils occur and the vessel is lost, the loan is
extinguished.

1.2 Respondentia - where goods are also used to secure the loan and
repayment is dependent of marine risk/s.

(2) Code of Commerce provides for the form and manner in which a loan on
bottomry or respondentia may be constituted. Note Statute of Fraud-like
requirement. - Art. 720, 721, Code of Commerce (CoC)

(3) Distinguish simple loan from a loan on bottomry or respondentia (refer to

Aquino). Key is whether the repayment of the loan is dependent upon the
occurrence of a marine risk. - Art. 729 (CoC)

(4) Preference: loans for the last voyage have preference over prior ones, based
on the theory that were it not for the last lender/s, the prior lenders would not have
benefited from the preservation of the vessel used as security for the loan. - Art. 730
(CoC)

Averages

(1) Concept: If goods are thrown overboard to preserve the vessel, the cargo or
both, all who benefited contributes to the loss.

(2) Types:

2.1 Simple - expenses and damages to the vessel or cargo that do not inure
to the benefit of all. The owner suffers the damage. See Art. 809, CoC for
examples of simple averages.

2.1 General - expenses and damages deliberately caused to save the

vessel, cargo or both, from real and known risk. While average usually occurs
during a voyage, there are at least two instances where a general average can
occur when the vessel is not on a voyage. See Art. 811 for examples of
general average- Art. 816, 817, 818 (CoC)

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Quick Notes - TRANSPORTATION
Lyceum of the Philippines University – College of Law
4-6pm, Fridays/ / 2nd Semester, SY 2017-18

(3) Requisites of general average:

3.1 Common danger to vessel and cargo; danger is ascertained, imminent

and inevitable - see Campagnie de Commerce vs. Hamburg America (1955)

3.2 Deliberate sacrifice of cargo for the common safety of the vessel, cargo
or both; generally involves jettison of goods of some to save/for the benefit of
the whole. The general principle is to sacrifice some to save more. There is
prescribed order of cargo to be cast off - see Art. 815 (CoC).

3.3 Successful saving of vessel and other cargo. No general contribution

can be demanded if the vessel is lost. - Art. 860, 861 (CoC)

3.4 Damage and expense incurred after taking legal steps and authority.
The Code of Commerce requires some degree of consultation between the
captain, crew and owner of the cargo, and other formalities of recordation of
the decision. - Art. 813, 814 (CoC)

(4) The Code of Commerce provides for processes in the determination of

general average.

(5) Those who benefited from the deliberate sacrifice must share pro rata in/
contribute to the general average. Share is computed as:

Each contribution multiplied by general average expense/ sum of

contributing values
General average expense

Each contributing value X ______________________

Total contributing value

Collision

(1) Concept: impact or sudden contact of a vessel with another, whether both
are in motion or one is stationary. But sometimes the term “allision” is used
when one vessel is moving and one is stationary.

(2) The rules of contributory negligence and last clear chance are not applicable.

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Quick Notes - TRANSPORTATION
Lyceum of the Philippines University – College of Law
4-6pm, Fridays/ / 2nd Semester, SY 2017-18

(3) Code of Commerce has specific rules on who suffers the loss in case:

a. One vessel is at fault - Art. 826

b. Both vessels at at fault - Art. 827

c. Party at fault cannot be determined - Art. 828

d. Fortuitous event - Art. 828

e. Third party is at fault - Art. 831

(4) Protest must be made within 24 hours from collision to be able to claim
damages

(5) Principle of limited liability - to the extent of the value of the vessel - applies.
Abandonment is required.

Arrival under stress

(1) Concept: arrival of a vessel at the nearest and most convenient port decided
upon after a determination that there is a well-founded fear of seizure,
privateers, or pirates or by reason of any accident disabling the vessel to
navigate.

(2) There is a process to be followed to determine if arrival under stress is

justified - Art. 819 (CoC)

(3) Protest within 24 hours is a must.

(4) An arrival under stress may be considered improper - Art. 820 (CoC)

(5) Determination of propriety of arrival under stress has direct correlation to

liability of the shipowner or ship agent or the captain for expenses or for
damage to cargo.

Salvage

(1) Concept: service provided by a person to the owner of a vessel or goods, by

his own labor, to preserve the goods or the vessel which the owner or those
entrusted with their care have either abandoned in distress at sea or are
unable to protect and secure. See Act No. 2616 (Salvage Law) Based on the
principle of equity: compensation for actual services rendered for the benefit
of the owner of the vessel or goods

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Quick Notes - TRANSPORTATION
Lyceum of the Philippines University – College of Law
4-6pm, Fridays/ / 2nd Semester, SY 2017-18

(2) Kinds:

a. Voluntary - compensation is dependent upon success

b. Under a contract, fee payable at all events

c. Under a contract, fee payable only in case of success

(3) Persons not entitled to salvage compensation:

a. Crew of vessel shipwrecked or in danger of being shipwrecked

b. Salvor who commenced work in spite of opposition of captain or his

representative

c. Salvor who failed to comply with requirements of Section 3 of the

Salvage Law, i.e. fails to promptly deliver the vessel or salvaged
merchandise to the Collector of Customs or the provincial treasurer
or municipal mayor.

(4) Some terms to remember:

a. Derelict - ship or cargo which is abandoned at sea by those who are in

charge of it, without any hope of recovering or without any intention
of returning to it

b. Jetsam - goods thrown off a ship which is in danger

c. Flotsam - goods that floated off the ship while it was in danger or
when it sank

d. Ligan - goods left at sea on the wreck or tied to a bouy for later
recovery.

(5) If there is no agreement on the salvage fee, the court shall fix the reward.
Salvaged goods are sold at public auction if no claim is made. Expenses are
deducted from gross proceeds and salvage fee shall not exceed 50% of the net
proceeds.