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Loan on Bottomry

the owner of a ship borrows

for the use, equipment or repair of

the vessel for a definite term, and

pledges the ship as security,
if the ship is lost during the voyage
or during the limited time on account
of the perils enumerated, the lender
shall lose his money.

Loan on Respondentia

of money on maritime interest;

on goods laden on board of a ship;
Such goods must be sold or exchanged during
the course of the voyage;
if the goods should be lost in the course of the
voyage, by any of the perils enumerated in the
contract, the lender shall lose his money;
if not that the borrower shall pay him the sum
borrowed , with the interest agreed upon.

Characteristics :

In respondentia, the goods are

hypothecated as security for a

loan; the repayment is dependent
on maritime risks;
Usually in the form of a bond;
Borrowers (owner of the goods)
personal responsibility is the
principal security.

Repayment must be based on a maritime risk;

No bottomry or respondentia if there is no maritime risk

involved as to the loss of the goods;

Loss of the goods due to maritime risk will result to the

lender losing the money lent;

Where the ship is lost but the goods survive, the lender
on respondentia shall be entitled to repayment;

Where both the ship and goods are lost, the lender shall
lose the money lent.

Where there is repayment, lender is entitled to receive

greater return than what an ordinary lender would

Bottomry or

Simple loan

the rate of interest is not the rate of interest must

subject to the usury law on not exceed the ceiling
the fixed by the usury law
there must necessarily be a there need not
marine risk the existence of risks involved

be such

in the
with form and regarding
manner required in the code general would apply.
of commerce
must be recorded in the no such
registry of vessels in order to required
bind third persons



preference is extended to the the first lender a s a general

last lender if there be several rule enjoys preference over
lenders, on the theory that subsequent ones.

Forms of Loan on Bottomry or

Public instrument .

contracting parties and the

broker taking part therein.
Private instrument.

To affect Third Person:

Shall be entered in the certificate of the

registry of the vessel.

Shall be recorded in the registry of vessel.

Additional requisites:
Must conform to the registry of the broker who

took part therein in case of number 2 above

Acknowledgement of the signature in case of
number 3 above.
Must be recorded in the registry of vessels of
the port of registry of the vessel within 8 days
upon its arrival in case of contracts executed
during the voyage.

Required Contents of Loan on

bottomry or respondentia
The following must be stated:
The kind, name and registry of the vessels
The name ,surname and domicile of the captain
The names , surnames and domiciles of the person

giving and the person receiving the loan.

The amount of the loan abd the
stipulated .
The time for payment.
The goods pledged to secure repayment
The voyage during which the risk is run.


Transferability of the
The contract must be made to order
Indorsement is necessary
Indorsee acquire all the rights as well as the
corresponding obligations of the indorser.

Principal of Loan
Determine by fixing the value of good or in

In case the principal is larger than the object of
bottomry loan:
the loan shall be valid only for the amount of
object appraised by the experts
The surplus principal shall be returned with
legal interest for the entire time required for

If the full amount not used for cargo or the

goods were not loaded:
The balance shall be returned before clearing.

Duration of the risk assume by the

The period stated on the contract
If no contract:

On Vessel - From the moment the vessel

puts to sea until the drops of its anchor in the
port of the destination.
On Cargo From the time they are
loaded at the shore or wharf of the port of
shipment unitl they are unloaded in the port
of consignment.

The loans may be constituted jointly

or separately:
On the hull of the vessel
On the rigging
On the equipment, provisions and fuel
On the engine , if the vessel is a steamer
On the merchandise loaded.

If the loan constituted based on 1 to 4 as

enumerated above:
Freightage earned during the voyage shall also be

considered as liability for the loan.

If the loan is made on the cargo
For the whole cargo
All must be liable for the loan
For particular object of the vessel or cargo
Only the object concretely and specifically
mentioned shall be liable.

Authority to constitute loan on

The shipowner
If part owner he may contract shall be limited only to the

extent of his interest.

If part owner - he may contract shall be limited only to
the extent of his interest.
If Not part owner he cannot constitute loan except
when, on account of extreme necessity.
Note: No Loans on bottomry may be made on the salaries of
the crew or on the profits.

Authority to constitute loan on

Only the Cargo owner

Effects if Shipcaptain entered a contract of

Loan is void
The principal,interest

and the
chargeable to his private account.
May discharge by the shipowner.



Absolute loss of the goods

Requisites to extinguish liability:
If the loss arose from an accident of the sea at

the time and during the voyage designated in

the contract.
If it is proven that the cargo was on board

If the loss was caused by the inherent defect of

the thing
through the fault or malice of the borrower.
Barratry on the part of the captain
If the damages is the consequence of being
engaged in contraband.
If it arose it arose from having loaded the
merchandise on a vessel different from that
designated in the contract unless change made
by reason of force majeure.

Who suffered loss of the goods?

Both Loan on bottomry and respondentia
Lenders shall suffer in proportion to their

respective interest.

In case of shipwreck
On cargo or goods
the proceed from salvage value of the
goods shall be apply first to the loan.
On vessel or any of its parts
The freightage earned during the
voyage shall be liable for payment of loan.

If the vessel or cargo is the object of a loan on

Bottomry or respondentia and marine
The salvage value of the vessel or goods

shall be divide between the lender in

proportion to their legitimate interest.

Delay in repayment
On principal of the loan
It bears legal interest
On premiums
It bears no legal interest