There are two reasons why it is impossible to do away with these privileges, to wit

attested by proper officer or a notary, to the effect that damages has suffered by the ship.

1. The risk to which the thing is exposed 2. The real nature of maritime law according to which liability of the parties is limited
to a thing to which is at mercy of the waves.

Protest is required under the Code of Commerce in the following cases: 1. Arrival under stress Vessel is shipwrecked Where the vessel has gone through a hurricane or the captain believes that the cargo has suffered damages or averages 4. Maritime collisions

The Supreme Court likewise explained in another case that the real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts to the vessel which is hypothecated for such obligation or which stands as the guaranty for their settlement. Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself, its equipment, freight and insurance if any -which limitation served to induce capitalists into effectively wagering their resource against the consideration of the large profits attainable in the trade. EXCEPTIONS TO THE LIMITED LIABILITY RULE 2. 3.

THE SHIP MORTGAGE DECREE ACT OF 1978 Section 2. Who may Constitute a Ship Mortgage. Any citizen of the Philippines, or any association or corporation organized under the laws of the Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines may, for

1. Where the injury or death is due either to the fault of shipowner or to the
concurring negligence of the shipowner and captain the purpose of financing the construction, acquisition, purchase of vessels or initial operation of vessels, freely constitute a mortgage or any other lien or encumbrance on his or its vessels and its equipment with any bank or other financial institutions, domestic or foreign. Section 3. Mortgage of Vessel of Domestic Ownership; records. (a) No mortgage, which at the time such mortgage is made includes a vessel of domestic ownership as this term is defined in Presidential Decree No. 761, or any portion thereof, as the whole or any part of the property mortgaged, shall be valid, in respect to such vessel, against any person other than the mortgagor, his heir or assign, and a person having actual notice thereof, until such mortgage is recorded in the office of the Philippine Coast Guard of the port of documentation of such vessel.

2. Where the vessel is insured 3. In workmens compensation claims 4. That the total destruction of the vessel affect the liability of the owner for repairs of
the vessel completed before its loss NEGLIGENCE PROTEST

Protest is a written statement by the master of the vessel or any authorized officer,

(b) The Coast Guard District or Station Commander shall record mortgages delivered to him, in the order of their reception, in books to be kept for that purpose and indexed to show 1. The name of the vessel; 2. The names of the parties tot he mortgage; 3. The time and date of reception of the instrument;

(b) Any mortgage which complies with the above conditions is hereafter called a "preferred mortgage". For purposes of this Decree, a vessel holding a Provisional Certificate of Philippine Registry is considered a vessel of domestic ownership such that it can be subject of preferred mortgage. The Philippine Coast Guard is hereby authorized to enter a vessel holding a Provisional Certificate of Philippine Registry in the Registry of Vessels and to record any mortgage executed thereon. Such mortgage shall have the preferred status as of the date of recordation upon compliance with the above conditions. (c) There shall be endorsed upon the documents of a vessel covered by a preferred

4. The interest in the vessel so mortgaged; 5. The amount and date of maturity of the mortgage; 6. Name, citizenship, nationality and residence of owner, and 7. Any material change of condition in respect to any of the preceding items.

mortgage 1. The names of the mortgagor and mortgagee; 2. The time and date the endorsement is made; 3. The amount and date of maturity of the mortgage; and 4. Any amount required to be endorsed by the provisions of paragraphs

A copy of the instrument or mortgage shall be furnished the Central Bank of the Philippines. Section 4. Preferred Mortgages (a) A valid mortgage which at the time it is made includes the whole of any vessel of domestic ownership shall have, in respect to such vessel and as of the date of recordation, the preferred status given by the provisions of Section 17 hereof, if 1. The mortgage is recorded as provided in Section 3 hereof; 2. An affidavit is filed with the record of such mortgage to the effect that the mortgage is made in good faith and without any design to hinder, delay, or defraud any existing or future creditor of the mortgagor or any lien or of the mortgaged vessel; 3. The mortgage does not stipulate that the mortgagee waives the preferred status thereof;

(e) or (f) of this Section. (d) Such endorsement shall be made (1) by the Coast Guard District or Station Commander of the port of documentation of the mortgaged vessel, or (2) by the Coast Guard District or Station Commander of any port in which the vessel is found, if such Coast Guard District or Station Commander is directed to make the endorsement by the Coast Guard District or Station Commander of the port of documentation. The Coast Guard District or Station Commander of the port of documentation shall give such direction by wire of letter at the request of the mortgagee and upon the tender of the cost of communication of such direction. Whenever any new document is issued for the vessel, such endorsement shall be transferred to and endorsed upon the new document by the Coast Guard District or Station Commander. In the case of a vessel holding a provincial certificate of Philippine Registry, the endorsement shall be made by the Philippine consul abroad upon direction by wire

or letter from the Maritime Industry Authority at the request of the mortgagee and upon tender of the cost of communication of such direction. A certificate of such endorsement, giving the place, time and description of the endorsement, shall be recorded with the records of registration to be maintained at the Philippine Consulate. (e) A mortgage which includes property other than a vessel shall not be held a preferred mortgage unless the mortgage provides for the separate discharge of such property by the payment of a specified portion of the mortgage indebtedness. If a preferred mortgage so provides for the separate discharge, the amount of the portion of such payment shall be endorsed upon the documents of the vessel. (f) A preferred mortgage includes more than one vessel and provides for the separate discharge of each vessel by the payment of a portion of mortgage indebtedness, the amount of such portion of such payment shall be endorsed upon the documents of the vessel. In case such mortgage does not provide for the separate discharge of a vessel and the vessel is to be sold upon the order of a district court of the Philippines in a suit in rem in admiralty, the court shall determine the portion of the mortgage indebtedness increased by 20 per centum (1) which, in the opinion of the court, the approximate value of all the vessels covered by the mortgage, and (2) upon the payment of which the vessel shall be discharged from the mortgage. Section 5. Certified Copies of Mortgage; exhibition. The Coast Guard District or Station Commander upon the recording of a preferred mortgage shall deliver two certified copies thereof to the mortgagor who shall place, and use due diligence to retain, one copy on board the mortgaged vessel notice of which shall be posted in a conspicuous place thereat and cause such copy and the documents of the vessel to be exhibited by the master to any person having business with the vessel, which give rise to a maritime lien upon the vessel or to the sale, conveyance, or mortgage thereof. The master of the vessel shall upon the request of any such person, exhibit to him the documents of the vessel placed on board thereof. The requirement of this Section that a copy of a preferred mortgage be placed and retained on board the mortgaged vessel shall not apply in the case of a mortgaged vessel which is not self-propelled (including but not limited to, barges, scors, lighters, and car floats).

If the master of the vessel willfully fails to exhibit the documents of the vessel or the copy of any preferred mortgage thereof, the Philippine Coast Guard may suspend or cancel the master's license. Section 6. Prior and Subsequent Maritime Liens on Mortgaged Vessel. The mortgagor (1) shall, upon request of the mortgagee, disclose in writing to him prior to the execution of any preferred mortgage, the existence of any maritime lien, prior mortgage, or other obligation or liability upon the vessel to be mortgaged, that is known to the mortgagor, and (2) without the consent of the mortgagee, shall not incur, after the execution of such mortgage and before the mortgagee has had a reasonable time in which to record the mortgage and have indorsements in respect thereto made upon the documents of the vessel, any contractual obligation creating a lien upon the vessel other than a lien for wages of stevedores when employed directly by the owner, operator, master, ship's husband, or agent of the vessel, for wages of the crew of the vessel, for general average, or for salvage, including contract salvage, in respect to the vessel, tonnage dues and all other charges (not to exceed P20,000) of the Philippine Government in respect to the vessel. A mortgagor, who, with intent to defraud, violates the above provision and if the mortgagor is a corporation or association, the president or other principal executive officer of the corporation or association, shall be punished by a fine of not, more than P5,000 or imprisonment of not more than two years, or both. The mortgage indebtedness shall thereupon become immediately due and payable at the election of the mortgagee. Section 7. Record of Notice of Claim of Lien on Mortgaged Vessel; discharge of lien (a) The Coast Guard District or Station Commander of the port of documentation shall, upon the request of any person, record notice of his claim of a lien upon a vessel covered by a preferred mortgage, together with the nature, date of creation, and amount of the lien, and the name and address of the person. Any person who has caused notice of his claim of lien to be so recorded shall, upon a discharge in whole or in part of the indebtedness, forthwith file with the Coast Guard District or Station Commander a certificate of such discharge. The Coast Guard District or Station Commander shall thereupon record the certificate.

(b) The mortgagor upon a discharge in whole or in part of the mortgage indebtedness, shall forthwith file with the Coast Guard District or Station Commander for the port of documentation of the vessel, a certificate of such discharge duly executed by the mortgagee. Such Coast Guard District or Station Commander shall there upon record the certificate. In case of a vessel covered by a preferred mortgage, the Coast Guard District or Station Commander at the port of documentation shall endorse upon the documents of the vessel, or direct the Coast Guard District or Station Commander at any port in which the vessel is found, to so endorse, the fact of such discharge. A certificate of such endorsement, giving the time, place and description of the endorsement, shall be recorded with the Philippine Coast Guard. Where the endorsement is made by a person other than the Coast Guard District or Station Commander such certificate shall be promptly forwarded to the Philippine Coast Guard. Section 8. Conditions Precedent to Record; interest on Preferred Mortgage

POLIAND INDUSTRIAL VS. NATIONAL DEVELOPMENT Section 2 of P.D. No. 1521 recognizes the constitution of a mortgage on a vessel, to wit: SECTION 2. Who may Constitute a Ship Mortgage. ' Any citizen of the Philippines, or any association or corporation organized under the laws of the Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines may, for the purpose of financing the construction, acquisition, purchase of vessels or initial operation of vessels, freely constitute a mortgage or any other lien or encumbrance on his or its vessels and its equipment with any bank or other financial institutions, domestic or foreign. If the mortgage on the vessel is constituted for the purpose stated under Section 2, the mortgage obtains a preferred status provided the formal requisites enumerated under Section 4[53] are complied with. Upon enforcement of the preferred mortgage and eventual foreclosure of the vessel, the

(a) No mortgage shall be recorded unless it states the interest of the mortgagor in the vessel, and the interest so mortgaged. (b) No mortgage, notice of claim of lien, or certificate of discharge thereof, shall be recorded unless previously acknowledged before the Coast Guard District or Station Commander of the port of documentation or a notary public or other officer authorized by a law of the Philippines to take acknowledgment of deeds or before a Philippine consul or consular agent. (c) In case of a change in the port of documentation of a vessel of the Philippines, no mortgage shall be recorded at the new port of documentation unless there is furnished to the Coast Guard District or Station Commander of such port, together with the copy of the mortgage to be recorded, a certified copy of the record of the vessel at the former port of documentation furnished by the Coast Guard District or Station Commander of such port. The Coast Guard District or Station Commander at the new port of documentation is authorized and directed to record such certified copy.

proceeds of the sale shall be first applied to the claim of the mortgage creditor unless there are superior or preferential liens, as enumerated under Section 17, namely: SECTION 17. Preferred Maritime Lien, Priorities, Other Liens. ' (a) Upon the sale of any mortgaged vessel in any extra-judicial sale or by order of a district court of the Philippines in any suit in rem in admiralty for the enforcement of a preferred mortgage lien thereon, all preexisting claims in the vessel, including any possessory common-law lien of which a lienor is deprived under the provisions of Section 16 of this Decree, shall be held terminated and shall thereafter attach in like amount and in accordance with the priorities established herein to the proceeds of the sale. The preferred mortgage lien shall have priority over all claims against the vessel, except the following claims in the order stated: (1) expenses and fees allowed and costs taxed by the court and taxes due to the Government; (2) crew's wages; (3) general average; (4) salvage including contract salvage; (5) maritime liens arising prior in time to the recording of the preferred mortgage; (6) damages arising out of tort; and (7) preferred mortgage registered prior in time. (b) If the proceeds of the sale should not be sufficient to pay all creditors included in one number or grade, the residue shall be divided among them pro rata.

All credits not paid, whether fully or partially shall subsist as ordinary credits enforceable by personal action against the debtor. The record of judicial sale or sale by public auction shall be recorded in the Record of Transfers and Encumbrances of Vessels in the port of documentation. (Emphasis supplied.) There is no question that the mortgage executed in favor of DBP is covered by P.D. No. 1521. Contrary to NDC's assertion, the mortgage constituted on GALLEON's vessels in favor of DBP may appropriately be characterized as a preferred mortgage under Section 2, P.D. No. 1521 because GALLEON constituted the same for the purpose of financing the construction, acquisition, purchase of vessels or initial operation of vessels. While it is correct that GALLEON executed the mortgage in consideration of DBP's guarantee of the prompt payment of GALLEON's obligations to the Japanese lenders, DBP's undertaking to pay the Japanese banks was a condition sine qua non to the acquisition of funds for the purchase of the GALLEON vessels. Without DBP's guarantee, the Japanese lenders would not have provided the funds utilized in the purchase of the GALLEON vessels. The mortgage in favor of DBP was therefore constituted to facilitate the acquisition of funds necessary for the purchase of the vessels. The provision of P.D. No. 1521 on the order of preference in the satisfaction of the claims against the vessel is the more applicable statute to the instant case compared to the Civil Code provisions on the concurrence and preference of credit. General legislation must give way to special legislation on the same subject, and generally be so interpreted as to embrace only cases in which the special provisions are not applicable.[55] POLIAND's maritime lien is superior to DBP's mortgage lien Before POLIAND's claim may be classified as superior to the mortgage constituted on the vessel, it must be shown to be one of the enumerated claims which Section 17, P.D. No. 1521 declares as having preferential status in the event of the sale of the vessel. One of such claims enumerated under Section 17, P.D. No. 1521 which is considered to be superior to the preferred mortgage lien is a maritime lien arising prior in time to the recording of the preferred mortgage. Such maritime lien is described under Section 21, P.D. No. 1521, which reads:

SECTION 21. Maritime Lien for Necessaries; persons entitled to such lien. ' Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel. The trial court found that GALLEON's advances obtained from Asian Hardwood were used to cover for the payment of bunker oil/fuel, unused stores and oil, bonded stores, provisions, and repair and docking of the GALLEON vessels.[58] These expenses clearly fall under Section 21, P.D. No. 1521. As stated in Section 21, P.D. No. 1521, a maritime lien may consist in 'other necessaries spent for the vessel. The ship modification cost may properly be classified under this broad category because it was a necessary expenses for the vessel's navigation. As long as an expense on the vessel is indispensable to the maintenance and navigation of the vessel, it may properly be treated as a maritime lien for necessaries under Section 21, P.D. No. 1521. With respect to the claim for salary and wages of the crew, there is no doubt that it is also one of the enumerated claims under Section 17, P.D. No. 1521, second only to judicial costs and taxes due the government in preference and, thus, having a status superior to DBP's mortgage lien. All things considered, however, the Court finds that only NDC is liable for the payment of the maritime lien. A maritime lien is akin to a mortgage lien in that in spite of the transfer of ownership, the lien is not extinguished. The maritime lien is inseparable from the vessel and until discharged, it follows the vessel. Hence, the enforcement of a maritime lien is in the nature and character of a proceeding quasi in rem.[65] The expression 'action in rem is, in its narrow application, used only with reference to certain proceedings in courts of admiralty wherein the property alone is treated as responsible for the claim or obligation upon which the proceedings are based.[66] Considering that DBP subsequently transferred ownership of the vessels to NDC, the Court holds the latter liable on the maritime lien. Notwithstanding the subsequent transfer of the vessels to NDC, the maritime lien subsists.

ROLE OF CAPTAIN

However, there is overwhelming authority to the effect that the master does not surrender his vessel to the pilot and the pilot is not the master. The master is still in command of the vessel notwithstanding the presence of a pilot. There are occasions when the master may and should interfere and even displace the pilot as when the pilot is obviously incompetent or intoxicated and the circumstances may require the master to displace a compulsory pilot because of incompetency or physical disability. If however the master does not observe that a compulsory pilot is incompetent or physically incapacitated, the master is justified in relying on the pilot but not blindly. Ergo, the master is not wholly absolved from his duties while a pilot is on board his vessel. The master has overriding authority over the pilot. SHIPOWNER AND PILOT In general, a pilot is personally liable for damages caused by his own negligence or default to the owners of the vessel, and to third parties for damages sustained in a collision. Such negligence of the pilot in the performance of duty constitute maritime tort. Even though the pilot is compulsory, if his negligence was not the sole cause of the injury but the negligence of the master or crew contributed thereto, the owners are liable.

1. He is a general agent of the shipowner 2. He is commander and technical director of the vessel 3. He is a representative of the country under whose flag he navigates
The most important role is the role performed by the captain as commander of the vessel, it is analogous to being a CEO of a present-day corporation. DISCRETION OF CAPTAIN OR MASTER The applicable principle is that the captain has control of all departments of service in the vessel, and reasonable discretion as to its navigation. The discretionary authority is recognized with respect to his right to exercise his best judgment, with respect to navigating the vessel he commands. PILOTAGE A pilot in maritime law is a person duly qualified and licensed to conduct a vessel into or out of ports or in certain waters. In this jurisdiction COMPULSORY PILOTAGE is being implemented. On compulsory pilotage, the harbor pilot providing the service to a vessel shall be responsible for the damage caused to a vessel or to life and property at ports due to his negligence or fault.

DIFFERENT KINDS OF CHARTER PARTIES 1. 2. BAREBOAT OR DEMISE CHARTER CONTRACT OF AFFREIGHTMENT A. B. Time charter Voyage charter

The master shall retain overall command of the vessel even on pilotage grounds whereby he can countermand or overrule the order or command of the harbor pilot on board. MASTER AND PILOT Under English and American authorities, the pilot supersedes the master for the time being in the command and navigation of the ship, and his orders must be obeyed in all matters connected with her navigation. BAREBOAT CHARTER In a bareboat or demise charter, the shipowner leases the whole vessel, transferring to the latter the entire command, possession and consequent control over the vessels navigation, including the master and the crew who thereby become the charterers servants.

Thus the charterer becomes the wner pro hac vice of the vessel since he mans the vessel with his own set of master and crew, effectively becoming the owner for the voyage or service stipulated, subject however to any liability or damages arising from negligence.

Second, in bottomry or respondentia, there must necessarily be a marine risk, the existence of which must be duly established whereas in simple loan, there need not be such risks involved Third, the loan on bottomry and respondentia must be executed in accordance with the form

CONTRACT OF AFFREIGHTMENT In a time charter, the vessel is leased to the charterer for a fixed period of time, whereas in a voyage charter, the vessel is leased for a single or particular voyage. EFFECTS OF CHARTER ON CHARACTER OF CARRIER

and manner required by the Code of Commerce, while in simple loan the formal requisites of contract would apply Fourth, the loan on bottomry and respondentia must be recorded in the registry of vessels in order to bind third persons whereas no such registration is required in simple load Fifth, in the loan of bottomry and respondentia, preference is extended to the last lender if

Generally the character of common carrier as such is not affected by the charter party if the same is a contract of affreightment. REQUISITES FO A VALID CHARTER PARTY 1. 2. 3. 4. Consent of the contracting parties An existing vessel which should be placed at the disposition of the shipper Freight Compliance with the requirements of Art. 652 of Code of Commerce which requires that a charter party must be drawn in duplicate, signed by the parties and by two witness at his the parties request. LOANS ON BOTTOMRY AND RESPONDENTIA BOTTOMRY in maritime law is a contract whereby the owner of a ship borrows for the use, equipment or repair of the vessel, for a definite term, and pledges the ship as the security with the stipulation that 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.

there be several lenders, on the theory that were it not for the last lender, then prior lenders would not have benefitted from the preservation of the security, whereas in simple laod, the first lender as a general rule enjoys preference. AVERAGES Averages may be general averages or simple averages SIMPE AVERAGES Simple averages shall include all the expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the person interested in the vessel and her cargo. BY WHOM BORNE Since simple or particular average do not inure to the common benefit, the owner of the goods that suffered the damage bears the loss. Res perit domio principles applies GENERAL AVERAGES A general average shall include all the damages and expenses which are deliberately caused

DISTINGUISHED FROM SIMPLE LOAN First, in bottomry or respondentia, the rate of interest is not subject to the Usury Law, whereas in simple loan it is subject to such law.

in order to save the vessel, its cargo or both at the same time, from real and known risk. REQUISITES FOR A GENERAL AVERAGE

1. There must be a common danger

2. That for the common safety, part of the vessel or of the cargo or both is sacrificed
deliberately 3. That from the expenses or damages caused by the follows the successful saving of the vessel and cargo

Art. 826. If a vessel should collide with another , through or the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. BOTH VESSELS AT FAULT Art. 827 If the collision is imputable to both vessels, each one shall suffer its own damage, and both shall be solidarily responsible for the losses and damages occasioned to their cargoes.

4. That the expenses or damages should have been incurred or inflicted after taking
proper legal steps and authority AMERICAN HOME ASSURANCE COMPANY VS. CA

DOCTRINE OF INSCRUTABLE FAULT; PARTY AT FAULT CANNOT BE Art. 848 of the Code of commerce reads that claims for averages shall not be admitted if they do not exceed 5% of the interest which the claimant may have in the vessel or cargo if it is gross average, and 1% of the goods damaged if particular averages, deducting in both cases the expenses of appraisal, unless there is an agreement to the contrary. COLLISIONSDEFINITION Collision is considered as an impact or sudden contact of a moving body with an obstruction in its line of motion whether both bodies are in motion or one stationary and the other no matter which, in motion. ERROR IN EXTREMIS In the first zone no rules apply. In the second zone the burden is on the vessel required to keep away and avoid the danger. The third zone covers the period in which error in extremis and the rule is that the vessel which has forced the privileged vessel into danger is responsible even if the privileged vessel has committed an error within that zone. RULES ON LIABILITY ARRIVAL UNDER STRESS In some respect, however, the rules that apply to quasi-delict cannot be applied in collision cases. For example, the view is that the doctrine of last clear chance and the rule on contributory negligence cannot be applied in collision cases. SPECIFIC RULES UNDER THE CODE OF COMMERCE STEPS ONE VESSEL AT FAULT Arrival under stress is the arrival of a vessel at the nearest and most convenient port which wsa decided upon after determining that there is well-founded fear of seizure, privateers, or pirates or reason of any accident of the sea disabling it to navigate. Art. 837 The civil liability incurred by the shipowners in the cases prescribed in this section shall be understood as limited to the value of the vessel with all her appurtenances and freight earned during the voyage. Art. 828 The provisions of the preceding article are applicable to the use in it cannot be determined which of the two vessels caused the collision. PROTEST 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 24 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 the Philippine territory, and to the consul of the Republic of the Philippines if it occurred in a foreign country. LIMITED LIABILITY RULE DETERMINED

a.

Captains should determine during the voyage if there is well founded fear of seizure

(2) service voluntarily rendered when not required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service rendered contributed to such success (4) the vessel is shipwrecked beyond the control of the crew or shall have been abandoned BASIS FOR ENTITLEMENT TO SALVAGE REWARD

b. c.

The captain shall then assemble the officers The captain shall summon the persons interested in the cargo who may be present and who may attend without the right to vote

d.

The officers shall determine and agree if there is a well-founded fear. Captain shall have deciding vote Principal circumstance to be taken in consideration 1. 2. The labor expended by the salvors in rendering the salvage service 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

e.

The agreement shall be drafted and the proper minutes shall be signed and entered in the log book

f.

Objections and protest shall likewise be entered

Sec. 8. The following shall have no right to a reward for salvage or assistance: 4. 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. 5. 6. The risk incurred by the salvors in rescuing the property from the impending peril The value of the property salved The degree of danger which the property was rescued

MITSUI OSK LINES VS. CA Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioners vessel loaded private respondents container van for carriage at the said port of origin. However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the off season in that country. The remaining half was allegedly charged to the

CLAIM FOR VALID SALVAGE AND ITS ELEMENTS 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, from impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or recapture." (Blackwall v. Saucelito Tug Company, 10 Wall. 1, 12, cited in Erlanger & Galinger v. Swedish East Asiatic Co., Ltd., 34 Phil. 178.) In the Erlanger & Galinger case, it was held that three elements are necessary to a valid salvage claim, namely, (1) a marine peril,

account of private respondent which in turn demanded payment from petitioner through its agent. There would be some merit in appellants insistence that the damages suffered by him as a result of the delay in the shipment of his cargo are not covered by the prescriptive provision of the Carriage of Goods by Sea Act above referred to, if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not obtain. In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carriers breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit. virtualawlibrary Precisely, the question before the trial court is not the particular sense of damages as it refers to the physical loss or damage of a shippers goods as specifically covered by 3(6) of COGSA but petitioners potential liability for the damages it has caused in the general sense and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for the breach of its contract of carriage with private respondent. vir We conclude by holding that as the suit below is not for loss or damage to goods contemplated in 3(6), the question of prescription of action is governed not by the COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of ten years. PHIL FIRST INSURANCE CO VS. WALLEM PHILS. SHIPPING PUBLIC UTILITIES

Public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas water, transportation, telephone or telegraph service. As such public utility services are impressed with public interest and concern. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect grants to the public an interest in that use, and must submit to the control by the public for the common good, to the extent of the interest he has thus created. Public service includes every person that now or hereafter may own, operate, manage or control in the Philippines for hire or for compensation with general or limited clientele whether permanent, occasional, or accidental and done for general business. It is up to congress whether it will delegate the power to authorize the operation of public utilities to administrative agencies. FRANCHISE AND CERTIFICATE OF PUBLIC CONVENIENCE A franchise is distinguished from a CPC in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through the administrative agencies. A certificate of public convenience is not necessary for the issuance of a legislative franchise. However, a legislative franchise is necessary before a CPC can be issued to operate radio and television broadcasting companies. Consequently, even if there was already a delegation of authority to a specific administrative agency to issue a CPC, it does not follow that a legislative franchise is no longer necessary. NATURE OF CPC A certificate is a mere privilege that is always subject to the regulation of the State. Insofar as the State is concerned, a certificate of public convenience constitute neither a franchise nor a contract, confers no property right, and is a mere license or privilege.