CHAPTE 19

SALVAGE

DEFINITION OF SALVAGE – 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 in distress at sea, or are unable to protect and
secure. 1

GOVERNING LAW - ACT NO. 2616 “SALVAGE LAW”

 Enacted, February 4, 1916.

 This law had its roots in Roman Law among the earliest
codifications can be found in the Laws of Oleron.
 Prior to the promulgation of the Salvage Law, the customs of the
place and in their absence, the general principles of law, were
applied by the courts in deciding salvage claims.
 G. Urrutia & Co, v. The Pasig Steamer and Lighter Company,2 SC
adjudged the issue of remuneration for salvage services in
accordance with the legal theory in practice in the US as there is
no express law in force in the PH.

RATIONALE.

 Equity of remuneration. Compensation for actual services

rendered to the property.
 For the meritorious conduct of the “Salvor”.
 Given to private and individual services performed in saving, in
whole or in part, a ship or its cargo from impending peril.
 Recover such ship after actual loss.
 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. 3 (Voluntary Salvage).

KINDS OF SALVAGE SERVICES

 Voluntary Salvage – Compensation is dependent upon success.
Considered as the first and most ancient class comprises cases
of pure salvage.
 Rendered under a contract – For a per diem or per horam
wage. Payable at all events. Most common upon the Great Lakes.
1
Erlanger & Galinger v. Swedish East Asiatic Co, Ltd., 34 Phil. 178 (1916)
2
G.R. No. 7294, March 22, 1912
3
ibid.
  Under a contract for a compensation payable only in case
of success. 4 Involves stipulated consideration for the salvage
service.
This kind of contract has much larger compensation.
Can only be set aside by courts if:
1) Corruptly entered into,
2) Made under fraudulent representations.
3) A clear mistake or suppression of facts,
4) In immediate danger to the ship, or
5) Under other circumstances amounting to compulsion, or when
enforcement would be contrary to equity and good
conscience. 5

CLAIM FOR VALID SALVAGE

 Sec. 1 of the Salvage Law provides that 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, such persons
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.

Elements for Salvage claims to be valid:

1) There must be a marine peril;
2) The service is voluntarily rendered and is not required as an
existing duty or from a special contract; and
3) There must be success in whole or in party or that the service
rendered contributed to such success.6
4) The vessel is shipwrecked beyond the control of the crew or
shall have been abandoned. (Sec 1 of the Salvage Law has a
4th requirement).

a) Persons not entitled to salvage compensation

 The Salvor, as provided under the Salvage Law, must have no
relation, contractual or otherwise, upon the ship in distress,
 Sec. 8, of Salvage Law provides for the following persons not
entitled to a reward or salvage compensation:
a) 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 of his representatives; and
4
C.S. Robinson, et al. v. The Ship “Alta” et al., No. 3488, August 10, 1907.
5
Ibid.
6
Barrios v. Go Thong & Company G.R. No. L-17192 March 30, 1963, 7 SCRA 535
 c) He who shall have failed to comply with the provisions of
section three.

 Sec. 3 provides that, “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.

b) Requisites of compensation

c) Derelict Required

 Sec. 1 of Salvage law, requires that the vessel sought to be

salvaged is shipwrecked beyond control of the crew or
abandoned. This will be present when the vessel is considered a
DERELICT.
 Derelict is deined 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 revertendi).
 A boat or vessel found entirely deserted or abandoned on the
sea without hope or intention of recovery or return by the master
or the crew, whether resulting from wreck, accident, necessity,
or voluntary abandonment.
 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 is not derelict.

d) Jetsam and Flotsam

 “Unless abandoned, still the property of their original owners”.

 Jetsam – goods that were thrown off a ship which was in danger.
 Flotsam – goods that floated off the ship while the ship was in
danger or when it sank.
 Ligan – goods left at sea on the wreck or tried to a buoy so that
they can be recovered alter.
BASIS OF ENTITELD SALVAGE REWARD

 Neither be too liberal nor too stingy.

  Should constitute sufficient compensation for the outlay and
effort of the savlors.
 Liberal enough to offer an inducement to others to render
services in similar emergencies in the future.

a) Limit of Salvage Fee

 In the absence of agreement or if the agreement is impugned

because the reward is too excessive, the RTC shall fix the reward
for salvage. 7
 Limit is 50% of the net amount of the proceeds of the sale of the
things saved.
 In case there is a public auction, the net amount is determined
by deducting from the proceeds first the expenses of their:
1) custody,
2) conservation,
3) advertisement, and
4) auction, as well as
5) whatever taxes or duties they should pay for their entrance,
6) and then there shall be deducted the expenses of salvage. 8

Sec. 7. No claim, being presented in the three months subsequent to

the publication of the advertisement prescribed in sub-section ( c ) of
section five, the things save shall be sold at a 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.

Sec. 11. From the proceeds of the sale of the things saved shall be
deducted first, the expenses of their custody, conservation,
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
fifty percent of such amount remaining.

b) Quantum Meruit not Applicable

 Quantum Meruit – Reasonable amount of money to be paid for

services rendered or work done when the amount due is not
stipulated in a legally enforceable contract.
7
Sec.10, Salvage Law
8
Sec 11, ibid.
  Admiralty courts should view compensation of Salvage not
merely as payment under the principle of Quantum Meruit or as
a 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.
 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 in salvage allowance for it rests on the
sound discretion of the court or judge who hears the case.

c) Circumstances to Consider

Sec. 10 provides for some considerations that the trial court shall take
into account in fixing a reward for salvage:

1) Principally the expenditures made to recover or save the vessel

or the cargo or both,
2) The zeal demonstrated, the time employed, the services
rendered;
3) The excessive express occasioned the number of persons who
aided;
4) The danger to which they and their vessels were exposed as well
as that which menaced the things recovered or salvaged; and
5) The value of such things after deducting the expenses.

SC noted in one case that it has been declared by the SC of the US,
that the principal circumstances shall be taken into consideration in
fixing the amount of compensation to be awarded for salvage services:

1) The labor expended by the salvors in rendering the salvage

service;
2) The promptitude, skill and, and energy displayed in rendering the
service and saving the property;
3) The value of the property employed by the savlors in rendering
the service, and the danger to which such property exposed;
4) The risk incurred by the savlors 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. 9

 In the case of Atlantic Gulf & Pacific Co. of Manila v. Uchida Kisen
Kaisha, et al., the SC applied Sec. 10 of the Salvage Law together

9
Fernandez, et al. v. Thompson, et al., No. 12475, March 21, 1918, 37 Phil. 850,
citing The Blackwall, 10 Wall., 1:19 L. ed., 870.
 with each of the specific circumstances during the Salvage
operation to determine the reward for the salvage in question.
Circumstances such as: (1) the Location of the ship where the
salvage operations were performed, (2) depth of the water
during the operation, (3) Period of the salvage operation, & other
pertinent facts.10

RIGHTS AND OBLIGATIONS OF SALVORS AND OWNERS

 Salvor is entitled to compensation for services rendered, and in

the enforcement of that right, he as 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) Maritime Lien

 A salvor, in maritime law, has an interest in the property; which

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
ub the thing saved.
 Salvor, in all intents and purposes, a joint owner.
 If the property is lost, he must bear his share like other joint
owners.

THE SALVAGE LAW

10
G.R. No. L – 15871, November 7, 1921.