Transportation and maritime law

Art. 835. The action for the recovery of losses and damages arising from collisions cannot be admitted if a protest or declaration is not presented within twenty-four hours 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 consul of the Philippines, if it occurred in a foreign country.

Art. 836. With respect to damages caused to persons or to the cargo, the absence of a protest may not prejudice the persons interested who were not on board or were not in a condition to make known their wishes.
Art. 835 establishes a condition precedent before any action for the recovery of damages arising from collisions may be admitted --> presentation of a protest or declaration within 24 hours before the proper authorities [competent authority at the point where the collision took place or of the first port of arrival of the vessel or to the consul of the Philippines if it occurred in a foreign country]
The requirement of protest is not necessary with respect to small boats engaged in river and bay traffic and boats manned by a group of fishermen
Reason for requiring protest: Neccesity of preventing fictitious collisions and improper indemnities

Summary of cases where protest is required:

1. under 612, when the vessel makes an arrival under stress

2. under 612, 624 and 843, where the vessel is shipwrecked

3. under 624, where the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages

4. under 835, in case of maritime collisions

Art. 839. If the collision should take place between Philippine vessels in foreign waters, of if having taken place in the open seas, and the vessels should make a foreign port, the Filipino consul in said port shall hold a summary investigation of the accident, forwarding the proceedings to the Secretary of the Department of Foreign Affairs for continuation and conclusion.
4. Shipwrecks
Art. 840. The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding shall be individually for the account of the owners, the part which may be saved belonging to them in the same proportion.

Art. 841. If the wreck or standing should be caused by the malice,e negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and equipped, the ship agent or the shippers may demand indemnity of the captain for the damages caused to the vessel or to the cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621.

Shipwreck: Loss of a vessel at sea, either by being swallowed up by the waves, by running against another vessel or thing at sea, or on coast --> renders the ship incapable of navigation

Under 841, in case the wreck or stranding is due to the (1) malice, negligence, or lack of skill of the captain, or (2) because the vessel put to sea was insufficiently repaired and equipped, the captain shall be liable

Art. 842. The goods saved from the wreck shall be specially bound for the payment of the expenses of the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference over any other obligation if the merchandise should be sold.

Where a ship and its cargo are saved together, the salvage allowance should be charged against the ship and cargo in proportion of their respective values, the same as in general averages and neither is liable for the salvage due from the other

Where a personal action is brought by the salvor against the owner of the ship, the liability of the latter is limited to such part of the salvage compensation due for the entire service as is proportionate to the value of the ship

Art. 843. If several vessels sail under convoy, and any of them should be wrecked, the cargos saved shall 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 vessels shall enter a protest against him, before two sea officials, of the losses and damages resulting therefrom, ratifying the protest within twenty-four hours after arrival at the first port, and including it in the proceedings he must institute in accordance with the provisions contained in Article 612.

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 shall be saved first, the designation thereof to be made by the captain with the concurrence of the officers of his vessel.
Salvage Law (Act No. 2616)
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.
Salvage.-- The compensation allowed to persons by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from impending sea peril, or such property recovered from actual peril or loss, as in cases of shipwrecks, derelict or recapture -- a service which one person, renders to the owner of a ship or goods by his own labor, preserving the goods or ship which the owner or those entrusted with the care of them either abandoned in distress at sea or are unable to protect and secure ---> a permit is required to engage in salvage business
Shipwreck-- means a ship which has received injuries rendering her incapable by navigation; loss of a vessel at sea, either by being swallowed up by the waves, running against a thing at sea, or on the coast
Derelict.-- A ship or her cargo which is abandoned and deserted at sea by those who are in charge of it, without any hope of recovering it, or without any intention of returning it --> if those in charge of the property left it with the intention of finally leaving it, it is a derelict and the change of their intention and an attempt to return to it will not change its nature

ex. a schooner which has capsized in the high seas, deserted by her captain with no intention to return, is a derelict

a vessel, though not abandoned, may be the subject of salvage, if at the time the services were rendered, there was a probable, threatening danger to the vessel or its cargo --> if the vessel towed is aided in escaping present or prospective danger, the service is one of salvage an the towage is merely incidental
Rights of finder of derelict: The finder who takes possession with the intention of saving her, gains a right of possession which he can maintain against the true owners. The owner does not renounce his right of property. This is not presumed to be intentional, nor does the finder acquire any such right. But the owner thus abandons temporarily, his right of possession, which is transferred to the finder who becomes bound to preserve the property with GF and bring it to a place of safety for the owner's use; in return, he acquires a right to be paid for his service a reasonable and proper compensation out of the property itself. He is not bound to part with the possession until he is paid or the property is taken into the possession of the law preparatory to the amount of salvage being legally asserted
Elements of a valid salvage:
1. a marine peril

2. service voluntarily rendered when not required as an existing duty or from special contract

3. success, in whole or in part, or that the services rendered contributed to such success
Distinction between salvage and towage is of importance to the crew of the salvaging ship : if the contract for towage is in fact towage, then the crew does not have any interest or rights with the renumeration pursuant to the contract; BUT if the owners of the respective vessels are of a salvage nature, the crew of the salvaging ship is entitled to salvage, and can look to the salvaged vessel for its share

Captain towing vessel cannot invoke equity in quasi-contract of towage --> there is an express provision of law (Art. 2142, NCC) applicable to the relationship of quasi-contract of towage, where the crew is not entitled to compensation separate from that of the vessel

Section 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.
Section 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.
Section 4. After the salvage is accomplished, the owner or his representative shall have the right to the delivery of the vessel or the things saved, provided that he pays or gives a bond to secure the expenses and the proper reward.

Salvor has an interest in the property; this is called a lien, but it is not a debt due by the owner to the salvor for services rendered but upon the principle that the service creates a property in the thing saved --> he is, to all intents and purposes, a joint owner and if, the property is lost he must bear his share like other joint owners.

Payment of compensation where vessel and cargo salvage : where a ship and its cargo are saved together, the salvage allowance should be charged against the ship and cargo in the proportion of their respective values, as in the case of general average
Section 5. The Collector of Customs, provincial treasurer, or municipal mayor, to whom a salvage is reported, shall order:

a. That the things saved be safeguarded and inventoried.

b. The sale at public auction of the things saved which may be in danger of immediate loss or 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 30 days subsequent to the salvage, in one of the local newspapers or in the nearest newspaper 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.
Section 6. If, while the vessel or thing 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 not be made until the matter is decided by the CFI (RTC) of the province.
Section 7. No claim being presented in the three months subsequent to the publication of the advertisements prescribed in subsection (c) of Section 5, the things saved 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.
Section 8. The following shall have no right to a reward for salvage or assistance:

a. The crew of the vessel shipwrecked or which was in 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 3.
Section 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.

Kinds of salvage service:

(1) voluntary - wherein the compensation is dependent upon success

(2) rendered under a contract for a pier diem or per horam wage, payable at all events

Where the compensation is dependent upon success, it may be very much larger than mere quantum meruit --> as a reward for perilous services

Such contracts for salvage will not be set aside unless corruptly entered into, or made under fraudulent representations, a clear mistake or suppression of important facts, under compulsion or contrary to equity and good conscience
Section 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 RTC 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 expenses 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.
Reasons for allowing salvage compensation to salving vessel:

(1) to reward promptness, energy, efficiency, and heroic endeavor in saving life and property in peril;

(2) to compensate the use and service of the vessel as an indispensable instrument for the salvage;

(3) recognizes the danger and risk to which the crew and the vessel were exposed to in saving the ship and property and life.

The amount should be liberal enough to cover the expenses and to give an extra sum as a reward for the services rendered; should be liberal enough to offer an inducement to others to render like services in similar emergencies in the future; BUT should not be so high as to cause vessels in need of assistance to hesitate because of ruinous cost
"Public policy encourages the hardy and adventurous mariner to engage in these laborious and sometimes dangerous enterprises, and with a view to withdraw from him every temptation to embezzlement and dishonesty, the law allows him, in case he is successful, a liberal compensation."
Section 11. From the proceeds of the sale of the things saved shall be deducted, first, the expenses of their custody, conversation, 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 50% of such amount remaining.
Section 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.

No other person has the right to interfere with the salvage of a vessel or cargo if the salvor is able to effect the salvage with fidelity and vigor --> if their means are inadequate, they are bound to accept additional assistance if offered

Taking passengers from a sinking ship, without rendering any service in rescuing the vessel, is not a salvage service, being a duty of humanity and not for reward --> the Salvage Act, giving salvors of human life a fair share or remuneration offered to salvors of the vessel, refers to a situation where both lives and property were simultaneously imperiled and both are rescued at the same time

Section 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 expenses of salvage, as well as the reward for salvage or assistance, shall be a charge on the thing salvaged or their value.

The owner of the salving vessel has always been considered as entitled to salvage reward for the use of his vessel in rendering salvage services, though he was not present when the salvage service was rendered --> remuneration is awarded on account of the danger to which the service exposes their property and the risk which they run of loss in suffering their vessels engaged in such perilous undertaking.

Section 14. This Act shall take effect on its passage. Enacted 2/4/16.

MRR vs Macondray 37 Phil 850
F: On April 6, 1915 the steamer Seward owned by Macondray & Co. left Saigon for the Philippine Islands, encountering a moderately high sea. Laden with a cargo of rice, the weight of which, taken with the condition of the sea, caused the vessel to spring a leak, and her master felt compelled to return to Saigon. At this juncture, the steamship Hondagua owned by plaintiff, was sighted, whereupon the Seward flew the international distress signal asking for assistance. The Hondagua changed her course and approached the Seward. Seward had indicated that it had sprung a leak and wished to be taken in tow. In response to signals from the Hondagua, the Seward sent her boat to the Hondagua for a heaving line, by means of which a hawser was passed from the Hondagua to the Seward and the former, with the latter in tow, then proceeded at half speed towards Saigon. Shortly afterwards, the Seward signaled that the leak was gaining rapidly. The Hondagua went full speed ahead, until their arrival at Cape St. James, at the mouth of the Saigon River. The towing occupied some 4 or 5 hours and covered a distance of 20 to 30 miles.

The court found that the value of the Seward upon her arrival at Cape St. James did not exceed P 20,000 and that the value of the cargo was approximately P 54,000. The defendant company had no interest in the cargo, other than that of the carrier, and the cargo was owned by shippers whose names do not appear of record.

Plaintiff filed an action in the CFI of Manila, seeking to recover from defendant P 75,000, the alleged value of the salvage service. The CFI ordered the defendant to pay P 4,000 to the plaintiff. Both appealed.
Issues : Is the plaintiff entitled to recover renumeration for saving the cargo as well as for saving the ship? What is the reasonable compensation which should be allowed?

Held : There is no question as to the liability of defendant for the service rendered by plaintiff. Nor is there any dispute over the fact that the service rendered was a salvage service and renumerable as such. Where a ship and its cargo are saved together, as a result of services carried on with a view to saving both, the salvage allowance should be apportioned between the ship and cargo in the proportion of their respective values, the same as in a case of general average; and neither is liable for the salvage due from the other. If one who have salved both ship and cargo brings before the court in his salvage action only the ship, or only the cargo, he will get judgment only for such amount of reward as the court finds to be due in respect of the value of that property which is before the court. Not only is the salvage charge a separate and divisible burden as between ship and cargo, but also as between portions of the cargo belonging to different owners. There is no common liability for the amounts due from the ship or other portions of the cargo when the ship and cargo, or either, are brought into the custody of the court as a result of a proceeding in rem. The rule of liability must be the same where a personal action is instituted against the owners of the one or the other. The personal liability of each must be limited to the portion of the salvage charge which should be borne by his own property.

If it had been alleged and proved that the ship was unseaworthy when she put to sea or that the necessity for the salvage service was due to the negligence of the master, or of the ship's owner, the latter might have been liable, at least between himself and the shipper, for the entire cost of the service. But when the claim is put upon the basis of salvage, the fixing of the compensation goes beyond the limits of a quantum meruit for the work and labor done and involves the assessment of a bounty. The amount to be allowed is in part determined upon considerations of equity and public policy; and it is not proper to make the ship or the ship's owner liable for the whole amount. But where the owner of the cargo has not been made a party to the action, no recovery can be had in this action in regard to the service rendered to the cargo.

In fixing the compensation, the ff. circumstances are taken into consideration: (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, and the 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; and (6) the degree of danger from which the property was rescued.

In applying these criteria to this case, the ff. circumstances are pertinent : the Hondagua was delayed in her voyage about nine hours. This delay caused her to enter Iloilo, the port of destination, in the early hours of the morning instead of the late afternoon of the previous day; but the unloading of her cargo was not thereby retarded. Under the charter party contract under which she was operating, the Hondagua was earning about P 300/day, which was considered reasonable compensation for her use, including the services of officers and crew. The service rendered did not involve any further expenditure of labor on the part of the salvors, no unusual display of skill and energy and the condition of the sea was not such as to involve any special risk either to Hondagua or her crew. Finally, the danger from which the Seward was rescued was real since the ship was confronted by a serious peril. In determining the amount of the award, the aim should be to hold out to seafaring men a fair inducement to the performance of salvage service without fixing a scale of compensation so high as to cause vessels in need of such services to hesitate and decline to receive them because of the ruinous cost. That the salvor is entitled, as of bounty, to something more than mere renumeration for his own work and the risk incurred by him is conceded; but the interests of commerce should also be considered. Towage is not considered a salvage service of high order of merit and where the risk is inconsiderable and other conditions favorable, the compensation to be allowed should be modest in its amount.

In this case, the sum of P 1,000 is adequate for the service rendered.

Barrios vs Go Thong 7 SCRA 535
F: Plaintiff Barrios was the captain of MV Henry I, a vessel of William Lines, Inc. At about 8:00 p.m. of May 1, 1958, plaintiff as captain received an SOS or distress signal by blinkers from the MV Alfredo, owned by the defendant Carlos Go Thong & Co. Answering the SOS call, the plaintiff as captain of MV Henry, which was then sailing from Dumaguete City, altered the course of said vessel, and headed towards the MV Don Alfredo, which plaintiff found to be in trouble, due to engine failure and the loss of her propeller, for which reason, it was drifting slowly southward from Negros Island towards Borneo in the open China Sea, at the mercy of a moderate easterly wind. At about 8:25 p.m. on the same day, May 1, 1958, the MV Henry, under the command of the plaintiff, succeeded in getting near the MV Don Alfredo -- in fact as near as about 7 meters from the latter ship -- and with the consent and knowledge of the captain and/or master of the MV Don Alfredo, the plaintiff caused the latter vessel to be tied to, or well-secured and connected with two lines from the MV Henry; and the latter had the MV Don Alfredo in tow and proceeded towards the direction of Dumaguete City, as evidenced by a written certificate to this effect executed by the Master, the Chief Engineer, the Chief Officers, and the Second Engineer of the MV Don Alfredo, who were then on board the latter ship at the time of the occurrence. When both vessels were approaching the vicinity of Negros Oriental, the MV Lux, a sister ship of MV Don Alfredo, was sighted heading towards the two vessels. At the request and instance of the captain of MV Don Alfredo, the plaintiff caused the tow lines to be released, thereby also releasing the MV Don Alfredo.
Issue: WON the service rendered by plaintiff constituted salvage or towage, and if so, WON plaintiff may recover from defendant compensation for such service.

Held :(1) According to Sec. 1 of the Salvage Law, those who assist in saving a vessel or its cargo from shipwreck, shall be entitled to a reward (salvage). "Salvage" has been defined as the compensation allowed to persons by whose assistance a ship or her cargo has been saved, in whole or in part, form impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict or recapture. There was no marine peril in this case. Although defendant's vessel was in a helpless condition due to engine failure, it did not drift too far from the place where it was. As found by the LC, the weather was fair, clear and good. The waves were small and too slight, so much so, that there were only ripples on the sea, which was quite smooth. During the towing of the vessel on the same night, there was moonlight. Although said vessel was drifting towards the open sea, there was no danger of its foundering or being stranded, as it was far from any island or rocks. In case of danger of stranding, its anchor could be released, to prevent such occurrence. There was no danger that defendant's vessel would sink, in view of the smoothness of the sea and the fairness of the weather. That there was absence of danger is shown by the fact that said vessel or its crew did not even find it necessary to lower its launch and two motor boats, in order to evacuate its passengers no were the cargo in danger of perishing. All that the vessel's crew members could no do was to move the vessel on its own power. That did not make the vessel a quasi-derelict, considering that even before the plaintiff-appellant extended the help to the distressed ship, a sister vessel was known to be on its way to succor it.

(2) But plaintiff's service can be considered as a quasi- contract of towage. In consenting to plaintiff's offer to tow the vessel, the defendant through its captain, thereby impliedly entered into a juridical relation of towage with the owner of the MV Henry. If the contract thus created is one for towage, then only the owner of the towing vessel , to the exclusion of the crew of the said vessel, may be entitled to renumeration. And as the vessel-owner, William Lines, had expressly waived its claim for compensation for the towage service rendered to defendant, it is clear that plaintiff, whose right if at all depends upon and not separate from the interest, is not entitled to payment for such towage services. Neither may the plaintiff captain invoke equity in support of his claim for compensation against defendant. There being an express provision of law (Art. 2142, NCC) applicable to the relationship created in this case, that is, that of a quasi-contract of towage where the crew is not entitled to compensation separate from that of the vessel, there is no occasion to resort to equitable considerations.

E. SPECIAL CONTRACTS OF MARITIME COMMERCE

1. Charter Parties
a. Definition; as common carrier
A charter party is a contract by virtue of which the owner or agent of a vessel binds himself to transport merchandise or persons for a fixed price. It is a contract by which the owner or agent of the vessel leases for a certain price the whole or a portion of the vessel for the transportation of goods or persons from one port to another.

Towage is not a charter party; instead it is a contract for the hire of services by virtue of which a vessel is engaged to tow another vessel from one port to another for a consideration

Planters Products vs CA G.R. 101503 (Sept. 15, 1993)
F: Planters purchased urea fertilizer from Mitsubishi,New York. The fertilizer was shipped on MV Sun Plum, which is owned by KKKK, from Alaska to San Fernando, La Union. A time charter party was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner. Upon arrival in the port, PPI unloaded the cargo. It took PPI 11 days to unload the cargo. PPI hired a marine and cargo surveyor to determine if there was any shortage. A shortage and contamination of the fertilizer was discovered. PPI sent a claim letter to SSA, the resident agent of KKKK for the amount of the loss. An action for damages was filed. SSA contended that the provisions on CC do not apply to them because they have become private carriers by reason of the charter-party. The TC awarded damages. The CA reversed.
Issue : Does a charter party between a shipowner and a charterer transform a CC into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo? NO.
Held : A charter-party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use. There are 2 kinds : (1) contract of affreightment which involves the use of shipping space or vessels leased by the owner in part or as a whole, to carry goods for others; and (2) charter by demise or bareboat charter where the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants.

It is not disputed that the carrier operates as a CC in the ordinary course of business. When PPI chartered the vessel, the ship captain, its officers and crew were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Thus it continued to be a public carrier.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel, provided the charter is limited to the ship only, as in the case of a time-charter or a voyage-charter. It is only when the charter includes both the vessel and the crew, as in a bareboat or demise that a CC becomes private, insofar as such particular voyage is concerned.
Issue : WON the carrier is liable for damages. NO.
Held : The presumption of negligence on the part of respondent carrier has been overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. On the other hand, no proof was adduced by the petitioner showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.
b. Kinds