SALVAGE

Submitted by: STACY L. CUNANAN 2G Submitted to: ATTY. PLARIDEL BOHOL II Submitted on: March 1, 2011

The general rules and principles governing salvage services and salvage awards date back to the early history of navigation. As a branch of the law of the sea, it had its roots in Roman Law, and among the earliest codifications or the recording thereof can be found in the Laws of Oleron, which had been promulgated sometime in the year 1266. In the local setting, prior to the passage of the Salvage Law on February 4, 1916, the customs of the place, and in their absence, the general principles of law, were applied by the courts in adjudicating salvage claims as there was, at the time, no express legislative act applicable thereto. In general, salvage may be defined as a service which 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 on distress at sea, or are unable to protect and secure. Salvage is founded on the equity of remunerating private and individual services performed in saving, in whole or in part, a ship or its cargo from impending peril, or recovering them after actual loss. It is a compensation for actual services rendered to the property charged with it, and is allowed for meritorious conduct of the salvor, and in consideration of a benefit conferred upon the person whose property he has saved. A claim for salvage rests on the principle that, unless the property be in fact saved by those who claim the compensation, it cannot be allowed, however benevolent their intention and however heroic their conduct. Salvage services are either: (1) voluntary, wherein the compensation is dependent upon success; (2) rendered under a contract for a per diem or per horam wage, payable at all events; or (3) under a contract for compensation payable only in case of success. The first and most ancient class comprises cases of pure salvage. The second is the most common upon the Great Lakes. The third involves stipulated consideration for the salvage service. Obviously where the stipulated compensation is dependent upon success and particularly success of within a limited time, it may be very much larger than a mere quantum meruit. Indeed, such contracts will not be set aside by Courts unless corruptly entered into, or made under fraudulent representations, a clear mistake or suppression of important facts, in immediate danger to the ship, or under the circumstances amounting to compulsion, or when their enforcement would be contrary to equity and good conscience. Section I of the Salvage Law provides that when in case if 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. Other persons who assist in saving the vessel or its cargo from shipwreck shall be entitled to a similar reward. In Barrios v. Go Thong & Company, the Supreme Court laid down three elements which must be established in order for a salvage claim to be valid, namely: 1) there must be a marine peril; 2) the service is voluntarily rendered and is not required as an existing duty or from the a special contract; and 3) there must be a success in a whole or in part or that service rendered

contributed to such success. Additionally, Section1 of the Salvage Law makes clear the requirement that (4) the vessel is shipwrecked beyond the control of the crew or shall have been abandoned. The salvor, under the Salvage Law, must have no relation, contractual or otherwise, upon the ship in distress. Thus, under Section 8 of the law, the following person shall have no right to a reward, namely: 1) the 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; and 3) he who shall have failed to comply with the provisions of section three. The following are the subjects of Salvage: 1) the ship itself; 2) Jetsam, which are goods cast into the sea, and there sink and remain under water; 3) Floatsam or Flotsam, goods which float upon the sea when cast overboard; and, 4) Ligan or Lagan, the goods cast into the sea tied to a buoy, so that they may be found again by the owners. The requirement of Section 1 of the Salvage Law that the vessel sought to be salvaged is shipwrecked beyond the control of the crew or abandoned, is present when the vessel is considered a derelict. A derelict is defined as a ship or her cargo which is abandoned and deserted at sea by those who were in charge of it, without any hope of recovering it (sine spe recuperandi), or without any intention of returning to it (sine animo revertandi). Whether the property is to be adjudged derelict is determined by ascertaining what was the intention and expectation of those in charge of it when they quitted it. If those in charge left with the intention of returning, or of procuring assistance, the property in not derelict, but if they quitted the property with the intention of finally leaving it, it is derelict, and a change of their intention and an attempt to return will not change its nature. Whether the intention to return exists in a particular case is always difficult to determine. It is indeed a rare case when the master if the ship will leave without the intention of returning, if there is the slightest hope if saving his vessel. Nevertheless, if it is clear that the intention to return is slight, the salvage which was done thereafter is considered valid. A salvage reward should neither be too liberal nor too stingy. It should constitute sufficient compensation for the outlay and effort of the salvors, taking into account the rules prescribed by Section 10 of Act No. 2616. It should be liberal enough to offer an inducement to others to render services in similar emergencies in the future. Said compensation to be paid by the owner of the ship and owner of the cargo must be in proportion to the value of the vessel and the value of the cargo saved. The expenses incurred in carrying out the salvage must be shown to be necessary and reasonable in amount before they will be allowed to the salvors. Furthermore, compensation as salvage should not be viewed by the admiralty courts merely as pay on the principle of quantum meruit or as remuneration pro opera et labore , but as a reward given for perilous services, voluntarily rendered and as an inducement to mariners to embark in such dangerous enterprises to save life and property. The amount should be liberal enough to cover the expenses and to give an extra sum as a reward for the services rendered.

There is no fixed rule for salvage allowance. The allowances rest on the sound discretion of the court or judge who hears the case, hears the witnesses testify and is familiar with the environments of the rescue. An allowance for salvage should not be weighed in golden scales, but should be made as a reward for meritorious voluntary services, rendered at a time when danger of loss is imminent and for the purpose of encouraging others in like services. However, the Supreme Court noted in one case that in fixing the amount of compensation to be awarded for salvage service it has been declared by the Supreme Court of the United States that the principal circumstances to be taken into consideration are: (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 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 saved ; and (6) The degree of danger from which the property was rescued. The salvor is of course entitled to compensations for services rendered, and in the enforcement of that right, he has, under the Salvage Law, a lien upon the property salvaged whereby he is not bound to part with the possession of the vessel salvaged or of the cargo saved until he is paid his due compensation. A salvor, in maritime law, has an interest in the property; this is 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. The salvor is, to all intents and purposes, a joint owner and if the property is lost he must bear his share like the other joint owners. If the ship and its cargo are saved together by the salvor, 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; and neither is liable for the salvage due from the other. Thus, in a personal action which is brought 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. Not only is the salvage charge a separate and divisible burden as between the ship and cargo, but also as between portions of the cargo belonging to different owners. The salvor has a right of possession of a derelict for purposes of a salvage claim. A derelict is a boat or vessel found entirely deserted or abandoned on the sea without hope or intention of recovery or return by the master of crew, whether resulting from wreck, accident, necessity, or voluntarily abandonment. When a vessel is found at sea, deserted, and has been abandoned by the master and crew without the intention of returning and resuming possession, she is, in the sense of the law, derelict, abandoned, and the finer who takes possession with the intention of saving her gains right of possession which he can maintain against the true owner. However, while the salvor has the right to retain the abandoned vessel or cargo until the salvage is completed without interference from other persons, it would not be so if the salvor has inadequate means. In such case, the salvor is bound to accept additional assistance from other salvors who may offer their services.

On the other hand, the owner of the vessel which is a derelict, does not renounce his right to the property. There is no presumption of an intention to abandon such property rights on the part of such owner under the Salvage Law. What the owner abandons, temporarily is his right of possession, which is thereby transferred to the salvor who becomes bound to preserve the property with good faith and bring it to a place of safety for the owners use. In Section 3 of the salvage Law, the 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 as soon as possible, to the collector of customs, if the port has a collector, and otherwise to the provincial treasurer or municipal mayor. The owner of his representative shall have a right to the delivery of the vessel or things saved after the salvage is accomplished, 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 Regional Trial Court of the province where the things saved may be found. If the owner does not make any claim within three months after the publication by the authorities of a salvage report, the things saved shall be sold at a public auction, the proceeds of which shall be deposited in the National treasury after deducting the expenses and the proper reward to which the salvor is entitled . If three years lapses without any claim thereon, the salvor shall be entitled to half of the deposit as his reward and the other half shall pertain to the government. The owner of the salving vessel is also entitled to the salvage reward for the use of his vessel in rendering salvage services even though he may not have been present at the time the salvage service was rendered. Remuneration for the salvage service is awarded to the owners of the salving vessel on account of the danger to which the service exposes their property, and the risk which they run of loss in suffering their vessles engaged in such perilous undertaking. Under Section 13 of the Salvage Law, reward is due not only to the owner of the salving vessel but the captain and crew as well. Thus, if a vessel or its cargo shall have been assisted or saved, entirely or partially, by another vessel, the reward of salvage or assistance shall be divided between the owner and 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 other fourth of the reward, in proportion to their respective salaries, in the absence of an agreement to the contrary. 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.