AVERAGES: GROSS OR GENERAL – Essential Requisites the owner of the property gave rise to same (Art.
he owner of the property gave rise to same (Art. 810); while general or gross averages
G.R. No. L-6393 January 31, 1955
A. MAGSAYSAY INC., plaintiff-appellee,
vs.
ANASTACIO AGAN, defendant-appellant.
REYES, A. J.:
The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October 6,
1949, bound for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to
different shippers, among them the defendant. The vessel reached Aparri on the 10th of that
month, and after a day's stopover in that port, weighed anchor to proceed to Basco. But
while still in port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat
it under its own power having failed, plaintiff have it refloated by the Luzon Stevedoring
Co. at an agreed compensation. Once afloat the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination. There the cargoes were delivered to their
respective owners or consignees, who, with the exception of defendant, made a deposit or
signed a bond to answer for their contribution to the average.
On the theory that the expenses incurred in floating the vessel constitute general average to
which both ship and cargo should contribute, plaintiff brought the present action in the
Court of First Instance of Manila to make defendant pay his contribution, which, as
determined by the average adjuster, amounts to P841.40. Defendant, in his answer, denies
liability to his amount, alleging, among other things, that the stranding of the vessel was
due to the fault, negligence and lack of skill of its master, that the expenses incurred in
putting it afloat did not constitute general average, and that the liquidation of the average
was not made in accordance with law. After trial, the lower court found for plaintiff and
rendered judgment against the defendant for the amount of the claim, with legal interests.
From this judgment defendant had appealed directly to this Court.
Although appellant assigns various errors, under our view of the case only the following
need be considered:
The trial court erred in allowing the general average for floating a vessel
unintentionally stranded inside a port and at the mouth of a river during a fine
weather.
For the purposes of this assignment of error we may well accept the finding below that the
stranding of plaintiff's vessel was due to the sudden shifting of the sandbars at the mouth of
the river which the port pilot did not anticipate. The standing may, therefore, be regarded
as accidental, and the question is whether the expenses incurred in floating a vessel so
stranded should be considered general average and shared by the cargo owners.
The law on averages is contained in the Code of Commerce. Under that law, averages are
classified into simple or particular and general or gross. Generally speaking, simple or
particular averages include all expenses and damages caused to the vessel or cargo which
have not inured to the common benefit (Art. 809), and are, therefore, to be borne only by
include "all the damages and expenses which are deliberately caused in order to save the
vessel, its cargo, or both at the same time, from a real and known risk" (Art. 811). Being for
the common benefit, gross averages are to be borne by the owners of the articles saved (Art.
812).
In classifying averages into simple o particular and general or gross and defining each class,
the Code (Art. 809 and 811) at the same time enumerates certain specific cases as coming
specially under one or the other denomination. Going over the specific cases enumerated
we find that, while the expenses incurred in putting plaintiff's vessel afloat may well come
under number 2 of article 809-which refers to expenses suffered by the vessel "by reason of
an accident of the sea of the force majuere" — and should therefore be classified as
particular average, the said expenses do not fit into any of the specific cases of general
average enumerated in article 811. No. 6 of this article does mention "expenses caused in
order to float a vessel," but it specifically refers to "a vessel intentionally stranded for the
purpose of saving it" and would have no application where, as in the present case, the
stranding was not intentional.
Let us now see whether the expenses here in question could come within the legal concept
of the general average. Tolentino, in his commentaries on the Code of Commerce, gives the
following requisites for general average:
First, there must be a common danger. This means, that both the ship and the
cargo, after has been loaded, are subject to the same danger, whether during the
voyage, or in the port of loading or unloading; that the danger arises from the
accidents of the sea, dispositions of the authority, or faults of men, provided that
the circumstances producing the peril should be ascertained and imminent or may
rationally be said to be certain and imminent. This last requirement exclude
measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately.
Third, that from the expenses or damages caused follows the successful saving of
the vessel and cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority. (Vol. 1, 7th ed., p. 155.)
With respect to the first requisite, the evidence does not disclose that the expenses sought
to be recovered from defendant were incurred to save vessel and cargo from a common
danger. The vessel ran aground in fine weather inside the port at the mouth of a river, a
place described as "very shallow". It would thus appear that vessel and cargo were at the
time in no imminent danger or a danger which might "rationally be sought to be certain and
imminent." It is, of course, conceivable that, if left indefinitely at the mercy of the elements,
they would run the risk of being destroyed. But as stated at the above quotation, "this last
requirement excludes measures undertaken against a distant peril." It is the deliverance from
an immediate, impending peril, by a common sacrifice, that constitutes the essence of
general average. (The Columbian Insurance Company of Alexandria vs. Ashby & Stribling
et al., 13 Peters 331; 10 L. Ed., 186). In the present case there is no proof that the vessel had
1
to be put afloat to save it from imminent danger. What does appear from the testimony of
plaintiff's manager is that the vessel had to be salvaged in order to enable it "to proceed to
its port of destination." But as was said in the case just cited it is the safety of the property,
and not of the voyage, which constitutes the true foundation of the general average.

As to the second requisite, we need only repeat that the expenses in question were not
incurred for the common safety of vessel and cargo, since they, or at least the cargo, were
not in imminent peril. The cargo could, without need of expensive salvage operation, have
been unloaded by the owners if they had been required to do so.

With respect to the third requisite, the salvage operation, it is true, was a success. But as the
sacrifice was for the benefit of the vessel — to enable it to proceed to destination — and
not for the purpose of saving the cargo, the cargo owners are not in law bound to contribute
to the expenses.

The final requisite has not been proved, for it does not appear that the expenses here in
question were incurred after following the procedure laid down in article 813 et seq.

In conclusion we found that plaintiff not made out a case for general average, with the result
that its claim for contribution against the defendant cannot be granted.

Wherefore, the decision appealed from is reversed and plaintiff's complaint ordered
dismissed with costs.

2
COLLUSIONS: INSCRUTABLE FAULT
G.R. No. L-7675 March 25, 1913
G. URRUTIA & CO., plaintiff-appellee,
vs.
BACO RIVER PLANTATION CO., defendant-appellee.
M. GARZA, intervener-appellant.
MORELAND, J.:
This action spring from a collision between the steamship Nuestra Señora del Pilar, owned
by the plaintiff, and the schooner Mangyan owned by the defendant, which occurred in the
early morning of the 8th of April, 1910, in Verde Island North Passage. The sail vessel was
sailing with a fresh breeze dead astern, her sails wing and wing. The steamer was seen by
those on board the sailing vessel some time before the actual collision, sailing erratically.
The sail vessel kept her course steadily until just before the actual contact when her
helmsman threw her hard to port in an effort to avoid the collision. The movement, however,
was unsuccessful and the sail vessel rammed the steamer on the starboard quarter well aft.
The steamer sank and eight lives were lost. The sail vessel was considerably injured.
This action was brought by the owners of the steamship against the owner of the sail vessel,
to recover the value of the destroyed steamer and the damages caused by reason of its
destruction, alleging as a basis therefor the negligence of the said vessel. The defendant
denied the material allegations of the complaint and set up a counterclaim for damages,
alleging as grounds therefor that the injuries sustained by the said vessel were due to the
gross negligence of those handling plaintiff's steamer.
Before the action was tried, M. Garza made an application to intervene under the provisions
of section 121 of the Code of Civil Procedure, he alleging in support of his application that
the steamer was carrying for him at the time several thousand pesos' worth of merchandise
as freight, which was lost as a result of the collision. He was permitted to intervene and
accordingly filed a complaint setting up the loss of this merchandise and the value thereof
and alleging, as the basis for his right to recover, the negligence of one or the other of the
vessels, without specifying which, and praying that the court award him damages against
the vessel the negligence of which, upon the trial, was shown to have caused his loss.
The case turns upon the question which of the vessels was negligent in failing to conform
to the International Rules for the Prevention of Collissions at Sea. The learned trials court
found that those managing the steamer were guilty of gross negligence and that for that
reason the plaintiff could recover nothing.
An examination of the record leave no doubt that the finding of the trial court that the
steamer was handled in a grossly negligent manner is clearly and fully supported by the
evidence. No other finding could be sustained.
Relative to the alleged negligence of the sail vessel the learned trial court said:
I am satisfied beyond any reasonable doubt that the steamer Ntra. Sra. del
Pilar was sailing erratically, that it did not have a proper watch on board, and that
it therefore contributed neglect to the collision.
I am thoroughly satisfied that the sailing vessel Mangyan had its lights properly
on it long before the time the collision occurred, and that the lights were so
arranged upon the rigging of the vessel as to comply with the rules, and that they
were visible and were seen by the crew of the steamer Elcano and could have
been seen by the wathcman or the chief officer of the steamer Ntra. Sra. del Pilar,
if they had been on the lookout for them;
That the steamer Ntra. Sra. del Pilar, being bound to keep out of the course of the
sailing vessel and suddenly seeing the sailing vessel very close, went over hard to
port and crossed the course of the sailing vessel.
I also find that the sailing vessel, notwithstanding the erratic movements of the
steamer, proceeded directly on its course regardless of consequences when with
all the searoom there was it could easily have maneuvered so as to very well avoid
the collision, and thereby having contributed neglect to the collision, neither is
entitled to recover from the other any damages which may have occurred.
These facts and circumstances clearly appear in the record and fully sustain the conclusions
reached.
We are of the opinion that under the facts stated in the decision of the trial court the
defendant was entitled to recover upon its counterclaim.
It being clear from, the evidence that the gross negligence of those managing the steamer
brought it into such close proximity to the sail vessel that a collision was apparently
inevitable, the question is whether or not the sail vessel was negligent in continuing its
course without variation up to the moment that it found itself in extremis.
Article 20 of the International Rules for the Prevention of Collission at Sea is as follows:
"If two ships, one of which is a sailing ship and the other a steam ship, are proceeding in
such directions as to involve risk of collision, the steam ship shall keep out of the way, of
the sailing ship."
Article 21 is as follows: "where by any of these rules one of two vessels is to keep out of
the way, the other shall keep her course and speed."
Generally speaking, in collisions between vessels there exist three divisions of time, or
zones; The first division covers all the time up to the moment when the risk of collision may
be said to have begun. Within this zone no rule is applicable because none is necessary.
Each vessel is free to direct its course as it deems best without reference to the movements
of the other vessel. The second division covers the time between the moment when the risk
of collision begins and the moment when it has become a practical certainty. The third
division covers the time between the moment when collision has become a practical
certainty and the moment of actual contact.
3
It was during the time when the sail vessel was passing through the third zone that it changed
its course to port in order to avoid, if possible, the collision. This act may be said to have
been done in extremis, and, even if wrong, the sailing vessel is not responsible for the result.
The question before us, as presented by the finding of the trial court, arises wholly over the
action of the schooner in keeping her course through the second zone, that is, during the
period when there was a risk of collision. In resolving this question we have to note the
well-established presumption which favors the sail vessel in cases of this character. The rule
relative to this presumption is conservatively stated in volume 25 of the American and
English Encyclopedia of Law, page 926:
Subject to the general rules of evidence in collision cases as to the burden of proof,
in the case of a collision between a steam vessel and a sail vessel, the presumption
is against the steam vessel, and she must show that she took the proper measures
to avoid a collision.
Hughes on Admiralty, page 242, declares the law thus:
A steamer must keep out of the way of a sail vessel. In doing so she must allow
the said vessel a wide berth. . . .
A steamer may take her own method of passing a sail vessel. The mere approach
of the two vessels does not bring about risk of collision. The steamer may assume
that the sail vessel will do her duty and do nothing to embarrass her. Hence the
steamer may shape her course so as to avoid the sail vessel. . . .
This rule that vessels may each assume that the other will obey the law is one of
the most important in the law of collision. Were it otherwise and were vessels
required to take all sorts of measures to keep out the way, when they are not in
each other's way, navigation would be impossible. . . . There is, however, one
important qualification which must be borne in mind. It is that a steamer must not
approach so near a sailing vessel, and on such a course as to alarm a man of
ordinary skill and prudence. If the man on the sailing vessel makes an improper
manuever, he is not responsible. It is what is called an "error in extremis." . . . The
leading case on the subject is The Lucille (15 Wallace, 676). In that case a steamer
and schooner were approaching on converging course only half a point apart, so
that they would have come within thirty yards of each other, and that in
Chesapeake Bay. The court held that this was too close and condemned the
steamer."
On page 245 the same author says:
Article 21 . . . renders it obligatory on the vessel which has the right of way to
pursue her course. . . . She must rely on the other vessel to avoid the collision and
not embarrass her by any maneuver. All she need do is to do nothing. Then the
other vessel knows to expect and navigates accordingly. . . .
In collisions between steam and sail vessels the steamer's defense is almost
invariably that the sail vessel changed her course.
On page 255 of the same work appears the following:
In The Clara Davidson (24 Fed. 763), the court said: "But I do not find my self at
liberty to ignore the inquiry whether a statutory rule of navigation was violated
by the schooner. These rules are the law of laws in cases of collision. They admit
of no option or choice. No navigator is at liberty to set up his discretion against
them. If these rules were subject to the caprice or election of masters and pilots,
they would be not only useless, but worse than useless. These rules are imperative.
They yield to necessity, indeed, but only to actual and obvious necessity. It is not
stating the principles too strongly to say that nothing but imperious necessity or
some overpowering his major will excuse a sail vessel in changing her course
when in the presence of a steamer in motion."
Spencer on Marine Collisions, page 154, says:
The duties imposed upon vessels are of a mutual character; and where the statute
directs one to give way to the other, it imposes an equal duty upon the latter to
continue on its course, and a change of course on its part is as unlawful as it would
be for the other refuse to yield the right of way. . . .
It is one of the conditions of the duty to keep out of the way," that the other vessel
shall act intelligently, and afford reasonable evidence of her intention; while it is
doubtful what the other will do, the former should hold her course. Like all other
rules for the prevention of collisions at sea, there may be special circumstance
which would warrant a ship in departing from her course, where collision appears
inevitable by pursuing it; indeed, it is her duty to do so; but until it plainly appears
that there is no other alternative, a vessel should hold her course when in a
position required to do so by the statute."
On page 181 the same author says:
The duty of one vessel to keep her course is not intended by the rules as a privilege
conferred, but as an obligation imposed, in order to enable the other vessel with
certainty to keep out of the way. In order to warrant a vessel to either change her
course or speed, there must be reasonable certainty that the other is not doing her
duty, and that the situation imperatively demands a departure from the rules. It is
the duty of the vessel required to keep out of the way to give an early and
intelligible expression of her intentions to do so; and while there is any doubt as
to what her actions will be, the vessel required to hold her course may presume
that the other will act intelligently and lawfully, and she should hold her course
until the contrary appears. it is no excuse for a vessel taking a course forbidden
by law that the unlawful course was the best one.
In the American and English Encyclopedia of law (vol. 25. p. 925) the rules is stated as
follows:
But it must be a strong case which puts the sail vessels in the wrong for obeying
the rule to hold her course, for the court must clearly see, not only that a deviation
from the rule for would have prevented the collision, but that the officer in charge
of the sail vessel was guilty of negligence or a culpable want of seamanship in
4
 not perceiving the necessity for a departure from the rule and acting accordingly.
The sail vessel is justified in holding her course to the last minute possible for the
steamship to avoid her by making the necessary maneuver.
In the case of St. John vs. Paine (10 How., 557), the collision was between a schooner and
a steamer. The schooner had no lights visible; the night was starlight and clear. The court
reviewed the rules governing the management of sail vessel at some length, explained the
rules applicable to the management of steam vessels, and gave the reasons why the rules
which govern travelers on the highways of the sea should be strictly enforced. After
showing the greater facility of manuevering which a steamer has over a sail vessel and,
therefore, the greater ability to avoid collisions, the court said:
As a general rule, therefore, when meeting a sailing vessel, whether close hauled
or with the wind free, the latter has a right to keep her course, and it is the duty of
the steamer to adopt precautions as will avoid her. (Cites cases.)
By an adherence to this rule on the part of the sailing vessel the steamer with a
proper lookout will be enabled, when approaching in an opposite direction, to
adopt the necessary measures to avoid the danger, and she will have a right to
assume that the sailing vessel will keep her course. If the latter fails to do this, the
fault will be attributable to her, and the master of the steamer will be responsible
only for a fair exertion of the power of his vessel to avoid the collision under the
unexpected change of the course of the other vessel, and the circumstances of the
case.
A similar case is that of The Genesee Chief vs. Fitzhugh (12 How., 443). This pertains also
to a collision between a steamer, The Genesee Chief , and a sail vessel. The two watched
each other for some time before the collision. The sailing vessel kept her course until in
extremis when she made a wrong maneuver. The court said:
The collision took place in the open lake. It was a starlight night, and although
there was a haze near the surface of the lake, it was not sufficient to conceal the
Cuba from those on board of the propeller. . . .
The lake was smooth. The steamboat had the entire command of her course and
a wide water, by which she might have passed the Cuba on either side, and at a
safe distance. She was going at the rate of eight miles an hour. And if proper care
had been taken on board the Genesee Chief , after the schooner was first seen, it
would seem to be almost impossible that a collision could have happened with a
vessel moving so slowly and sluggishly through the water even if she was
carelessly or injudiciously managed. There was no necessity for passing so near
her as to create the hazard. The steamboat could choose it own distance. . . .
And the captain and crew of the Cuba appear to have been watchful and attentive
from the time the propeller was discovered. Nor do we deem it material to inquire
whether the order of the captain at the moment of collision was judicious or not.
He saw the steamboat coming directly upon him; her speed not diminished; nor
any measures taken to avoid a collision., And if, in the excitement and alarm of
the moment, a different order might have been more fortunate, it was the fault of
the propeller to have placed him in a situation where there was no time for
thought; and she is responsible for the consequences. She had the power to have
passed at a safer distance, and had no right to place the schooner in such jeopardy,
that the error of a moment might cause her destruction, and endanger the lives of
those on board. And if an error was committed under such circumstances it was
not a fault.
In the case of The Ottawa (3 Wall., 269), the court said:
Rules of navigation are obligatory from the time the necessity for precaution
begins, and continue to be applicable as the vessels advance, so long as the means
and opportunity to avoid the danger remain; but they do not apply to a vessel
required to keep her course after the approach is so near that the collision is
inevitable, and are equally inapplicable to vessels of every description while they
are yet so distant from each other that measures of precaution have not become
necessary.
This case exemplifies the three zone theory already referred to. In the first zone no rules
apply. In the second the burden is on the vessel required to keep away and avoid the danger.
The third zone covers the period in which errors in extremis occur; 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.
The duty of the sailing vessel to keep her course is well exemplified in the leading case of
The Lucille vs. Respass (15 Wall., 676), which was a collision between a schooner and a
steamer. Both vessels saw each other in time to have avoided the collision. The court said:
The principles of law applicable to the case are well settled. They are not disputed
by either party. In the case of The Carrol (8 Wall., 302), it is thus laid down,
"Nautical rules require that where a steamship and sailing vessel are approaching
each other from opposite directions, or on intersecting lines, the steamship from
the moment the sailing vessel is seen, shall watch with the highest diligence her
course and movements so as to be able to adopt such timely means of precaution
as will necessarily prevent the two boats from coming in contact. Fault on the part
of the sailing vessel at the moment preceeding a collision does not absolve a
steamer which has suffered herself and a sailing vessel to get in such dangerous
proximity as to cause inevitable alarm and confusion and collusion as a
consequence. The steamer, as having committed a far greater fault in allowing
such proximity to be brought about, is chargeable with all the damages resulting
from a collision."
The rule laid down in the case of The Fannie (11 Wal., 238( is still more
applicable to the case before us. It was held that a schooner meeting a steamer
approaching her on a parallel line, with the difference of half a point in the course
of the two, ought to have kept in her course; that a steamer approaching a sailing
vessel is bound to keep out of her way, and allow her a free and unobsructed
passage. Whatever is necessary for this it is her duty to do, and to avoid whatever
obstructs or endangers the sailing vessel in her course. It, therefore, the sailing
vessel does not change her course so as to embarrass the steamer, and render it
difficult for her to avoid a collision, the steamer alone is answerable for the
damage of a collision, if there is one.
5
In the case of The Sea Gull (23 Wall., 165) the court said:
Steamers approaching a sail ship in such a direction as to involve risk of collision
are required to keep out of the way of the sail ship; but the sail ship is required to
keep her course unless the circumstances are such as to render a departure from
the rule necessary in order to avoid immediate danger.
Vessels with sails being required to keep their course, the duty of adopting the
necessary measures of precaution to keep out the way is devolved upon the
steamer subject only to the condition that the sail ship shall keep her course and
do not act to embarrass the steamer in her efforts to perform her duty. Doubtless
the steamer may go to the right or left if she can keep out of the way, but if not
and the approach is such as to involve risk of collision she is required to slacken
her speed, or, if necessary, stop and reverse, and if she fails to perform her duty
as required by the rules of navigation she is responsible for the consequences if
the sail vessel is without fault. . . .
Attempts is made in argument to show that the schooner also was in fault and that
the case falls within the rule which requires that the damages shall be divided.
Support to that charge is attempted to be drawn from the assumed fact that the
schooner changed her course in violation of the rule of navigation which requires
the sail ship to keep her course, as a correlative duty to that of the steamer
whenever the latter is required to keep out of the way. . . .
Two answers are made by the libelants to that defense, either of which, if found
to be true, is sufficient to exonerate the schooner: . . . (2) That the schooner made
no change in her course until the collision was inevitable, nor until it became
indispensably necessary in order to avoid immediate danger caused by the fault
of the steamer. . . .
Rules of navigation continue to be applicable as long as the means and
opportunity remain to avoid the danger, but they do not apply to a vessel required
to keep her course after the wrongful approach of the opposite vessel is so near
that a collision is inevitable. . . .
Nor will an error committed by the sail vessel under such circumstances of peril,
if she otherwise without fault, impair the right of the sail vessel to recover for the
injuries occasioned by the collision, for the plain reason that those who produced
the peril and put the sail vessel in that situation are chargeable with the error and
must answer for the consequences. (Steamship Co. vs. Rumball, 21 How., 383.)
Subject to that exceptions the sail vessel must keep her course.
In the case of The Benefactor (102 U. S. 214), the court laid down the following
conclusions.:
1. Upon the steamship and schooner discovering each other proceeding in such
directions as to involve risk of collision, as stated in the foregoing findings of fact,
it was the right and duty of the schooner to keep her course, and the duty of the
steamship to keep out of the way of the schooner, and the steamship was in fault
in failing to perform that duty.
2. It was also the duty of the steamship under the circumstances stated, to pursue
a course which should not needlessly put the schooner in imminent peril; and the
steamship was in fault in failing to perform that duty.
3. It was the duty of the steamship before the time when she did so, to slacken her
speed or stop, and the steamship was in fault in failing to perform that duty.
4. If, when a collision had become imminent by reason of the fault of the
steamship, any error was committed in extremis by those in charge of the
schooner, the schooner is not responsible therefor.
5. The steamship had no right, under the circumstances stated, needlessly to place
herself in such close proximity to the schooner that the error or a moment would
bring destruction.
6. The collision was occasioned by the fault of the steamship, and the steamship
should be condemned therefor.
In the case of The Badger State (8 Fed. Rep., 526), the court said:
Where a sailing level and one propelled by steam are approaching each other bow,
on the steamer must give away, In case of a collision between such vessels, the
steamer is prima facie in fault.
In the case of The Gate City (90 Fed. Rep., 314), the court held, according to the syllabus:
The rule requiring a sailing vessel meeting a steamer to hold her course is a broad
and general one intended to put the burden of avoiding a collision upon the
steamer; and, if the sailing vessel departs from the injunction the burden is on her
to show some reasonable excuse therefor.
A disregard of the rule not demanded by a clearly existing exigency should not
be excused.
Therefore, she will not be held in fault for adhering to her course, although the
steamer seems to be manuevering in an uncertain and dangerous way.
We are satisfied from the authorities that, under the facts stated in the opinion of the trial
court, the defendant is entitled to recover such damages as reasonably and naturally flowed
from the collision. There is sufficient evidence in the record to fix such damages with
reasonable accuracy. It was proved upon the trial that it would require an expenditure of
P3,525 to put the sail vessel in the condition in which it was before the injury; that it cost
245 to get the vessel to Manila after the injury; that the value of the supplies lost was
P240.99. The evidence relative to the loss of earnings is not sufficient to permit the court to
6
formulate any conclusion in relation thereto, even if it be considered a proper item of
damage.

We think the judgment of the trial court was correct in dismissing the complaint of
intervention. The intervener had no "legal interest in the matter in litigation, or in the success
of either of the parties, or an interest against both." Their action was personal, involved no
rights in property which extended beyond their immediate selves, and touched no third party
in any of the ramifications of those rights.

The judgment of the court below, in so far as it finds against the plaintiff and the intervener,
is hereby affirmed. As to that portion which dismisses the counterclaim of the defendant,
the Baco River Plantation Company, the judgment is reversed and the cause remanded, with
instructions to the trial court to enter judgment in favor of the defendant, The Baco River
Plantation Company, and against the plaintiff, G. Urrutia & Company, for the sum of
P4,010.99 and costs. No costs on this appeal.

While it was held in the case of Philippine Shipping Co. vs. Vergara (6 Phil. Rep., 281),
that, in accordance with articles 837 and 826 of the Code of Commerce, the defendant in an
action such as the one at bar cannot be held responsible in damages when the ship causing
the injury was wholly lost by reason of the accident, we do not apply it in this case for the
reason that the vessel lost was insured and that the defendant collected the insurance. That
being the case, the insurance money substitutes the vessel and must be used, so far as
necessary, to pay the judgment rendered in this case.

In coming to this conclusion we have not lost sight of the case of Place vs. Norwich and N.
Y. Trans. Co. (118 U. S., 468), in which it was held that, under the provision of the Act of
Congress relative thereto, insurance money obtained by reason of the loss of a vessel
causing damages, as in the case at bar, was not subject to the payment of the damages
sustained by the negligence of the vessel lost by reason of the accident in which the damages
occurred. We do not follow that case because we are met in this jurisdiction with article
1186 of the Civil Code, which provides that "after the obligation is extinguished by the loss
of the thing, all the actions which the debtor may have against third persons, by reason
thereof, shall pertain to the creditor," and with article 2 of the Code of Commerce, which
provides that where the Code of Commerce is silent to the law relating to the matters of
which it treats, those matters shall be governed by the provisions of the Civil Code.

That said article 1186 is, under the Spanish jurisprudence, applicable to money obtained
from the insurance of the thing lost or destroyed, there can be no doubt. (Manresa, vol. 8,
353.)

The judgment in this case is, therefore, collectible, but the amount collected cannot exceed
the amount of insurance money actually received.

The writer of this opinion had doubts of the applicability of article 1186, referred to; but has
yielded to the learning of the majority relative to the Roman and Spanish jurisprudence on
this point.

7
COLLUSIONS: INSCRUTABLE FAULT
G.R. No. L-18957 January 16, 1923
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee,
vs.
PHILIPPINE STEAMSHIP CO., INC., and FERNANDEZ
HERMANOS, defendants.
PHILIPPINE STEAMSHIP CO., INC., appellant.
STREET, J.:
In this action the Government of the Philippine Islands seeks to recover the sum of
P14,648.25, the alleged value of 911 sacks of rice which were lost at sea on February 11,
1920, as a result of a collision between the steamer Antipolo, owned by the defendant
company, and the vessel Isabel, upon which said rice was embarked. In the Court of First
Instance judgment was entered for the recovery by the plaintiff from the Philippine
Steamship Company, Inc., of the full amount claimed, with interest from the date of the
filing of the complaint. From this judgment said company appealed.
It appears in evidence that at about 10 o'clock at night on February 10, 1920, the
coastwise Isabel, equipped with motor and sails, left the port of Manila with primary
destination to Balayan, Batangas, carrying, among its cargo, 911 sacks of rice belonging to
the plaintiff and consigned to points in the south. After the boat had been under weigh for
about four hours, and has passed the San Nicolas Light near the entrance into Manila Bay,
the watch and the mate on the bridge of the Isabel discerned the light of another vessel,
which proved to be the Antipolo, also a coastwise vessel, on its way to Manila and coming
towards the Isabel. At about the same time both the watch and mate on the bridge of
the Antipolo also saw the Isabel, the two vessels being then about one mile and a half or
two miles apart. Each vessel was going approximately at the speed of 6 miles an hour, and
in about ten minutes they had together traversed the intervening space and were in close
proximity to each other.
When the mate of the Antipolo, who was then at the wheel, awoke to the danger of the
situation and saw the Isabel"almost on top of him," to use the words of the committee on
marine accidents reporting the incident, he put his helm hard to the starboard.
This maneuver was correct, and if the helmsman of the Isabel had done likewise, all would
apparently have been well, as in that event the two vessels should have passed near to each
other on the port side without colliding. As chance would have it, however, the mate on
the Isabel at this critical juncture lost his wits and, in disregard of the regulations and of
common prudence, at once placed his own helm hard to port, with the result that his boat
veered around directly in the path of the other vessel and a collision became inevitable.
Upon this the mate on the Antipolofortunately stopped his engines, but the Isabel continued
with full speed ahead, and the two vessels came together near the bows.
The Isabel immediately sank, with total loss of vessel and cargo, though the members of
her crew were picked up from the water and saved.
The trial judge was in our opinion entirely right in finding that negligence was imputable to
both vessels, though differing somewhat in character and decree with respect to each. The
mate of the Antipolo was clearly negligent in having permitted that vessel to approach
directly towards the Isabel until the two were in dangerous proximity. For this there was no
excuse whatever, since the navigable sea at this point is wide and the incoming steamer
could easily have given the outgoing vessel a wide berth. On the other hand it is not clear
that the Isabel was chargeable with negligence in keeping on its course; for this boat had its
jib sail hoisted, and may for that reason be considered to have had the right of way. (G.
Urrutia & Co. vs. Baco River Plantation Co., 26 Phil., 632.)
Negligence shortly preceding the moment of collision is, however, undoubtedly chargeable
to the Isabel, for the incorrect and incompetent way in which this vessel was then handled.
The explanation of this may perhaps be found in the fact that the mate on the Isabel had
been on continuous duty during the whole preceding day and night; and being almost
absolutely exhausted, he probably was either dozing or inattentive to duty at the time the
other vessel approached.
It results, as already stated, that both vessels were at fault; and although the negligence on
the part of the mate of the incoming vessel preceded the negligence on the part of the mate
of the outgoing vessel by an appreciable interval of time, the first vessel cannot on that
account be absolved from responsibility. Indeed, in G. Urrutia & Co. vs. Baco River
Plantation Co., supra, this court found reason for holding that the responsibility rested
exclusively on a steamer which had allowed dangerous proximity to a sailing vessel to be
brought about under somewhat similar conditions.
We are of the opinion therefore that his Honor, the trial judge, committed no error in holding
that both vessels were to blame and in applying article 827 of the Code of Commerce to the
situation before him. It is there declared that where both vessels are to blame, both shall be
solidarily responsible for the damage occasioned to their cargoes. As the Isabel was a total
loss and cannot sustain any part of this liability, the burden of responding to the Government
of the Philippine Islands, as owner of the rice embarked on the Isabel, must fall wholly upon
the owner of the other ship, that is, upon the defendant, the Philippine Steamship Company,
Inc.
Only one observation will be added, in response to one of the contentions of the appellant's
attorneys, which is, that the application of article 827 of the Code of Commerce is not
limited by article 828 to the case where it cannot be determined which of the two vessels
was the cause of the collision. On the contrary article 828 must be considered as an
extension of article combined the rule of liability announced in article 827 is applicable not
only to the case where both vessels may be shown to be actually blameworthy but also to
the case where it is obvious that only one was at fault but the proof does not show which.
The judgment appealed from must be affirmed; and it is so ordered with costs against the
appellant.
8
COLLUSIONS: INSCRUTABLE FAULT
G.R. No. L-56294 May 20, 1991
SMITH BELL AND COMPANY (PHILIPPINES), INC. and TOKYO MARINE
AND FIRE INSURANCE CO., INC., petitioners,
vs.
THE COURT OF APPEALS and CARLOS A. GO THONG AND CO., respondents.
FELICIANO, J.
In the early morning of 3 May 1970—at exactly 0350 hours, on the approaches to the port
of Manila near Caballo Island, a collision took place between the M/V "Don Carlos," an
inter-island vessel owned and operated by private respondent Carlos A. Go Thong and
Company ("Go Thong"), and the M/S "Yotai Maru," a merchant vessel of Japanese registry.
The "Don Carlos" was then sailing south bound leaving the port of Manila for Cebu, while
the "Yotai Maru" was approaching the port of Manila, coming in from Kobe, Japan. The
bow of the "Don Carlos" rammed the portside (left side) of the "Yotai Maru" inflicting a
three (3) cm. gaping hole on her portside near Hatch No. 3, through which seawater rushed
in and flooded that hatch and her bottom tanks, damaging all the cargo stowed therein.
The consignees of the damaged cargo got paid by their insurance companies. The insurance
companies in turn, having been subrogated to the interests of the consignees of the damaged
cargo, commenced actions against private respondent Go Thong for damages sustained by
the various shipments in the then Court of First Instance of Manila.
Two (2) cases were filed in the Court of First Instance of Manila. The first case, Civil Case
No. 82567, was commenced on 13 March 1971 by petitioner Smith Bell and Company
(Philippines), Inc. and Sumitomo Marine and Fire Insurance Company Ltd., against private
respondent Go Thong, in Branch 3, which was presided over by Judge Bernardo P.
Fernandez. The second case, Civil Case No. 82556, was filed on 15 March 1971 by
petitioners Smith Bell and Company (Philippines), Inc. and Tokyo Marine and Fire
Insurance Company, Inc. against private respondent Go Thong in Branch 4, which was
presided over by then Judge, later Associate Justice of this Court, Serafin R. Cuevas.
Civil Cases Nos. 82567 (Judge Fernandez) and 82556 (Judge Cuevas) were tried under the
same issues and evidence relating to the collision between the "Don Carlos" and the "Yotai
Maru" the parties in both cases having agreed that the evidence on the collision presented
in one case would be simply adopted in the other. In both cases, the Manila Court of First
Instance held that the officers and crew of the "Don Carlos" had been negligent that such
negligence was the proximate cause of the collision and accordingly held respondent Go
Thong liable for damages to the plaintiff insurance companies. Judge Fernandez awarded
the insurance companies P19,889.79 with legal interest plus P3,000.00 as attorney's fees;
while Judge Cuevas awarded the plaintiff insurance companies on two (2) claims US $
68,640.00 or its equivalent in Philippine currency plus attorney's fees of P30,000.00, and
P19,163.02 plus P5,000.00 as attorney's fees, respectively.
The decision of Judge Fernandez in Civil Case No. 82567 was appealed by respondent Go
Thong to the Court of Appeals, and the appeal was there docketed as C.A.-G.R. No. 61320-
R. The decision of Judge Cuevas in Civil Case No. 82556 was also appealed by Go Thong
to the Court of Appeals, the appeal being docketed as C.A.-G.R. No. 61206-R. Substantially
identical assignments of errors were made by Go Thong in the two (2) appealed cases before
the Court of Appeals.
In C.A.-G.R. No. 61320-R, the Court of Appeals through Reyes, L.B., J., rendered a
Decision on 8 August 1978 affirming the Decision of Judge Fernandez. Private respondent
Go Thong moved for reconsideration, without success. Go Thong then went to the Supreme
Court on Petition for Review, the Petition being docketed as G.R. No. L-48839 ("Carlos A.
Go Thong and Company v. Smith Bell and Company [Philippines], Inc., et al."). In its
Resolution dated 6 December 1978, this Court, having considered "the allegations, issues
and arguments adduced in the Petition for Review on Certiorari, of the Decision of the
Court of Appeals as well as respondent's comment", denied the Petition for lack of merit.
Go Thong filed a Motion for Reconsideration; the Motion was denied by this Court on 24
January 1979.
In the other (Cuevas) case, C.A.-G.R. No. 61206-R, the Court of Appeals, on 26 November
1980 (or almost two [2] years after the Decision of Reyes, L.B., J., in C.A.-G.R. No. 61320-
R, had been affirmed by the Supreme Court on Petition for Review) through Sison, P.V., J.,
reversed the Cuevas Decision and held the officers of the "Yotai Maru" at fault in the
collision with the "Don Carlos," and dismissed the insurance companies' complaint. Herein
petitioners asked for reconsideration, to no avail.
The insurance companies are now before us on Petition for Review on Certiorari, assailing
the Decision of Sison, P.V., J., in C.A.-G.R. No. 61206-R. Petitioners' principal contentions
are:
a. that the Sison Decision had disregarded the rule of res judicata;
b. that Sison P.V., J., was in serious and reversible error in accepting Go Thong's
defense that the question of fault on the part of the "Yotai Maru" had been settled
by the compromise agreement between the owner of the "Yotai Maru" and Go
Thong as owner of the "Don Carlos;" and
c. that Sison, P. V. J., was in serious and reversible error in holding that the "Yotai
Maru" had been negligent and at fault in the collision with the "Don Carlos."
I
The first contention of petitioners is that Sison, P. V. J. in rendering his questioned
Decision, failed to apply the rule of res judicata. Petitioners maintain that the Resolution of
the Supreme Court dated 6 December 1978 in G.R. No. 48839 which dismissed Go Thong's
Petition for Review of the Decision of Reyes, L.B., J., in C.A.-G.R. No. 61320-R, had
effectively settled the question of liability on the part of the "Don Carlos." Under the
doctrine of res judicata, petitioners contend, Sison, P. V. J. should have followed the Reyes,
L.B., J. Decision since the latter had been affirmed by the Supreme Court and had become
final and executory long before the Sison Decision was rendered.
Private respondent Go Thong, upon the other hand, argues that the Supreme Court, in
rendering its minute Resolution in G.R. No. L- 48839, had merely dismissed Go Thong's
9
Petition for Review of the Reyes, L.B., J. Decision for lack of merit but had not affirmed in
toto that Decision. Private respondent, in other words, purports to distinguish between
denial of a Petition for Review for lack of merit and affirmance of the Court of Appeals'
Decision. Thus, Go Thong concludes, this Court did not hold that the "Don Carlos" had
been negligent in the collision.
Private respondent's argument must be rejected. That this Court denied Go Thong's Petition
for Review in a minute Resolution did not in any way diminish the legal significance of the
denial so decreed by this Court. The Supreme Court is not compelled to adopt a definite and
stringent rule on how its judgment shall be framed.1 It has long been settled that this Court
has discretion to decide whether a "minute resolution" should be used in lieu of a full-blown
decision in any particular case and that a minute Resolution of dismissal of a Petition for
Review on certiorariconstitutes an adjudication on the merits of the controversy or subject
matter of the Petition.2 It has been stressed by the Court that the grant of due course to a
Petition for Review is "not a matter of right, but of sound judicial discretion; and so there is
no need to fully explain the Court's denial. For one thing, the facts and law are already
mentioned in the Court of Appeals' opinion."3 A minute Resolution denying a Petition for
Review of a Decision of the Court of Appeals can only mean that the Supreme Court agrees
with or adopts the findings and conclusions of the Court of Appeals, in other words, that
the Decision sought to be reviewed and set aside is correct. 4
Private respondent Go Thong argues also that the rule of res judicata cannot be invoked in
the instant case whether in respect of the Decision of Reyes, L.B., J. or in respect of the
Resolution of the Supreme Court in G.R. No. L-48839, for the reason that there was no
identity of parties and no identity of cause of action between C.A.-G.R. No. 61206-R and
C.A.-G.R. No. 61320-R.
The parties in C.A.-G.R. No. 61320-R Where the decision of Judge Fernandez was
affirmed, involved Smith Bell and Company (Philippines), Inc., and Sumitomo Marine and
Fire Insurance Co., Ltd. while the petitioners in the instant case (plaintiffs below) are Smith
Bell and Co. (Philippines), Inc. and Tokyo Marine and Fire Insurance Co., Ltd. In other
words, there was a common petitioner in the two (2) cases, although the co-petitioner in one
was an insurance company different from the insurance company co-petitioner in the other
case. It should be noted, moreover, that the co-petitioner in both cases was an insurance
company arid that both petitioners in the two (2) cases represented the same interest, i.e.,
the cargo owner's interest as against the hull interest or the interest of the shipowner. More
importantly, both cases had been brought against the same defendant, private respondent
Go Thong, the owner of the vessel "Don Carlos." In sum, C.A.-G.R. No. 61320R and C.A-
G.R. No. 61206-R exhibited substantial identity of parties.
It is conceded by petitioners that the subject matters of the two (2) suits were not identical,
in the sense that the cargo which had been damaged in the one case and for which indemnity
was sought, was not the very same cargo which had been damaged in the other case
indemnity for which was also sought. The cause of action was, however, the same in the
two (2) cases, i.e., the same right of the cargo owners to the safety and integrity of their
cargo had been violated by the same casualty, the ramming of the "Yotai Maru" by the "Don
Carlos." The judgments in both cases were final judgments on the merits rendered by the
two (2) divisions of the Court of Appeals and by the Supreme Court, the jurisdiction of
which has not been questioned.
Under the circumstances, we believe that the absence of identity of subject matter, there
being substantial identity of parties and identity of cause of action, will not preclude the
application of res judicata.5
In Tingson v. Court of Appeals,6 the Court distinguished one from the other the two (2)
concepts embraced in the principle of res judicata, i.e., "bar by former judgment" and
"conclusiveness of judgment:"
There is no question that where as between the first case Where the judgment is
rendered and the second case where such judgment is invoked, there is identity of
parties, subject-matter and cause of action, the judgment on the merits in the first
case constitutes an absolute bar to the subsequent action not only as to every
matter which was offered and received to sustain or defeat the claim or demand,
but also as to any other admissible matter which might have been offered for that
purpose and to all matters that could have been adjudged in that case. This is
designated as "bar by former judgment."
But where the second action between the same parties is upon a different claim
or demand, the judgment in the prior action operates as an estoppel only as to
those matters in issue or points controverted, upon the determination of which the
finding or judgment was rendered. In fine, the previous judgment is conclusive in
the second case, only as those matters actually and directly controverted and
determined and not as to matters merely involved therein. This is the rule
on 'conclusiveness of judgment' embodied in subdivision (c) of Section 49 of Rule
39 of the Revised Rules of' Court.7 (Citations omitted) (Emphases supplied)
In Lopez v. Reyes,8 the Court elaborated further the distinction between bar by former
judgment which bars the prosecution of a second action upon the same claim, demand or
cause of action, and conclusiveness of judgment which bars the relitigation of particular
facts or issues in another litigation between the same parties on a different claim or cause
of action:
The doctrine of res judicata has two aspects. The first is the effect of a judgment
as a bar to the prosecution of a second action upon the same claim, demand or
cause of action. The second aspect is that it precludes the relitigation of a
particular fact or issues in another action between the same parties on a different
claim or cause of action.
The general rule precluding the relitigation of material facts or questions which
were in issue and adjudicated in former action are commonly applied to all
matters essentially connected with the subject matter of the litigation. Thus, it
extends to questions "necessarily involved in an issue, and necessarily
adjudicated, or necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto, and although such matters were
directly referred to in the pleadings and were not actually or formally
presented. Under this rule, if the record of the former trial shows that the
judgment could not have been rendered without deciding the particular matter it
will be considered as having settled that matter as to all future actions between
the parties, and if a judgment necessarily presupposes certain premises, they are
as conclusive as the judgment itself. Reasons for the rule are that a judgment is an
10
 adjudication on all the matters which are essential to support it, and that every
proposition assumed or decided by the court leading up to the final conclusion
and upon which such conclusion is based is as effectually passed upon as the
ultimate question which is finally solved.9 (Citations omitted) (Emphases
supplied)
In the case at bar, the issue of which vessel ("Don Carlos" or "Yotai Maru") had been
negligent, or so negligent as to have proximately caused the collision between them, was an
issue that was actually, directly and expressly raised, controverted and litigated in C.A.-
G.R. No. 61320-R. Reyes, L.B., J., resolved that issue in his Decision and held the "Don
Carlos" to have been negligent rather than the "Yotai Maru" and, as already noted, that
Decision was affirmed by this Court in G.R. No. L-48839 in a Resolution dated 6 December
1978. The Reyes Decision thus became final and executory approximately two (2) years
before the Sison Decision, which is assailed in the case at bar, was promulgated. Applying
the rule of conclusiveness of judgment, the question of which vessel had been negligent in
the collision between the two (2) vessels, had long been settled by this Court and could no
longer be relitigated in C.A.-G.R. No. 61206- R. Private respondent Go Thong was certainly
bound by the ruling or judgment of Reyes, L.B., J. and that of this Court. The Court of
Appeals fell into clear and reversible error When it disregarded the Decision of this Court
affirming the Reyes Decision.10
Private respondent Go Thong also argues that a compromise agreement entered into
between Sanyo Shipping Company as owner of the "Yotai Maru" and Go Thong as owner
of the "Don Carlos," under which the former paid P268,000.00 to the latter, effectively
settled that the "Yotai Maru" had been at fault. This argument is wanting in both factual
basis and legal substance. True it is that by virtue of the compromise agreement, the owner
of the "Yotai Maru" paid a sum of money to the owner of the "Don Carlos." Nowhere,
however, in the compromise agreement did the owner of the "Yotai Maru " admit or concede
that the "Yotai Maru" had been at fault in the collision. The familiar rule is that "an offer of
compromise is not an admission that anything is due, and is not admissible in evidence
against the person making the offer."11 A compromise is an agreement between two (2) or
more persons who, in order to forestall or put an end to a law suit, adjust their differences
by mutual consent, an adjustment which everyone of them prefers to the hope of gaining
more, balanced by the danger of losing more.12 An offer to compromise does not, in legal
contemplation, involve an admission on the part of a defendant that he is legally liable, nor
on the part of a plaintiff that his claim or demand is groundless or even doubtful, since the
compromise is arrived at precisely with a view to avoiding further controversy and saving
the expenses of litigation.13 It is of the very nature of an offer of compromise that it is made
tentatively, hypothetically and in contemplation of mutual concessions.14 The above rule on
compromises is anchored on public policy of the most insistent and basic kind; that the
incidence of litigation should be reduced and its duration shortened to the maximum extent
feasible.
The collision between the "Yotai Maru" and the "Don Carlos" spawned not only sets of
litigations but also administrative proceedings before the Board of Marine Inquiry ("BMI").
The collision was the subject matter of an investigation by the BMI in BMI Case No. 228.
On 12 July 1971, the BMI through Commodore Leovegildo L. Gantioki, found both vessels
to have been negligent in the collision.
Both parties moved for reconsideration of the BMI's decision. The Motions for
Reconsideration were resolved by the Philippine Coast Guard ("PCG") nine (9) years later,
in an order dated 19 May 1980 issued by PCG Commandant, Commodore Simeon M.
Alejandro. The dispositive portion of the PCG decision read as follows:
Premises considered, the Decision dated July 12, 1971 is hereby reconsidered and
amended absolving the officers of "YOTAI MARU" from responsibility for the
collision. This Headquarters finds no reason to modify the penalties imposed
upon the officers of Don Carlos. (Annex "C", Reply, September 5, 1981). 15
Go Thong filed a second Motion for Reconsideration; this was denied by the PCG in an
order dated September 1980.
Go Thong sought to appeal to the then Ministry of National Defense from the orders of the
PCG by filing with the PCG on 6 January 1981 a motion for a 30-day extension from 7
January 1981 within which to submit its record on appeal. On 4 February 1981, Go Thong
filed a second urgent motion for another extension of thirty (30) days from 7 February 1981.
On 12 March 1981, Go Thong filed a motion for a final extension of time and filed its record
on appeal on 17 March 1981. The PCG noted that Go Thong's record on appeal was filed
late, that is, seven (7) days after the last extension granted by the PCG had expired.
Nevertheless, on 1 July 1981 (after the Petition for Review on Certiorari in the case at bar
had been filed with this Court), the Ministry of Defense rendered a decision reversing and
setting aside the 19 May 1980 decision of the PCG
The owners of the "Yotai Maru" then filed with the Office of the President a Motion for
Reconsideration of the Defense Ministry's decision. The Office of the President rendered a
decision dated 17 April 1986 denying the Motion for Reconsideration. The decision of the
Office of the President correctly recognized that Go Thong had failed to appeal in a
seasonable manner:
MV "DON CARLOS" filed her Notice of Appeal on January 5, 1981.
However, the records also show beyond peradventure of doubt that the PCG
Commandant's decision of May 19, 1980, had already become final and executory
When MV "DON CARLOS" filed her Record on Appeal on March 17, 1981, and
When the motion for third extension was filed after the expiry date.
Under Paragraphs (c), (d), (e) and (f), Chapter XVI, of the Philippine Merchant
Marine Rules and Regulations, decisions of the PCG Commandant shall be final
unless, within thirty (30) days after receipt of a copy thereof, an appeal to the
Minister of National Defense is filed and perfected by the filing of a notice of
appeal and a record on appeal. Such administrative regulation has the force and
effect of law, and the failure of MV "DON CARLOS" to comply therewith
rendered the PCG Commandant's decision on May 19, 1980, as final and
executory, (Antique Sawmills, Inc. vs. Zayco, 17 SCRA 316; Deslata vs.
Executive Secretary, 19 SCRA 487; Macailing vs. Andrada, 31 SCRA 126.)
(Annex "A", Go Thong's Manifestation and Motion for Early Resolution,
November 24, 1986).16 (Emphases supplied)
Nonetheless, acting under the misapprehension that certain "supervening" events had taken
place, the Office of the President held that the Minister of National Defense could validly
modify or alter the PCG Commandant's decision:
11
 However, the records likewise show that, on November 26, 1980, the Court of
Appeals rendered a decision in CA-G.R. No. 61206-R (Smith Bell & Co., Inc., et
al. vs. Carlos A. Go Thong & Co.) holding that the proximate cause of the
collision between MV "DON CARLOS" AND MS "YOTAI MARU" was the
negligence, failure and error of judgment of the officers of MS "YOTAI MARU".
Earlier, or on February 27, 1976, the Court of First Instance of Cebu rendered a
decision in Civil Case No. R-11973 (Carlos A. Go Thong vs. San-yo Marine Co.)
holding that MS "YOTAI MARU" was solely responsible for the collision, which
decision was upheld by the Court of Appeals.
The foregoing judicial pronouncements rendered after the finality of the PCG
Commandant's decision of May 19, 1980, were supervening causes or reasons
that rendered the PCG Commandant's decision as no longer enforceable and
entitled MV "DON CARLOS" to request the Minister of National Defense to
modify or alter the questioned decision to harmonize the same with justice and
tile facts. (De la Costa vs. Cleofas, 67 Phil. 686; City of Bututan vs. Ortiz, 3 SCRA
659; Candelario vs. Canizares, 4 SCRA 738; Abellana vs. Dosdos, 13 SCRA
244). Under such precise circumstances, the Minister of National Defense may
validly modify or alter the PCG commandant's decision. (Sec. 37, Act 4007; Secs.
79(c) and 550, Revised Administrative Code; Province of Pangasinan vs.
Secretary of Public Works and Communications, 30 SCRA 134; Estrelia vs.
Orendain, 37 SCRA 640).17 (Emphasis supplied)
The multiple misapprehensions under which the Office of the President labored, were the
following:
It took account of the Decision of Sison, P.V., J. in C.A.-G.R. No. 61206-R, the very
decision that is the subject of review in the Petition at bar and therefore not final. At the
same time, the Office of the President either ignored or was unaware of the Reyes, L.B., J.,
Decision in C.A.-G.R. No 61320-R finding the "Don Carlos" solely liable for the collision,
and of the fact that that Decision had been affirmed by the Supreme Court and had long ago
become final and executory. A third misapprehension of the Office of the President related
to a decision in a Cebu Court of First Instance litigation which had been settled by the
compromise agreement between the Sanyo Marine Company and Go Thong. The Office of
the President mistakenly believed that the Cebu Court of First Instance had rendered a
decision holding the "Yotai Maru" solely responsible for the collision, When in truth the
Cebu court had rendered a judgment of dismissal on the basis of the compromise agreement.
The Cebu decision was not, of course, appealed to the Court of Appeals.
It thus appears that the decision of the Office of the President upholding the belated reversal
by the Ministry of National Defense of the PCG'S decision holding the "Don Carlos" solely
liable for the collision, is so deeply flawed as not to warrant any further examination. Upon
the other hand, the basic decision of the PCG holding the "Don Carlos" solely negligent in
the collision remains in effect.
II
In their Petition for Review, petitioners assail the finding and conclusion of the Sison
Decision, that the "Yotai Maru" was negligent and at fault in the collision, rather than the
"Don Carlos." In view of the conclusions reached in Part I above, it may not be strictly
necessary to deal with the issue of the correctness of the Sison Decision in this respect. The
Court considers, nonetheless, that in view of the conflicting conclusions reached by Reyes,
L.B., J., on the one hand, and Sison, P.V., J., on the other, and since in affirming the Reyes
Decision, the Court did not engage in a detailed written examination of the question of
which vessel had been negligent, and in view of the importance of the issues of admiralty
law involved, the Court should undertake a careful review of the record of the case at bar
and discuss those issues in extenso.
The decision of Judge Cuevas in Civil Case No. 82556 is marked by careful analysis of the
evidence concerning the collision. It is worth underscoring that the findings of fact of Judge
Fernandez in Civil Case No. 82567 (which was affirmed by the Court of Appeals in the
Reyes Decision and by this Court in G.R. No. L-48839) are just about identical with the
findings of Judge Cuevas. Examining the facts as found by Judge Cuevas, the Court believes
that there are three (3) principal factors which are constitutive of negligence on the part of
the "Don Carlos," which negligence was the proximate cause of the collision.
The first of these factors was the failure of the "Don Carlos" to comply with the
requirements of Rule 18 (a) of the International Rules of the Road ("Rules")," which
provides as follows
(a) When two power-driven vessels are meeting end on, or nearly end on, so as to
involve risk of collision, each shall alter her course to starboard, so that each
may pass on the port side of the other. This Rule only applies to cases where
vessels are meeting end on or nearly end on, in such a manner as to involve risk
of collision, and does not apply to two vessels which must, if both keep on their
respective course, pass clear of each other. The only cases to which it does apply
are when each of two vessels is end on, or nearly end on, to the other; in other
words, to cases in which, by day, each vessel sees the masts of the other in a line
or nearly in a line with her own; and by night to cases in which each vessel is in
such a position as to see both the sidelights of the other. It does not apply, by day,
to cases in which a vessel sees another ahead crossing her own course; or, by
night, to cases where the red light of one vessel is opposed to the red light of the
other or where the green light of one vessel is opposed to the green light of the
other or where a red light without a green light or a green light without a red light
is seen ahead, or Where both green and red lights are seen anywhere but ahead.
(Emphasis supplied)
The evidence on this factor was summarized by Judge Cuevas in the following manner:
Plaintiff's and defendant's evidence seem to agree that each vessel made a visual
sighting of each other ten minute before the collision which occurred at 0350.
German's version of the incident that followed, was that "Don Carlos" was
proceeding directly to [a] meeting [on an] "end-on or nearly end-on situation"
(Exh. S, page 8). He also testified that "Yotai Maru's' headlights were "nearly in
line at 0340 A.M." (t.s.n., June 6, 1974) clearly indicating that both vessels were
sailing on exactly opposite paths (t.s.n. June 6, 1974, page 56). Rule 18 (a) of the
International Rules of the Road provides as follows:
xxx xxx xxx
12
And yet German altered "Don Carlos" course by five degrees to the left at 0343 hours
instead of to the right (t.s.n. June 6, 1974, pages 4445) which maneuver was the error that
caused the collision in question. Why German did so is likewise explained by the evidence
on record. "Don Carlos" was overtaking another vessel, the "Don Francisco",and was then
at the starboard (right side) of the aforesaid vessel at 3:40 a.m. It was in the process of
overtaking"Don Francisco" that "Don Carlos' was finally brought into a situation where he
was meeting end-on or nearly end-on "Yotai Maru, thus involving risk of collision. Hence,
German in his testimony before the Board of Marine inquiry stated:
Atty. Chung:
You said in answer to the cross-examination that you took a change of course to
the left. Why did you not take a course to the right instead?
German:
I did not take any course to the right because the other vessel was in my mind at
the starboard side following me. Besides, I don't want to get risk of the Caballo
Island (Exh. 2, pages 209 and 210).19 (Emphasis supplied)
For her part, the "Yotai Maru" did comply with its obligations under Rule 18 (a). As the
"Yotai Maru" found herself on an "end-on" or a "nearly end-on" situation vis-a-vis the "Don
Carlos, " and as the distance between them was rapidly shrinking, the "Yotai Maru" turned
starboard (to its right) and at the same time gave the required signal consisting of one short
horn blast. The "Don Carlos" turned to portside (to its left), instead of turning to starboard
as demanded by Rule 18 (a). The "Don Carlos" also violated Rule 28 (c) for it failed to give
the required signal of two (2) short horn blasts meaning "I am altering my course to port."
When the "Yotai Maru" saw that the "Don Carlos" was turning to port, the master of the
"Yotai Maru" ordered the vessel turned "hard starboard" at 3:45 a.m. and stopped her
engines; at about 3:46 a.m. the "Yotai Maru" went "full astern engine."20 The collision
occurred at exactly 3:50 a.m.
The second circumstance constitutive of negligence on the part of the "Don Carlos" was its
failure to have on board that night a "proper look-out" as required by Rule I (B) Under Rule
29 of the same set of Rules, all consequences arising from the failure of the "Don Carlos" to
keep a "proper look-out" must be borne by the "Don Carlos." Judge Cuevas' summary of
the evidence said:
The evidence on record likewise discloses very convincingly that "Don Carlos"
did not have "look-out" whose sole and only duty is only to act as Such. . . .21
A "proper look-out" is one who has been trained as such and who is given no other duty
save to act as a look-out and who is stationed where he can see and hear best and maintain
good communication with the officer in charge of the vessel, and who must, of course, be
vigilant. Judge Cuevas wrote:
The "look-out" should have no other duty to perform. (Chamberlain v. Ward, 21,
N.O.W. 62, U.S. 548, 571). He has only one duty, that which its name implies—
to keep "look-out". So a deckhand who has other duties, is not a proper "look-
out" (Brooklyn Perry Co. v. U.S., 122, Fed. 696). The navigating officer is not a
sufficient"look-out" (Larcen B. Myrtle, 44 Fed. 779)—Griffin on Collision, pages
277-278). Neither the captain nor the [helmsman] in the pilothouse can be
considered to be a "look-out" within the meaning of the maritime law. Nor should
he be stationed in the bridge. He should be as near as practicable to the surface
of the water so as to be able to see low-lying lights (Griffin on Collision, page
273).
On the strength of the foregoing authorities, which do not appear to be disputed
even by the defendant, it is hardly probable that neither German or Leo Enriquez
may qualify as "look-out" in the real sense of the word.22(Emphasis supplied)
In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk
of collision with the "Yotai Maru" coming in from the opposite direction, was at least in
part due to the failure of the "Don Carlos" to maintain a proper look-out.
The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact
that Second Mate Benito German was, immediately before and during the collision, in
command of the "Don Carlos." Judge Cuevas summed up the evidence on this point in the
following manner:
The evidence on record clearly discloses that "Don Carlos" was, at the time of the
collision and immediately prior thereto, under the command of Benito German,
a second mate although its captain, Captain Rivera, was very much in the said
vessel at the time. The defendant's evidence appears bereft of any explanation as
to why second mate German was at the helm of the aforesaid vessel when Captain
Rivera did not appear to be under any disability at the time. In this connection,
Article [633] of the Code of Commerce provides:
Art. [633] — The second mate shall take command of the vessel in case
of the inability or disqualification of the captain and sailing mate,
assuming, in such case, their powers and liability.
The fact that second mate German was allowed to be in command of "Don Carlos"
and not the chief or the sailing mate in the absence of Captain Rivera, gives rise
to no other conclusion except that said vessel [had] no chief mate. Otherwise, the
defense evidence should have at least explained why it was German, only a
second mate, who was at the helm of the vessel "Don Carlos" at the time of the
fatal collision.
But that is not all. Worst still, aside from German's being only a second mate, is
his apparent lack of sufficient knowledge of the basic and generally established
rules of navigation. For instance, he appeared unaware of the necessity of
employing a "look- out" (t.s.n. June 6, 1974, page 27) which is manifest even in
his testimony before the Board of Marine Inquiry on the same subject (Exh. 2,
page 209). There is, therefore, every reasonable ground to believe that his
inability to grasp actual situation and the implication brought about by
inadequacy of experience and technical know-how was mainly responsible and
decidedly accounted for the collision of the vessels involved in this case.. .
.23 (Emphasis supplied)
13
Second Mate German simply did not have the level of experience, judgment and skill
essential for recognizing and coping with the risk of collision as it presented itself that early
morning when the "Don Carlos," running at maximum speed and having just overtaken the
"Don Francisco" then approximately one mile behind to the starboard side of the "Don
Carlos," found itself head-on or nearly head on vis-a-vis the "Yotai Maru. " It is essential to
point out that this situation was created by the "Don Carlos" itself.
The Court of Appeals in C.A.-G.R. No. 61206-R did not make any findings of fact which
contradicted the findings of fact made by Judge Cuevas. What Sison, P.V., J. actually did
was to disregard all the facts found by Judge Cuevas, and discussed above and,
astonishingly, found a duty on the "Yotai Maru" alone to avoid collision with and to give
way to the "Don Carlos ". Sison, P.V., J., wrote:
onto the "Yotai Maru" the vessel which had observed carefully the mandate of Rule 18 (a).
Moreover, G. Urrutia and Company v. Baco River Plantation Company25 invoked by the
Court of Appeals seems simply inappropriate and inapplicable. For the collision in
the Urrutia case was between a sailing vessel, on the one hand, and a power-driven vessel,
on the other; the Rules, of course, imposed a special duty on the power-driven vessel to
watch the movements of a sailing vessel, the latter being necessarily much slower and much
less maneuverable than the power-driven one. In the case at bar, both the "Don Carlos" and
the "Yotai Maru" were power-driven and both were equipped with radar; the maximum
speed of the "Yotai Maru" was thirteen (13) knots while that of the "Don Carlos" was eleven
(11) knots. Moreover, as already noted, the "Yotai Maru" precisely took last minute
measures to avert collision as it saw the "Don Carlos" turning to portside: the "Yotai Maru"
turned "hard starboard" and stopped its engines and then put its engines "full astern."

At a distance of eight (8) miles and with ten (10) minutes before the impact,
[Katoh] and Chonabayashi had ample time to adopt effective precautionary
measures to steer away from the Philippine vessel, particularly because both
[Katoh] and Chonabayashi also deposed that at the time they had first eyesight of
the "Don Carlos" there was still "no danger at all" of a collision.1âwphi1 Having
sighted the "Don Carlos" at a comparatively safe distance—"no danger at all" of
a collision—the Japanese ship should have observed with the highest diligence
the course and movements of the Philippine interisland vessel as to enable the
former to adopt such precautions as will necessarily present a collision, or give
way, and in case of a collision, the former is prima facie at fault. In G. Urrutia &
Co. vs. Baco River Plantation Co., 26 Phil. 632, the Supreme Court held:
Thus, the Court agrees with Judge Cuevas (just as it had agreed with Reyes, L.B., J.), with
Judge Fernandez and Nocon, J.,26 that the "Don Carlos" had been negligent and that its
negligence was the sole proximate cause of the collision and of the resulting damages.
FOR ALL THE FOREGOING, the Decision of the Court of Appeals dated 26 November
1980 in C.A.-G.R. No. 61206-R is hereby REVERSED and SET ASIDE. The decision of
the trial court dated 22 September 1975 is hereby REINSTATED and AFFIRMED in its
entirety. Costs against private respondent.
SO ORDERED.

Nautical rules require that where a steamship and sailing vessel are
approaching each other from opposite directions, or on intersecting
lines, the steamship, from the moment the sailing vessel is seen, shall
watch with the highest diligence her course and movements so as to
enable it to adopt such timely means of precaution as will necessarily
prevent the two boats from coming in contact.' (Underscoring in the
original)

At 3:44 p.m., or 4 minutes after first sighting the "Don Carlos", or 6 minutes
before contact time, Chonabayashi revealed that the "Yotai Maru" gave a one-
blast whistle to inform the Philippine vessel that the Japanese ship was turning to
starboard or to the right and that there was no blast or a proper signal from the
"Don Carlos" (pp. 67-68. Deposition of Chonabayashi, List of Exhibits). The
absence of a reply signal from the"Don Carlos" placed the "Yotai Maru" in a
situation of doubt as to the course the "Don Carlos" would take. Such being the
case, it was the duty of the Japanese officers "to stop, reverse or come to a
standstill until the course of the "Don Carlos" has been determined and the risk
of a collision removed (The Sabine, 21 F (2d) 121, 124, cited in Standard
Vacuum, etc. vs. Cebu Stevedoring, etc., 5 C.A.R. 2d 853, 861-862).. . .
.24(Emphasis supplied)

The Court is unable to agree with the view thus taken by Sison, P.V., J. By imposing an
exclusive obligation upon one of the vessels, the "Yotai Maru, " to avoid the collision, the
Court of Appeals not only chose to overlook all the above facts constitutive of negligence
on the part of the "Don Carlos;" it also in effect used the very negligence on the part of the
"Don Carlos" to absolve it from responsibility and to shift that responsibility exclusively

14
SHIPWRECKS: SALVAGE LAW
G.R. No. L-10051 March 9, 1916
ERLANGER & GALINGER, plaintiffs-appellants,
vs.
THE SWEDISH EAST ASIATIC CO., (LTD.) ET AL., defendants. THE
"OELWERKE TEUTONIA" and NEW ZEALAND INSURANCE CO.
(LTD.), appellants.
PER CURIAM:
The facts in this case are as follows:
First. The steamship Nippon loaded principally with copra and with some other general
merchandise sailed from Manila on May 7, 1913, bound for Singapore. Second. The
steamship Nippon went aground on Scarborough Reef about 4.30 in the afternoon of May
8, 1913. Third. Scarborough Reef is about 120 to 130 miles from the nearest point on the
Island of Luzon. Fourth. On May 9, 1913, the chief officer, Weston, and nine members of
the crew left the Nippon and succeeded in reaching the coast of Luzon at Santa Cruz,
Zambales, on the morning of May 12, 1913. Fifth. On May 12, 1913, the chief officer sent
a telegram to Helm, the Director of the Bureau of Navigation, at Manila, which was as
follows:
SANTA CRUZ, ZAMBALES,
May 12, 1913.
DIRECTOR OF BUREAU OF NAVIGATION, Manila.
Nippon stranded on Scarborough Reef, wants immediate assistance for saving
crew — boats gone. 12.15 p. m.
(Sgd.) WESTON.
Sixth. On the same day (May 12) at 1.30 p. m., the Government of the Philippine Islands
ordered the coast guard cutter Mindoro with life-saving appliances to the scene of the wreck
of the Nippon . Seventh. On the same day (May 12) at 3 p. m. the
steamship Manchuria sailed from Manila for Hongkong and was requested to pass by
Scarborough Reef. Eighth. The Manchuria arrived at Scarborough Reef some time before
the arrival of the Mindoroon May 13, 1913, and took on board the captain and the remainder
of the crew. Ninth. The Manchuria was still near Scarborough Reef when
the Mindoro arrived. The captain of the Manchuria informed the captain of
the Mindoro that the captain and crew of the Nippon were on board the Manchuria and
were proceeding to Hongkong. Tenth. The captain of the Mindoro offered to render
assistance to the captain and crew of the Nippon , which assistance was declined
The Mindoro proceeded to the Nippon and removed the balance of the baggage of the
officers and crew, which was found upon the deck. Eleventh. The Mindoro proceeded to
Santa Cruz, Zambales, where the chief officer, Weston, and the nine members of the crew
were taken on board and brought to Manila, arriving there on May 14, 1913. Twelfth. On
May 13, 1913, Dixon, captain of the Manchuria sent the following message:
S. S. `MANCHURIA', May 13, 1913.
All rescued from the Nippon . Stranded on extreme north end of shoal. Vessel
stranded May 9. She is full of water fore and aft and is badly ashore. Ship
abandoned. Proceed Hongkong.
(Sgd.) "DIXON.
The captain of the Nippon saw the above message before it was sent. Thirteenth. On May
14, 1913, the plaintiff applied to the Director of Navigation for a charter of a coast guard
cutter, for the purpose of proceeding to "the stranded and abandoned steamer Nippon ."
Fourteenth. The coast guard cutter Mindoro was chartered to the plaintiffs and started on its
return to the S. S. Nippon on May 14, 1913. Fifteenth. The plaintiffs took possession of
the Nippon on or about May 17, 1913, and continued in possession until about the 1st of
July, when the last of the cargo was shipped to Manila. Sixteenth. The Nippon was floated
and towed to Olongapo, where temporary repairs were made, and then brought to Manila.
Seventeenth. The Manchuria arrived at Hongkong on the evening of May 14, 1913. When
the captain and crew left the Nippon and went on board of Manchuria, they took with them
the chronometer, the ship's register, the ship's articles, the ship's log, and as much of the
crew's baggage as a small boat could carry. The balance of the baggage of the crew was
packed and left on the deck of the Nippon and was later removed to the Mindoro, without
protest on the part of the captain of the Nippon , as above indicated. Eighteenth. The cargo
was brought to the port of Manila and the following values were fixed:
Copra (approximately 1317 tons) valued at, less cost of sale P142,657.05
by Collector of Customs
General cargo — sold at customhouse 5,939.68
Agar-agar 5,635.00
Camphor 1,850.00
Curios 150.00
Total 156,231.73
Nineteenth. The ship was valued at P250.000. The plaintiffs' claim against the ship was
settled for L15,000 or about P145,800.
15
The plaintiffs brought the present action (August 5, 1913; amended complaint, September
23, 1913) against the insurance companies and underwriters, who represented the cargo
salved from the Nippon, to have the amount of salvage, to which the plaintiffs were entitled,
determined.
The case came on for trial before the Honorable A. S. Crossfield. The Oelwerke Teutonia,
a corporation, appeared as claimant of the copra. The New Zealand Insurance Company
appeared as insurer and assignee of the owners of 33 crates of agar-agar; The Tokio Marine
Insurance Company appeared as the insurer and assignee of 1,000 cases of bean oil and two
cases of bamboo lacquer work; and The Thames and Mersey Marine Insurance Company
appeared as a reinsurer to the extent of P6,500 on the cargo of copra. The court found that
the plaintiffs were "entitled to recover one-half of the net proceeds from the property salved
and sold (which has nothing to do with the steamship itself), and one-half the value of the
property delivered to the claimants."
Judgment was entered as follows:
In favor of the plaintiffs, Erlanger & Galinger for one-half of the net proceeds of
sales amounting to P47,298.36 and one-half of the interest accruing thereon, and
against Carl Maeckler for the sum of P925, and against the New Zealand
Insurance Company (Ltd.) for the sum of P2,800, and against whomever the two
cases marked R — W, Copenhagen, were delivered to, and for the sum of
P2,370.68, out of the proceeds of the sale of 1,000 cases of vegetable oil, and in
favor of the 'Oelwerke Teutonia' for the sum of P71,328.53, now deposited with
the Hongkong & Shanghai Banking Corporation, together with one-half of the
interest thereon.
No costs were taxed.
The Oelwerke Teutonia, The New Zealand Insurance Company (Ltd.), and Erlanger &
Galinger appealed from this decision. The Oelwerke Teutonia made the following
assignments of error: "
(I) The court below erred in finding that the plaintiffs are salvors of the copra in
question. (II) The court erred in holding that the plaintiffs are entitled to recover
one-half of the proceeds of the copra. (III) The court erred in rendering judgment
in favor of the plaintiffs for half of the proceeds of the copra. (IV) The court erred
in disallowing the defendants' counterclaim. (V) The court erred in overruling
defendant's motion for a new trial."
The New Zealand Insurance Company (Ltd.) made the following assignments of error:
Now comes the New Zealand Insurance Company (Ltd.), defendant and appellant
in the above-entitled cause, and avers that in the proceedings in the said cause, in
the Court of First Instance of Manila, there was manifest error to the prejudice of
this appellant, in this, to wit:
(I) That said court found that the plaintiffs are entitled to one-half of the value of
thirty crates of agar-agar delivered to his appellant; (II) That the said court ordered
judgment in favor of the plaintiffs and against this appellant for the sum of
P2,800; (III) That the said court denied the motion of this appellant for a new
trial.
The appellants, Erlanger & Galinger, made the following assignments of error:
Error No. 1. The court erred in ruling that the plaintiffs were not entitled to a
reimbursement of their expenses, out of the gross value of the salved property,
before the division of the remainder into moieties between the salvors and the
claimants. Error No. 2. The court erred in holding that the cargo and the vessel
are equally chargeable with the expense of salvage. Error No. 3. The court erred
in refusing to award the plaintiffs, out of the proceeds of the sale of the cargo, the
sum of P28,755.86 as compensation and the sum of P98,720 as reimbursement of
expenses, or a total of P127,475.08. Error No. 4. The court erred in awarding into
the claimaint 'Oelwerke Teutonia' the sum of P17,328.53, or any part thereof out
of the proceeds of the salved cargo. Error No. 5. The court erred in denying the
motion of the plaintiffs for a new trial."
The assignments of error and the briefs of all of the appellants raised by three questions: (1)
Was the ship abandoned? (2) Was the salvage conducted with skill, diligence, and
efficiency? (3) Was the award justified?
The general rules and principles governing salvage services and salvage awards are well
settled. This branch of the law of the sea dates back to the early history of navigation. We
find the recorded in the Laws of Oleron, which were promulgated sometime before the year
1266, at article IV:
If a vessel, departing with her lading from Bordeaux, or any other place, happens
in the course of her voyage, to be rendered unfit to proceed therein, and the
mariners save as much of the lading as possibly they can; if the merchants require
their goods of the master, he may deliver them if he pleases, they paying the
freight in proportion to the part of the voyage that is performed, and the costs of
the salvage. But if the master can readily repair his vessel, he may do it; of if he
pleases, he may freight another ship to perform his voyage. And if he has
promised the people who help him to save the ship the third, or the half part of
the goods saved for the danger they ran, the judicatures of the country should
consider the pains and trouble they have been at, and reward them accordingly,
without any regard to the promises made them by the parties concerned in the
time of their distress. (See 30 Fed. Cas., at page 1172).
The courts of the United States and England have, in a long line of adjudicated cases,
discussed the various phases of this important subject. 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 in distress at sea, or are unable to protect and secure. The Supreme
Court of the United States and the other Federal Courts of the United States have had
occasion numerous times to quote with approval the following definition from Flanders on
Maritime Law:
16
 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 can not be
allowed, however benevolent their intention and however heroic their conduct.
(The Job H. Jackson, 161 Fed. Rep., 1015, 1017; The Amelia, 1 Cranch, 1; The
Alberta, 9 Cranch, 369; Clarke vs. Dodge Healy, 4 Wash. C. C., 651; Fed. Cas.
No. 2849.)
In the case of Williamson vs. The Alphonso (Fed. Cas., No. 17749; 30 Fed. Cas. 4, 5), the
court laid down practically the same rule.
The relief of property from an impending peril of the sea, by the voluntary
exertions of those who are under no legal obligation to render assistance, and the
consequent ultimate safety of the property, constitute a case of salvage. It may be
a case of more or less merit, according to the degree of peril in which the property
was, and the danger and difficulty of relieving it; but these circumstances affect
the degree of the service and not its nature.
In Blackwall vs. Saucelito Tug Company (10 Wall., 1, 12), the court said:
Salvage is 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.
It will be noticed from the above definitions that there are certain definite conditions which
must always exist in a case of pure salvage. The Supreme Court of the United States,
speaking through Mr. Justice Clifford, in the case of The Mayflower vs. The Sabine (101 U.
S., 384) makes those conditions three (p. 384).
Three elements are necessary to a valid salvage claim: (1) A marine peril. (2)
Service voluntarily rendered when not required as an existing duty or from a
special contract. (3) Success, in whole or in part, or that the service rendered
contributed to such success.
These are the general principles governing salvage.
The question whether or not a particular ship and her cargo is a fit object of salvage depends
upon her condition at the time the salvage services are performed. In the present case the
plaintiff-appellant claims that the Nippon was a derelict or quasi-derelict and that their
claim should be adjudged upon this cases. 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 revertendi). Whether property is to be adjudged derelict is determimed 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, 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." (Abbott's Law of Merchant Ships and Seamen, Fourteenth Edition, p.
994.)
This contention of the plaintiffs raises the first question: (1) Was the ship abandoned?
The defendant-appellant Oelwerke Teutonia contends that the captain and the crew did not
leave the ship sine animo revertendi, but that it was their intention to go to Hongkong and
procure assistance with which to save the ship and her cargo. Whether the intention to return
exists in a particular case is always difficult to determine. It is indeed a rare case when the
master of the ship will leave without the intention of returning, if there is the slightest hope
of saving his vessel. In the case of The Coromandel (1 Swab., 208) Dr. Lushington said:
It may be perfectly true that the master and these fifteen men, when they had got
on board The Young Frederick, and were sailing away to Yarmouth, intended, if
possible, to employ steamers to go and rescue the vessel, which was at no great
distance. But is not that the case every day? A master and crew abandon a vessel
for the safety of their lives; he does not contemplate returning to use his own
exertions, but the master hardly ever abandons a vessel on the coast without the
intention, if he can obtain assistance, to save his vessel. That does not take away
the legal character of derelict. (Norcross vs. The Laura, 14 Wall., 336.)
Judge Crossfield found that:
At the time the plaintiff commenced the attempt to salve what was possible of the
S. S. Nippon and cargo, it was justified, from all the conditions existing, in
believing that it had been abandoned and in taking possession, even though the
master of the vessel intended when he left it, to return and attempt salvage.
Such intention, if it existed, does not appear to have been very firmly fixed,
considering the leisurely manner in which the master proceeded after he reached
the Port of Hongkong.
The evidence amply supports this finding. The chief officer, Weston, upon reaching the
coast of Zambales, on May 12, 1913, sent the following telegram to the Director of the
Bureau of Navigation:
SANTA CRUZ, ZAMBALES,
May 12, 1913.
DIRECTOR OF BUREAU OF NAVIGATION, Manila.
Nippon stranded on Scarborough Reef, wants immediate assistance for saving
crew boats gone — 12.15 p. m.
17
 struck the reef, leaving only two on board and those damaged. The ship was filled
(Sgd.) R. WESTON. with water and pounding on the reef and we considered her a wreck. In company
with the chief officer, we left the ship about noon on Friday, May 9, 1913, in a
small boat and reached Sta. Cruz Zambales, a distance of 130 miles on the
morning of Monday, May 12, 1913, and immediately the chief officer wired the
On the evening of the same day Weston sent the following telegram: Director of Navigation at Manila for assistance to rescue the balance of the crew
left aboard the Nippon, as we considered their lives in danger and the ship a
wreck, with little hope of saving her.
SANTA CRUZ, ZAMBALES,
May 12, 1913.
(Signed.)

DIRECTOR OF BUREAU OF NAVIGATION, Manila.

F. Carman A.G. Erickson

Left with nine hands at noon, 9th, 26 men still on board, ship well on reef, stern
G.E. Johansson F. Palm
part afloat, about ten feed of water in holds, starboard list, heavy swell breaking
over, little hope of saving ship — 6.27 p. m.
W. Bratt J. Karlberg

(Sgd.) WESTON. B. Nyolram E. Thulin

E. Petterson
On May 13, 1913, Captain Dixon of the S. S. Manchuria, after rescuing the remainder of
the crew, left on board the Nippon , sent the following telegram to the Director of
On May 16, 1913, Captain Anderson of the Coast Guard cutter Mindoro made the following
Navigation.
report to the Director of Navigation.

S. S. `MANCHURIA,' May 13, 1913.

S.S. Mindoro
Manila, P.I., May 16, 1913

All rescued from the Nippon . Stranded on extreme north end of shoal. Vessel
stranded May 9th. She is full of water fore and aft, and is badly ashore. Ship
abandoned. Proceeding Hongkong — 9.40 a. m.
(Sgd.) DIXON, Master.
On May 14, 1913, after the members of the crew who came ashore with Weston had reached
Manila, they made the following signed statement:
MANILA, P. I., May 14, 1913.
We, the undersigned officers and part of the crew of the Swedish steamer Nippon,
do hereby declare that the S. S. Nippon struck on Scarborough Reef, about 4.30
on the afternoon on Thursday May 8 1913. Two of her boats were lost after we
Sir
I have the honor to make he following report of voyage made to Scarborough
Reef, May 12 to 14, 1913 for officers and crew of S.S. Nippon.
May 13, 1913, being 2 1/2 miles sought of reef, I observed S. S. Nippon stranded
on the N. E. edge of reef. I immediately steered northward around the western
edge of reef and arrived of stranded ship at 9.30 a. m. S. S. Manchuria was laying
to about 1 1/2 miles northward of reef, making signals for me to come alongside.
I immediately proceeded out to the Manchuria; upon arrival alongside
the Manchuria the captain of the same ship informed me that the S.
S. Nippon was abandoned and that he had the captain and crew on board for
Hongkong. I then asked the captain of the Manchuria if the captain of
the Nippon cared to go to Hongkong, as I was there to bring him and the crew to
Manila if he desired to go. The captain of the Manchuria again informed me that
the captain of the Nippon intended to go to Hongkong. I answered `All right, I
will then go and have a look at the Nippon and see how badly she is wrecked.'
The captain of the Manchuria made the remark that she was half full of water and
that she was very badly wrecked, but that there was still some baggage left on

18
 broad. He also informed me that he had a wire from the Director of Navigation Q. What do you mean by `ship's papers'? —
ordering me to proceed to Santa Cruz to pick up boat's crew from Nippon . I said,
`All right. I will go and get baggage and have a look at the wreck.' I then left A. Register, articles.
the Manchuria and steamed over to the wreck. On arrival alongside of the wreck
I took on board all baggage packed standing on deck and sounded around the ship,
fore and aft, finding 11 feet of water forward at low water and 20 feet aft in board, Q. Did you take the ship's log? —
gradually decreasing from forward to aft and I found in holds about 8 feet of water
and the cargo as far as I could see, on top, was nice and dry, and it is my opinion A. Yes; that is the first thing I take.
that with the position the ship is laying in and with the Southwest monsoon
blowing the ship and most of the cargo can be salved, if work is started before the Q. That is the first thing you take under what circumstances? —
heavy typhoon season sets in. After leaving the wreck, I proceeded to Santa Cruz
and picked up the first officer and crew of nine men and brought them to Manila.
A. Under any circumstances of accidents to the ship; because it is the official
record up to the time an accident happens.
On my second trip to the wreck, May 15th, I examined Nippon more fully and I
believe that if the cargo is taken out the ship can be saved after the holes are
pathed up, if this is done before the heavy weather sets in. Q. Do you mean to state, captain, that in the event of any accident to a ship,
no matter how slight, that the ship's log and register and articles are taken ashore?
—
Very respectfully,

A. The ship's log on any occasion has to be brought before the Swedish
(Sgd.) GEO. ANDERSON, Consul.
Captain, 'Mindoro.'
Q. How about the register and articles? —

THE DIRECTOR OF NAVIGATION, Manila. A. Of course not.

Copy sent Struckman & Company, May 16, 1913. Q. Under what circumstances do you take ashore the ship's articles and
register? —
(Sgd.) "A. S. Thompson, chief clerk.
A. When I leave the ship myself I have, of course, to take those papers with
The testimony of Captain Eggert of the Nippon regarding the circumstances of the wreck, me.
is as follows: (2d part of record, p. 327). "(P. 334.)
Q. Every time you leave the ship? —
Q. When the Manchuria visited the scene of the wreck on May 13, how many
of you went on board? — A. No. Every time when I leave it stranded as she was. If I go on shore and
try to get means for taking my ship off the ground, I have to prove what ship it is
A. We all went on board. and all that. In the meantime a gale may come up and the ship be torn off the rock
and destroyed and the papers lost."
Q. By 'all' you mean yourself, passenger, and all the members of the crew that
remained? — (P. 336.) Q. What were the conditions prevailing aboard the ship from the time
that she stranded until the Manchuria arrived? —
A. Yes.
A. The first night there was very bad sea and high wind. The ship was came
Q. What did you take with you? — so much better than we could send the boat off about 11 o'clock in the forenoon
by using precautions, oil, etc. The third and fourth day the weather was fine.
A. Just personal luggage, not all, what you could carry in a small boat, it could
not be very much considering that the boat was broken and there were 27 men, (P. 337.) Q. And do you now admit that you were mighty glad to get off
the ship's chronometer and ship's papers. the Nippon ? —

19
A. We were all mighty glad.
Q. Why were you mighty glad? —
A. Chiefly because the crew had insisted on leaving the ship in some way, by
building rafts, or in that boat of ours. And secondly because of the uncertainty.
We did not know if our boat had reached shore. The scene of the accident was
quite out of the track of any vessel, so it was quite natural when we saw that ship
coming up we were glad to get into communication with the outside world.
Q. You say that the crew had insisted on leaving the ship? —
A. They were not insisting on it because they can not insist against the master
of a ship. But they would like to get off.
Q. Why were they discussing the question? —
A. Because they considered it better to leave the ship and reach land rather
than stay on the ship, not knowing if the boat had reached land or not.
Q. They considered it better for what purpose? —
A. Being safe.
Q. You mean better from the standpoint of safety of their life and limb? —
A. Yes. To their lives.
(P. 343.) Q. Captain, if your purpose in leaving the Nippon was to go to
Hongkong for the purpose of arranging for her salvage, why did you not leave
some of the crew on board? —
A. How could I leave some of the crew on board when there was no attendant?
There could be a gale at any time and the ship would have slipped off and broken
to pieces. I first of all was responsible for their lives."
(P. 348.) Q. (By Mr. Rohde.) Captain, did you or did you not leave the Nippon ,
with the intention of returning and the hope of recovering your ship and cargo?
— reaching Hongkong on May 14, 1913:
A. I left the Nippon with the full intention of returning to the ship and try to
recover her, and I discussed that matter during the three days we were on the reef
with every member I could see in the crew, and with the passenger. Everybody
knew as soon as I put my foot on the Manchuria it was for the purpose of getting
assistance. Captain Dixon knew, his officers knew it, and his crew knew it.
(Mr. Cohn.) You have not fully replied to the question asked you by counsel for
the defendant, which is whether you had the hope of recovering the ship. —
A. I had hope if the weather continued fine.
(Mr. Cohn.) If you had that hope why didn't you leave some of your crew on
board? —
A. Because the hope would not justify me leaving any of the crew on the ship.
(Mr. Cohn.) Your hope was so slight it did not warrant your leaving anybody on
board? —
A. A hope is always slight. I mean to say your hope will never justify you to
risk another man's life, even if you have a very good foundation for your hope.
Life comes before property.
(Mr. Cohn.) Just what do you mean by "hope"? —
A. I mean to say that if the weather continues fine there is no risk, but if there
is a typhoon or gale we will be worse off and the ship will be smashed and the
crew perish. That is what I mean by a "hope" in this occasion.
(Mr. Cohn.) What you mean, Captain, is that you were going to Hongkong and if
you could find some one that was willing to go out and look for your ship, and if
your ship was still there, that you would undertake to salve her if you could. —
A. Of course.
Chief Engineer Emil Gohde was asked why the crew wanted to get ashore.
(P. 353.) Q. Why did they want to get to shore? —
A. They wanted to save their lives. We didn't know the weather in the China
Sea. We could have expected a typhoon in a couple of days and very likely the
ship would have gone into the sea.
Captain Eggert sent the following cablegram to the owners of the Nippon , after
(P. 360.) Nippon wrecked during typhoon eight May Scarborough Shoal latitude
15 longitude 118 probably total wreck bottom seriously damaged ship full of
water chief officer and nine men took to boat for rescue landed twelfth Luzon
mailsteamer Manchuria saved captain and remaining crew morning thirteenth.
Arrived Hongkong tonight. Wreck on edge of reef, will probably slip off and sink
by first gale captain arranging to visit wreck and attempt salvage.
20
 A. I tried to find out when the next steamer was leaving for Manila and there
EGGERT. was none leaving before the 20th, the steamer I took and proceeded here.

From the above it will be seen that Capt. Eggert had over two days in which to arrange for
Captain Eggert did not make any determined effort to arrange for the salvage of the Nippon, salvage operations and he did nothing, while the plaintiffs, who were strangers and had no
as will be seen from the testimony. interest, sent out a salvage expedition in twenty-four hours after they discovered that the
ship was wrecked.
(P. 330. Captain Eggert testifying).
The evidence proves that the Nippon was in peril; that the captain left in order to protect his
life and the lives of the crew; that the animo revertendi was slight. The argument of the
Q. What did you do upon your arrival in Hongkong? — defendant-appellant to the effect that the ship was in no danger is a bit out of place in view
of the statement of the captain that she would sink with the first gale, coupled with the fact
A. The first thing I did — it was about 5 o'clock in the afternoon — I went to that a typhoon was the cause of her stranding.
the office of our agents — my owners' agents. It was then close up so I had to
proceed to the private residence of the manager. From there I dispatched a The Federal Courts have, a number of times, had presented to them cases in which the facts
telegram to the owners. were very similar to the facts in the present case. The claim for salvage was allowed in each
of these cases. In The Bee (Fed. Cas. No. 1219; 3 Fed. Cas., 41), the facts were as
xxx xxx xxx follows: The Bee sailed from Boston to Nova Scotia. Three days after leaving port a gale
was encountered which forced her to run into a cove on the north side of Grand Manan
Q. What date was this telegram sent? — Island, where an anchor was let out. The ship was somewhat injured from the force of the
storm. The master and the crew stayed on board for 24 hours and then went ashore to
procure assistance. The island was very sparsely settled. They met on shore a number of
A. On the evening of the 14th. men (the libelants) to whom they explained the predicament and position of the ship. These
men immediately went to the ship, boarded her, and took possession. After the master had
Q. Of what month? — been ashore about five hours he returned to the ship and found the libelants in possession.
The owners contended that the master was excluded from the ship wrongfully and therefore
the libelants could not claim salvage. The court stated the law as follows (p. 44):
A. Of May.

When a vessel is found at sea, deserted, and has been abandoned by the master
Q. Did you enter into any negotiations with persons or firms? —
and crew without the intention of returning and resuming the possession, she is,
in the sense of the law, derelict, and the finder who takes the possession with the
A. Yes. The first thing in the morning of the 15th I visited together with the intention of saving her, gains a right of possession, which he can maintain against
Swedish Consul the Tykoo dockyard people, the Hongkong dockyard people, and the true owner. The owner does not, indeed, renounce his right of property. This
went to the Mitsui Bussan Kaisha branch office, and those people sent a wire to is not presumed to be his intention, nor does the finder acquire any such right. But
their home office in Nagasaki. the owner does abandon temporarily his right of possession, which is transferred
to the finder, who becomes bound to preserve the property with good faith, and
Q. What, if anything, interrupted your negotiations with the firms and persons bring it to a place of safety for the owner's use; and he acquired a right to be paid
in Hongkong relative to the salvage of the Nippon and her cargo? — for his services a reasonable and proper compensation, out of the property itself.
He is not bound to part with the possession until this is paid, or it is taken into the
custody of the law, preparatory to the amount of salvage being legally ascertained.
A. A wire from my owners.
Should be salvors meet with the owner after an abandonment, and he should
tender his assistance in saving and securing the property, surely this ought not,
xxx xxx xxx without good reasons, to be refused, as this would be no bar to the right of salvage,
and should it be unreasonably rejected it might affect the judgment of a court
Q. When was this telegram received by you, Captain? — materially, as to the amount proper to be allowed. Still, as I understand the law,
the right of possession is in the salvor. But when the owner, or the master and
crew who represent him, leave a vessel temporarily, without any intention of a
A. On the 17th. final abandonment, but with the intent to return and resume the possession, she is
not considered as a legal derelict, nor is the right of possession lost by such
Q. What did you do then? — temporary absence for the purpose of obtaining assistance, although no individual
may be remaining on board for the purpose of retaining the possession. Property

21
 is not, in the sense of the law, derelict and the possession left vacant for the finder,
until the spes recuperandi is gone, and the animus revertendi is finally given up.
(The Aquila, 1 C. Rob. Adm., 41.) But when a man finds property thus temporarily
left to the mercy of the elements, whether from necessity or any other cause,
though not finally abandoned and legally derelict, and he takes possession of it
with the bona fide intention of saving it for the owner, he will not be treated as a
trespasser. On the contrary, if by his exertions he contributes materially to the
preservation of the property, he will entitle himself to a remuneration according
to the merits of his service as a salvor.
The court allowed salvage in this case. They held that the master had taken insufficient
precautions to protect his vessel and although the ship was not a legal derelict, the libelants
were salvors and entitled to salvage.
In The John Gilpin (Fed. Cas. No. 7345; 13 Fed. Cas., 675) the ship John Gilpin, in
attempting to leave New York harbor in a winter storm, was driven ashore. The ship's crew
sent for help and in the meantime put forth every effort to get her off. Help arrived toward
evening, but accomplished nothing. The master and crew went ashore. The same night the
libelants went out to the ship with equipment and started working. It was contended that the
master had gone ashore for assistance. He returned the next morning with a tug and some
men and demanded possession, which was refused. Salvage was allowed. The court said (p.
676):
The libelants, in the exercise of their calling as wreckers, coming to a vessel in
that plight, would be guilty of a dereliction of duty if they failed to employ all
their means for the instantaneous preservation of property so circumstanced. This
may not be strictly and technically a case of derelict (Clarke vs. The Dodge Healy,
Case No. 2849), if really the master of the brig had gone to the city to obtain the
necessary help to save the cargo and brig, intending at the time, to return with all
practicable dispatch. It appears he came to the wreck by 8 or 9 a. m. the following
day, in a steam-tug, with men to assist in saving the cargo. The animus revertendi
et recuperandi may thus far have continued with the master, but this mental hope
or purpose must be regarded inoperative and unavailing as an actual occupancy
of the vessel, or manifestation to others of a continuing possession. She was
absolutely deserted for 12 or 14 hours in a condition when her instant destruction
was menaced, and the lives of those who should attempt to remain by her would
be considered in highest jeopardy. She was quite derelict; and being thus found
(The Boston, Case no. 1673; Rowe vs. The Brig, Case no. 12093; 1 Sir Lionel
Jenkins, 89) by the libelants, the possession they took of her was lawful. (The
Emulous, Case No. 4480.)
Possession being thus taken when the vessel was, in fact, abandoned and quite
derelict, under peril of instant destruction, the libelants had a right to retain it until
the salvage was completed, and no other person could interfere against them
forcibly, provided they were able to effect the purpose, and were conducting the
business with fidelity and vigor.
In The Shawmut (155 Fed. Rep., 476) the court allowed salvage upon the following facts:
The four-masted schooner Myrtle Tunnel sailed from Brunswick bound for New York. The
first day out a hurricane struck her and tore the sails away and carried off the deck load. She
was badly damaged and leaking. The master of the Myrtle Tunnelrequested towage by the
steamship Mae to the port of Charleston. The Mae, on account of her own damaged
condition, was unable to tow but she took the master and crew of the Myrtle Tunnel off and
landed them at Charleston. The owners were notified and they started an expedition out in
search. Before this expedition reached her, the steamship Shawmut sighted the Myrtle
Tunnel, and, finding that she was abandoned and waterlogged, took her in two and
succeeded in taking her to Charleston. The owners of the Myrtle Tunnel contended that she
was not derelict, because the master had gone ashore to procure assistance. With reference
to this question, the court said (p. 478):
The first question that arises is whether the Myrtle Tunnel is a derelict. Prima
facie a vessel found at sea in a situation of peril, with no one aboard of her, is a
derelict; but where the master and crew leave such vessel temporarily, without
any intention of final abandonment, for the purpose of obtaining assistance, and
with the intent to return and resume possession, she is not technically a derelict.
It is not of substantial importance to decide that question. She was what may be
called a quasi-derelict; abandoned, helpless, her sails gone, entirely without
power in herself to save herself from a situation not of imminent, but of
considerable peril; lying about midway between the Gulf Stream and the shore,
and about 30 miles from either. An east wind would have driven her upon one,
and a west wind into the other, where she should have become a total loss. Lying
in the pathway of commence, with nothing aboard to indicate an intention to
return and resume possession, it was a highly meritorious act upon the part of
the Shawmut to take possession of her, and the award must be governed by the
rules which govern in case of derelicts; the amount of it to be modified in some
degree in the interest of the owners in consideration of their prompt, intelligent,
and praiseworthy efforts to resume possession of her, wherein they incurred
considerable expense.
The first of these cases was decided in 1836 and the last in 1907. The indicate that the
abandonment of a vessel by all on board, when the vessel is in peril, will justify third parties
in taking possession with the bona fide intention of saving the vessel and its cargo for its
owners. The mental hope of the master and the crew will in no way affect the possession
nor the right to salvage. See also The Hyderabad (11 Fed. Rep., 749), The Cairnsmore (20
Fed. Rep., 519), Pearce vs. The Ann L. Lockwood (37 Fed. Rep., 233).
This brings us to the second question raised by the assignments of error: (2) Was the salvage
conducted with skill, diligence, and efficiency? The court found:
While the plaintiff entered upon the salvage proceedings without proper means
and not being adapted by their business to conduct their work, and while it may
appear that possibly the salvage might have been conducted in a better manner
and have accomplished somewhat better results in the saving of the copra cargo,
yet it appears that they quickly remedied their lack of means and corrected the
conduct of the work so that it accomplished fairly good results.
It does not appear from the evidence that anyone then or subsequently suggested
or found any other course which might have been pursued and which would have
brought better results.
22
There was some dispute whether Manila or Hongkong should be used as a base for
operations. Capt. Robinson, who was the only one of the experts who had had any
experience in handling wet copra, unqualifiedly approved Manila as a base for operations.
(P. 437, 3d part of record):
Q. Assuming that you had been asked to undertake the work of salving the
steamer Nippon and her cargo, please state whether you would have undertaken
that work with the men and material available in Manila, or whether you would
have gone to Hongkong and used Hongkong men and material and made
Hongkong your base on operations. —
A. Certainly not. I would have made Manila my base, which I always have
done.
Lebreton, a stevedore, testified that he would have gotten some of his materials from
Hongkong but that he would have freighted the salved cargo to Manila. All other things
being equal, the fact that Hongkong is forty sailing hours from Scarborough Reef while
Manila is less than twenty-four sailing hours would make Manila by far the more logical
base.
The plaintiffs sent men into the hold of the ship and sacked the copra and brought it to
Manila where it was sold. Some of the witnesses contended that other methods should have
been used. They testified that "grabs" or "claim shells" would have brought better results,
but none of these witnesses had had any experience in unloading wet copra. Capt. Robinson
was the only witness called who had had any experience in this class of work. He testified
that the only way all the copra could be gotten out was by sacks or by canvas slights; that
"grabs" would be of no use because of the inability to work with them between decks. The
copra was in three layers. The top layer was dry, the middle layer was submerged every
time the tide rose, and the lower layer was submerged all of the time. It was manifestly
impossible to keep these layers separate by using "grabs" or "clam shells." The fact that wet
copra is exceedingly difficult to handle, on account of the gases which arise from it, is also
of prime importance in weighing the testimony of defendant's witnesses, because none of
them had ever had experience with wet copra.
The plaintiffs commenced the actual work of salving the ship and cargo on May 18, 1913.
The last of the cargo was a brought to Manila the latter part of June. The last of the dry
copra was brought to Manila on June 5. The estimates of the experts with regard to the time
necessary to remove the cargo ranged from eight to twenty days. The greater portion of the
cargo was brought in by the plaintiffs within fifteen days. The delay after June 5 was due to
the difficulty in inducing laborers to work with wet copra. This difficulty would have arisen
with any set of salvors and cannot be attributed to a lack of care or diligence on the part of
the plaintiffs.
The plaintiffs were diligent in commencing the work and were careful and efficient in its
pursuit and conclusion.
The third and last question is with regard to the amount of the award — (3) Was the award
justified?
Compensation as salvage is not viewed by the admiralty courts merely as pay on
the principle of quantum meruit or as a remuneration pro opere 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 Mayflower vs. The Sabine, 101 U. S., 384.)
The plaintiff-appellant contends that the expenses incurred should be deducted from the
entire amount of the salved property and the remainder be divided as a reward for the
services rendered. This contention has no basis in the law of salvage compensation. The
expenses incurred by the plaintiffs must be borne by them. It is true that the award should
be liberal enough to cover the expenses and give an extra amount as a reward for the services
rendered but the expenses are used in no other way as a basis for the final award. A part of
the risk that the plaintiffs incurred was that the goods salved would not pay them for the
amount expended in salving them. The plaintiffs knew this risk and they should not have
spent more money than their reasonable share of the proceeds would amount to under any
circumstances.
In the case of The Carl Schurz (Case No. 2414; 5 Fed. Cas., 84) the actual expenditure by
the libelant in salving the vessel in question was $568.95. The ship when sold brought $792.
The libelant wanted the court to first deduct the expenses. The court refused to do this but
decreed a moiety. The court said (p. 86):
A salvor, in the view of the maritime law, has an interest in the property; it is
called a lien, but it never goes, in the absence of a contract expressly made, upon
the idea of a debt due by the owner to the salvor for services rendered, as at
common law, 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.
This is the governing principle here. The libelant and the owners must mutually
bear their respective share of the loss in value by the sale. If the libelant has been
unfortunate and has spent his time and money in saving a property not worth the
expenditure he made, or if, having saved enough to compensate him, it is lost by
the uncertainties of a judicial sale for partition, so to speak, it is a misfortune not
uncommon to all who seek gain by adventurous speculations in values. The
libelant says in his testimony that he relied entirely on his rights as a salvor. This
being so he knew the risk he ran and it was his own folly to expend more money
in the service than his reasonable share would have been worth under all
circumstances and contingencies. He can rely neither on the common law idea of
an implied contract to pay for work on and about one's property what the work is
reasonably worth with alien attached by possession for satisfaction, nor upon any
notion of an implied maritime contract for the service, with a maritime lien to
secure it, as in the case of repairs, or supplies furnished a needy vessel, or the like.
In such a case the owner would lose all if the property did not satisfy the debt,
when fairly sold. But this doctrine has no place in the maritime law of salvage. It
does not proceed upon any theory of an implied obligation, either of the owner or
the res, to pay a quantum meruit, nor actual expenses incurred, but rather on that
of a reasonable compensation or reward, as the case may be, to one who has
rescued the res from danger of total loss. If he gets the whole, the property had as
well been lost entirely, so far as the owner is concerned. (Smith vs. The Joseph
Stewart, Fed. Cas. No. 13070.) I think the public policy of encouragement for
23
 such service does not, of itself, furnish sufficient support for a rule which would
exclude the owner from all benefit to be derived from the service.
In Williams vs. The Adolphe (Fed. Cas. No. 17712; 29 Fed. Cas., 1350) the court said (p.
1353):
The claim of the libelants is for salvage, the services rendered were salvage
services and the owners are to receive their property again, after paying salvage
for the services rendered them. What service would it be to them to take their
property under circumstances calling for the whole of it by way of indemnity?
The mistake of the captain and the supercargo, and part owner of the Triton as to
the value of the property on board the Adolphe, should not operate to the injury
of the owners thereof; the salvors must bear the consequences of their own
mistake, taking such a proportion only of the property salved, as by the law of the
admiralty should be awarded them.
In The Edwards (12 Fed. Rep., 508, 509), the court said:
It is true that in rendering a salvage service the salvor assumes the risks of failure,
and his salvage depends upon his success and the amount of property saved; yet
when there is enough to fully compensate him for time and labor, and leave a
reasonable proportion for the owner, he should certainly be awarded that, if the
amount will allow no more.
In The L. W. Perry (71 Fed. Rep., 745, 746), the court said:
Without regard to the element of reward which is intended by the salvage
allowance, it is manifest that remuneration pro opere et labore would be placed
in excess of the fund here, if such basis were allowable. Therefore, it is contended
on behalf of the libelant that the entire sum remaining should be awarded for the
salvage service;. . . .
While salvage is of the nature of a reward of meritorious service, and for
determination of its amount the interests of the public and the encouragement of
others to undertake like service are taken into consideration, as well as the risk
incurred, and the value of the property saved, and where the proceeds for division
are small, the proportion of allowance to the salvor may be enlarged to answer
these purposes, nevertheless, the doctrine of salvage requires, as a prerequisite to
any allowance, that the service `must be productive of some benefit to the owners
of the property salved; for, however meritorious the exertions of alleged salvors
may be, if they are not attended with benefit to the owners, they can not be
compensated as such.' (Abb. Shipp. [London Ed., 1892], 722.) The claim of the
libelant can only be supported as one for salvage. It does not constitute a personal
demand, upon quantum meruit, against the owners, but gives an interest in the
property saved, which entitles the salvor to a liberal share of the proceeds. . . .
(P. 747.) One of the grounds for liberality in salvage awards is the risk assumed
by the salvor, — that he can have no recompense for service or expense unless he
is successful in the rescue of property, and that his reward must be within the
measure of his success. He obtains an interest in the property, and in its proceeds
when sold, but accompanied by the same risk of any misfortune or depreciation
which may occur to reduce its value. In other words, he can only have a portion,
in any event; and the fact that his exertions were meritorious and that their actual
value, or the expense actually incurred, exceeded the amount produced by the
service, cannot operate to absorb the entire proceeds against the established rules
of salvage. (The Carl Schurz, Fed. Cas. No. 2414).
The plaintiff-appellants contends that the award of the lower court of one-half is the
established rule in cases of derelicts and should not be disturbed. It is well established now
that the courts have a wide discretion in settling the award. The award is now determined
by the particular facts and the degree of merit. In The Job H. Jackson (161 Fed. Rep., 1015,
1018), the court said:
There is no fixed rule for salvage allowance. The old rule in cases of a derelict
was 50 per cent of the property salved; but under modern decisions and practice,
it may be less, or it may be more. The allowance rests in the sound discretion of
the court or judge, who hears the case, hears the witnesses testify, looks into their
eyes, and is acquainted 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, as a reward for such services so rendered, and for the purpose of
encouraging others in like services.
In The Lamington (86 Fed. Rep., 675, 678), the court said:
While it appears most clearly that, since the old hard and fast rule of `50 per cent
of a derelict' was abandoned, the award is determined by a consideration of the
peculiar facts of each case, it is none the less true that the admiralty courts have
always been careful not only to encourage salving enterprises by liberality, when
possible, but also to recognize the fact that it is, after all, a speculation in which
desert and reward will not always balance.
The award is largely in the discretion of the trial court and it is rare that the appellate court
will disturb the findings.
Appellate courts rarely reduce salvage awards, unless there has been some
violation of just principles, or some clear or palpable mistake. They are reluctant
to disturb such award, solely on the ground that the subordinate court gave too
large a sum, unless they are clearly satisfied that the court below made an
exorbitant estimate of the services. It is equally true that, when the law gives a
party a right to appeal, he has the right to demand the conscientious judgment of
the appellate court on every question arising in the case, and the allowance of
salvage originally decreased has, in many cases, been increased or diminished in
the appellate court, even where it did not violate any of the just principles which
should regulate the subject, but was unreasonably excessive or inadequate. (Post
vs. Jones, 19 How., 161). Although the amount to be awarded as salvage rests, as
it is said, in the discretion of the court awarding it, appellate courts will look to
see if that discretion has been exercised by the court of first instance in the spirit
of those decisions which higher tribunals have recognized and enforced, and will
24
 readjust the amount if the decree below does not follow in the path of authority,
even though no principle has been violated or mistake made.
The property of the defendant-appellants which was salved was forced to pay the same
proportion of the award without distinction. The day copra and the agar-agar was salved
with much more ease than the wet copra. The courts have, almost universally, made a
distinction in this regard. In The America (1 Fed. Cas., 596), decided in 1836, the award
was as follows: 25 per cent on cargo salved dry; 50 per cent on cargo salved damaged; 60
per cent on cargo salved by diving.
In The Ajax (1 Fed. Cas., 252(, decided in 1836, the award was as follows: 33 per cent on
the dry; 50 per cent on the wet; 50 per cent on ship's materials. In The Nathaniel
Kimball (Fed. Cas. No. 10033), decided in 1853, the award was as follows: 30 per cent on
dry cargo; 50 per cent on wet, salved by diving and working under water.
In The Brewster (Fed. Cas. No. 1852), decided in 1848, the award was as follows: 33 per
cent, and as to some cargo where diving was necessary, 60 per cent.
In The Mulhouse (Fed. Cas. No. 9910), decided in 1859, the award was as follows: 25 per
cent salving dry deck cotton; 45 per cent salving cotton submerged between decks; 55 per
cent salving cotton by diving.
In The John Wesley (Fed. Cas. No. 7433), decided in 1866, the award was as follows: 15
per cent; on damaged cotton a slightly higher per cent.
In The Northwester (Fed. Cas. No. 10333), decided in 1873, the award was as follows: 20
per cent on cotton dry; 33 1/3 per cent on cotton wet and burnt; 40 per cent on materials; 50
per cent on property salved by diving.
In Baker vs. Cargo etc. of The Slobodna (35 Fed. Rep., 537), decided in 1887, the award
was as follows: 25 per cent on dry cotton; 33 1/3 per cent on wet cotton; 45 per cent on
materials.
In the cases in which the full award of 50 per cent was allowed the court usually made the
comment: "services highly meritorious," "meritorious service," "with great labor and
difficulty," or similar remarks.
In the salvage operations conducted by the plaintiff, the following property was involved:
First, the steamship Nippon , valued at P250,000.00
Second, copra, net value, salved 142,657.05
Third, agar-agar, net value, salved 5,635.00
Fourth, general cargo 5,939.68
Fifth, camphor, net value, salved 1,850.00
Sixth, curios, net value, salved 150.00
The plaintiff and the owners of the ship have heretofore, by mutual agreement, settled the
question of the amount of salvage of the ship. The plaintiff received for that part of their
services the sum of L15,000 or about P145,800.
No appeal was taken from the judgment of the lower court concerning the amount of salvage
allowed by it for the general cargo, the camphor, nor the curios salved.
The only question raised by the appellants is as to the amount of salvage which should be
awarded to the plaintiff-appellants for the copra and the agar-agar. After a careful study of
the entire record and taking into account the amount which the plaintiffs has heretofore
received, we have arrived at the conclusion that in equity and justice the plaintiff-appellants
should receive for their services the following amounts:
(a) 40 per cent of the net value of the wet copra salved.
(b) 25 per cent of the net value of the dry copra salved.
(c) 20 per cent of the net value of the agar-agar salved.
The net value of the wet copra salved amounted to P40,381.94; 40 per cent of that amount
would be P16,152.78. The net value of the dry copra salved amounted to P102,272.11; 25
per cent of that amount would be P25,568.77.
In ascertaining the net value of the copra salved, the expenses incurred by the Collector of
Customs in the sale of the copra, amounting to P4,080.01, has been deducted from the total
amount of the copra salved in the proportion of 2.5 to 1. Dividing the expense in that
proportion we have deducted from the amount of the dry copra salved the sum of P2,914.39,
and from the amount of the wet copra salved, the sum of P1,165.62.
The net value of the agar-agar salved amounted to P5,636; 20 per cent of that amount would
be P1,127.
In view of all of the foregoing, it is hereby ordered and decreed that the judgment of the
lower court be modified, and that a judgment be entered against the defendant-appellants
and in favor of the plaintiff-appellant, as follows: First, it is hereby ordered and decreed that
a judgment be entered against the defendant, the Oelwerke Teutonia, and in favor of the
plaintiff in the sum of P41,721.55. Second, it is further ordered and decreed that a judgment
be entered against the defendant, the New Zealand Insurance Company (Ltd.), and in favor
of the plaintiff, in the sum of P1,127. Third, it is further ordered and decreed that the amount
of the judgment hereinbefore rendered in favor of the plaintiff be paid out of the money
which is now under the control of the Court of First Instance of the city of Manila. And
without any finding as to costs, it is so ordered.
25
SHIPWRECKS: SALVAGE LAW
G.R. No. L-15871 November 7, 1921
THE ATLANTIC, GULF & PACIFIC COMPANY OF MANILA and SIMMIE &
GRILK, plaintiffs-appellants,
vs.
UCHIDA KISEN KAISHA and MITSUI BUSSAN KAISHA, defendants-appellants.
VICENTE MADRIGAL, defendant-appellee.
JOHNSON, J.:
This action was commenced by the plaintiffs in the Court of First Instance of the city of
Manila to recover from the defendants the sum of P300,000 as compensation for the salvage
of the steamship Kyodo Maru and part of her cargo, in Manila Bay, in the months of October
and November, 1918. Judgment was rendered in favor of the plaintiffs and against the
defendants Uchida Kisen Kaisha and Mitsui Bussan Kaisha in solidum for the sum of
P14,000 and for costs. The action was dismissed as regards the defendants Vicente
Madrigal, the owner of the cargo. From that judgment the plaintiffs and the defendants
Uchida Kisen Kaisha and Mitsui Bussan Kaisha appealed to this Court.
It appears from the record that on the 21st day of October, 1918, while the
steampship Kyodo Maru was discharging a cargo of coal, the property of the defendant
Vicente Madrigal, in the harbor of Manila, inside the breakwater, one of the lighters
alongside said vessel sank. In swinging with the tide, the Kyodo Maru came violently in
contact with this submerged lighter, the result being that her hull was perforated.
The said steamer began to sink during the morning of October 22d and touched the bottom
of the harbor at 10 o'clock of the same morning. She continued to sink deeper into the mud
until, on October 23d, the forward half of the vessel was entirely submerged, while the stern
half was still afloat.
The depth of the water in that part of the harbor where the vessel was moored at the time of
the accident is about 21 feet at low tide. The depth of the vessel from deck to keel is about
35 feet. The value of the vessel at the time of the accident was about P1,300,000, Philippine
currency.
On the afternoon of October 23d, the plaintiffs, at the request of the captain and agents of
the ship, took possession of the sinking vessel as salvors and commenced salvage operation
at once. At that time they had submitted two propositions to the captain and agents of the
ship as to compensation for the salvage services to be performed: One for P150,000 in case
of success and reimbursement of expenses in case of failure, and another for P300,000 "no
cure no pay." The plaintiffs were informed that the propositions would be transmitted to the
owners of the vessel in Japan for acceptance or rejection, but they were requested to
continue work in the meantime, upon the understanding that if no special contract should
be made they would be compensated as salvors.
The vessel was floated on October 30th and the salvage operations ended the following day.
On the afternoon of October 30th the plaintiffs were informed in writing that the head office
of the steamship company in Japan had, by cable, rejected both of the above-mentioned
propositions, and that it was proposed to settle with them on the basis of the reasonable
value of their services as salvors. Plaintiffs then made demand for payment of P150,000.
Defendants (not including Madrigal) offered to pay P75,000. Plaintiffs then made a counter
offer of P125,000. This was rejected, and plaintiffs then brought the present action for the
recovery of a salvage award of P300,000; but, in their trial brief, they reduced this demand
to P297,443.40.
During the pendency of the negotiations regarding the value of the salvage services, it was
agreed that the vessel should be freed from any lien which the plaintiffs might have upon
her as salvors, in consideration of the agreement of the defendant Mitsui Bussan Kaisha to
respond in solidum with the owner of the vessel, the defendant Uchida Kisen Kaisha, for
whatever might be found due the salvors upon final judgment.
There is no dispute with regard to the foregoing facts. The only dispute in this case is (1)
with regard to the amount of compensation to be awarded to the plaintiffs for the salvage of
the ship in question, and (2) whether or not the defendant-appellee Vicente Madrigal, as
owner of the cargo, is liable for any contribution to such compensation.
I. While the plaintiffs originally claimed P300,000 as compensation, which they reduced to
P297,443.40 in their trial brief in the court below, they have further reduced the same to
P275,000 in their brief on appeal to this court; whereas the defendants-appellants still
maintain their original contention that the plaintiffs are not entitled to more than P75,000.
This question of compensation involves two elements: (a) The actual expenses incurred in
the salvage operation, and (b) the reward for services rendered by the plaintiffs as salvors.
A. Attached to the plaintiffs' complaint is a statement (Exhibit A) of the expenses alleged
to have been incurred by them, aggregating the sum of P63,074.45. The defendants-
appellants, in their brief, vigorously challenge the reasonableness of these charges, alleging
that they "are palpably, grossly and sinfully exaggerated," and contend that if the plaintiffs
"are allowed P40,000 to recover their out-of-pocket expenses and the reasonable value of
the use of their equipment, they would certainly not be the losers."
Among the items in Exhibit A which are impugned by the defendants-appellants are the
following:
(1) Rental of pump lighter .................................................. P11,520.00
(2) Rental of derrick No. 2 ................................................. 9,600.00
(3) Rental of the launch Columbia ................................... 4,800.00
(4) Ferry service .................................................................. 7,410.00
(5) Rental of pumps ........................................................... 3,000.00
(6) Use of hose .................................................................... 10,612.50
(7) Charges for labor and supervision, consisting of:
26

(a) Preliminary labor in connection with preparing
equipment, machine shop work, and overhauling
equipment upon its return ................................................
(b) Labor at ship ...............................................................
(c) Supervision .................................................................
7,242.00
We shall not undertake to analyze the evidence relative to each of the foregoing items with
a view to arriving at an accurate estimate of the total expenses incurred by the plaintiff.
Such a task would be impossible of accomplishment inasmuch as plaintiffs themselves have
"just figured it out roughly," and the defendants' expert witness, Swann, by whom they
endeavored to show that the plaintiffs' charges were grossly exaggerated, also admits that
his estimates have only been "figured out roughly." Suffice it to say that after a perusal of
the luminous briefs of the eminent counsel for both parties, in relation with the evidence
adduced during the trial of the cause, we are persuaded that most of the charges for expenses
made by the plaintiffs are really exorbitant. Considering all of the facts and circumstances
of this case, and specially the inflated war prices of materials at the time the salvage in
question was performed, we are of the opinion that the sum of P50,000 would be a very
reasonable allowance to the plaintiffs for their cash outlay and the rental value of their
equipment.
B. With regard to the reward for salvage services, defendants-appellants maintain that the
sum of P35,000 would be a liberal net award to the salvors.
Section 10 of Act No. 2616 prescribes the rule for determining the reward for salvage as
follows:
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 Court of First
Instance of the province where the things salvage 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.
Counsel for defendants-appellants, however, assail the validity of said Act (No. 2616) "upon
the ground that salvage is a matter which pertains, both as regard the substantive law and
procedure, to the admiralty jurisdiction of the courts, and that, therefore, it is not within the
scope of the law-making authority of the Philippine Legislature." In support of that
contention counsel call attention to the fact that section 56 of Act No. 136 provided that the
Courts of First Instance shall have original jurisdiction "in all actions in admiralty and
maritime jurisdiction, irrespective of the value of the property in controversy or the amount
of the demand;" and that both the Philippine Bill and the Jones Law provide "that the
admiralty jurisdiction of the Supreme Court and Courts of First Instance shall not be
changed except by act of Congress." Counsel maintain that the phrase "admiralty and
maritime jurisdiction, used in said Act No. 136, and the same phrase used in the Organic
Law, are identical in meaning and that both apply not only to the mere power to hear and
P1,390.00
decide, but to the maritime law as a body.
3,352.00
In the case of Heath vs. The Steamer San Nicolas (7 Phil., 532), this court held that "the
2,500.00 phrase 'admiralty and maritime jurisdiction' found in Act No. 136, section 56, paragraph 4,
did not put in force in these Islands the law, practice, and procedure in force in admiralty
courts in the United States." In the case of G. Urrutia and Co. vs. Pasig Steamer and Lighter
Co. (22 Phil., 330, decided March 22, 1912, four years prior to the passage of Act No. 2616),
this court said: "There being no express legislation exactly applicable to cases of salvage,
nor legal principles thereto relating established by the courts, pursuant to the second
paragraph of article 6 of the Civil Code, we must fall back upon the customs of the place,
and, in the absence thereof, general principles of law."
In the case of the United States vs. Bull (15 Phil., 7), this court held that "an Act of the
legislative authority of the Philippine Government which has not been expressly
disapproved by Congress is valid unless its subject-matter has been covered by
Congressional legislation, or its enactment forbidden by some provision of the organic law."
It is not even suggested that the Act in question (No. 2616) has been expressly disapproved
by Congress, and our attention has not been called to any Act of Congress, applicable to the
Philippine Islands, relating to the subject-matter of said Act No. 2616, nor are we aware of
the existence of any such Act. The only question, then, is whether the provision in our
organic law (the Philippine Bill and the Jones Law) "that the admiralty jurisdiction of the
Supreme Court and Courts of First Instance shall not be changed except by act of Congress,"
should be construed as forbidding the Philippine Legislature from enacting such a law as
Act No. 2616, relating to salvage — a matter pertaining to admiralty. The answer to that
question depends upon whether or not Act No. 2616 doing in any way change the admiralty
jurisdiction of the Supreme Court and the Courts of First Instance, as provided by Act No.
136.
Even granting, without deciding, the contention of defendants-appellants that the phrase
"admiralty jurisdiction" used in our organic law applies not only to the power to hear and
decide but to the maritime law as a body, still we are unable to say that Act No. 2616 has
effected any change in the admiralty jurisdiction of this court and the Courts of First
Instance. Counsel cite the case of The Jelling (253 Fed. Rep., 381), The Felix (62 Fed. Rep.,
620), and The L. W. Perry (71 Fed. Rep., 745), in an effort to show that the rules prescribed
by section 11 of Act No. 2616 are different from the American maritime law. Again granting
that they are different, yet, as decided by this court in the San Nicolas case, supra, the
phrase "admiralty and maritime jurisdiction" found in Act No. 136 did not put in force in
these Islands the law, practice, and procedure in force in the admiralty courts in the United
States. The American maritime law not being necessarily in force in these Islands, it is clear
that Act No. 2616 of the Philippine Legislature could not and did not affect the same.
Therefore, following our decision in the Bull case, supra, we are of the opinion and so
decide that Act No. 2616 is valid until expressly disapproved by Congress.lawphil.net
Applying now the rules prescribed by section 10 of said Act No. 2616, above quoted, in
determining the reward for the salvage in question, the following facts should be taken into
account: (1) That the salvage operations in question were performed in Manila Bay, inside
the breakwater, where the depth of the water was only about 21 feet at low tide; (2) that
27
those operations lasted eight days — from noon of October 23rd to October 31st — although
the salvors appear to have rendered services until the 8th of November; (3) that the vessel
salved and its cargo were never in danger of total loss, although it is admitted that if the
vessel had sunk and listed, the expenses of recovering the same would have been
considerable; (4) that the salvage operation was comparatively simple, consisting merely of
using pumps to prevent the vessel from sinking any further, while the salvors were building
a cofferdam around the submerged forehatch preparatory to pumping her out; (5) that there
was no danger to the lives and property of the salvors in view of the proximity to the shore
of the place where the work was performed; (6) that the value of the equipment used,
including the launches employed to maintain the ferry service, was about P300,000; (7) that
the plaintiffs' outlay, together with the reasonable rental value of their equipment, was, as
we have heretofore estimated, the sum of P50,000; (8) that the Kyodo Maru was, at the time
she was salved, valued at P1,300,000; (9) that the captain of said vessel was in a hurry to
get her out because he had to meet a new charter in Japan; and (10) that the plaintiffs
accomplished the salvage with energy and promptitude, to the entire satisfaction of the
captain and agents of the vessel.
not facilitated the salving of the ship and such removal did not operate in any way to benefit
the cargo, nor save it from any risk or damage. The only benefit may be one to the owner
of the coal in an amount equivalent to the stevedoring charges he would have had to pay to
remove from the ship the 573 tons taken from her by these plaintiffs. As there is no evidence
as to the value of this, and as this defendant has offered to pay and is still willing to pay the
plaintiff that amount, it need not be further discussed here."
While we agree with the defendant-appellee that, as the record shows, the removal of the
573 tons of coal from the vessel was merely incidental to, and necessitated by, the raising
of said vessel, we cannot agree with him that "such removal did not operate in any way to
benefit the cargo, nor save it from any risk or damage.' Had the vessel completely sunk and
listed, extreme difficulty would no doubt have been encountered in removing the coal in
question from her hold, thus occasioning considerable expense and loss to this defendant.
It is also undeniable that part of the plaintiffs expenses which we have allowed against
defendants-appellants were incurred in carrying such coal to the shore. It is but just, then,
that defendant-appellee should share a proportionate amount of the award.

Considering all of the foregoing facts in relation with the award heretofore made by this
court in the salvage cases of Erlanger and Galinger vs. Swedish East Asiatic Co., Ltd. (34
Phil., 178), Manila Railroad Co. vs. Macondray and Co. (37 Phil., 850), and G Urrutia and
Co. vs. Pasig Steamer and Lighter Co. (22 Phil., 330), we are persuaded that the sum of
P50,000 would be an equitably liberal net compensation to the plaintiffs as salvors of
the Kyodo Maru. This together with the sum of P50,000 which we have found should be
allowed them for their expenses and the reasonable rental value of their equipment, makes
a total award to the plaintiffs of the sum of P100,000. We are persuaded that this amount is
a sufficient compensation for the outlay and effort of the salvors in the present case, and
that the same is liberal enough to constitute an inducement to others to render like services
in similar emergencies in the future.
II. The next question for determination is the liability, if any, of the defendant Vicente
Madrigal as owner of the cargo, to contribute to the salvage award above-mentioned.
At the time the plaintiffs commenced their work as salvors there were 2,005 tons of coal on
the vessel, the property of the said defendant. In order to raise the vessel it was necessary
for the salvors to take part of said coal from her. The coal so taken and brought ashore by
the plaintiffs amounted to 573 tons. The value of that coal in Manila at that time was P45 a
ton.
Considering, however, that the removal of said coal from the sinking vessel was merely
incidental to salving her; and considering that only 573 tons of such cargo were actually
taken by the plaintiffs from the ship, it being no longer necessary to touch the rest for the
purpose of raising her, we are of the opinion that full justice would be done to all the parties
concerned by taking the value of the said 573 tons of coal in relation with the value of the
ship, and thus apportion the salvage award between their respective owners. The said 573
tons of coal, at P45 a ton, are worth P25,785, which is approximately 2 per cent of the value
of the ship (which is estimated at P1,300,000). Hence the defendant-appellee should be
made to pay 2 per cent of the award of P100,000, or the sum of P2,000.
Wherefore, the judgment appealed from is hereby modified, and it is hereby ordered and
decreed that the plaintiffs have and recover the sum of P98,000, Philippine currency, from
the defendants Uchida Kisen Kaisha and Mitsui Bussan Kaisha, jointly and severally, and
the sum of P2,000, Philippine currency, from the defendant Vicente Madrigal, without any
findings as to costs in this instance. So ordered.

The lower court absolved this defendant from liability upon the ground (a) that "it does not
appear that the cargo was in serious danger of injury or loss," and (b) that although the
plaintiffs may perhaps be entitled to compensation for the unloading and landing of the 573
tons, the record contains no data from which the amount of such compensation can be
determined. Defendants appellants take exception to that conclusion of the lower court and
contend that the salvage award should be apportioned between them, as owners of the
vessel, and defendant-appellee, as owner of the cargo; that the value of the whole amount
of coal on board the vessel at the time of the salvage was P92,525, which is approximately
6 ½ per cent of the value of the vessel; and that that proportion should be awarded against
the defendant-appellee. Defendant-appellee, on the other hand, contends that: "All the
service rendered to the cargo, the property of this defendant if any was in fact so rendered,
was not rendered with an intent to benefit the cargo, but to assist the salvors in their principal
work, the raising of the ship. They would not have removed a ton of this coal had its removal

28
SHIPWRECKS: SALVAGE LAW
G.R. No. L-17192 March 30, 1963
HONORIO M. BARRIOS, plaintiff-appellant,
vs.
CARLOS A. GO THONG & COMPANY, defendant-appellee.
BARRERA, J.:
From the decision of the Court of First Instance of Manila (in Civil Case No. 37219)
dismissing with costs his case against defendant Carlos A. Go Thong & Co., plaintiff
Honorio M. Barrios, interposed the present appeal.
The facts of the case, as found by the trial court, are briefly stated in its decision, to wit:
The plaintiff Honorio M. Barrios was, on May 1 and 2, 1958, captain and/or master of the
MV Henry I of the William Lines Incorporated, of Cebu City, plying between and to and
from Cebu City and other southern cities and ports, among which are Dumaguete City,
Zamboanga City, and Davao City. At about 8:00 o'clock on the evening of May 1, 1958,
plaintiff in his capacity as such captain and/or master of the aforesaid MV Henry I, received
or otherwise intercepted an S.O.S. or distress signal by blinkers from the MV Don Alfredo,
owned and/or operated by the defendant Carlos A. Go Thong & Company. Acting on and/or
answering the S.O.S. call, the plaintiff Honorio M. Barrios, also in his capacity as captain
and/or master of the MV Henry I, which was then sailing or navigating from Dumaguete
City, altered the course of said vessel, and steered and headed towards the beckoning 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 I, under the command of the plaintiff,
succeeded in getting near the MV Don Alfredo — in fact as near as about seven 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 I; and in that manner, position and situation,
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 and
accomplished by the Master, the Chief Engineer, the Chief Officer, and the Second
Engineer, of the MV Don Alfredo, who were then on board the latter ship at the time of the
occurrence stated above (Exh. A). At about 5:10 o'clock the following morning, May 2,
1958, or after almost nine hours during the night, with the MV Don Alfredo still in tow by
the MV Henry I, and while both vessels were approaching the vicinity of Apo Islands off
Zamboanga town, Negros Oriental, the MV Lux, a sister ship of the MV Don Alfredo, was
sighted heading towards the direction of the aforesaid two vessels, reaching then fifteen
minutes later, or at about 5:25 o'clock on that same morning. Thereupon, at the request and
instance of the captain and/or master of the MV Don Alfredo, the plaintiff caused the tow
lines to be released, thereby also releasing the MV Don Alfredo.
These are the main facts of the present case as to which plaintiff and defendant quite agree
with each other. As was manifested in its memorandum presented in this case on August
22, 1958, defendant thru counsel said that there is, indeed, between the parties, no dispute
as to the factual circumstances, but counsel adds that where plaintiff concludes that they
establish an impending sea peril from which salvage of a ship worth more than P100,000.00,
plus life and cargo was done, the defendant insists that the facts made out no such case, but
that what merely happened was only mere towage from which plaintiff cannot claim any
compensation or remuneration independently of the shipping company that owned the
vessel commanded by him.
On the basis of these facts, the trial court (on April 5, 1960) dismissed the case, stating:
Plaintiff bases his claim upon the provisions of the Salvage Law, Act No. 2616,
.....
In accordance with the Salvage Law, a ship which is lost or abandoned at sea is
considered a derelict and, therefore, proper subject of salvage. A ship in a
desperate condition, where persons on board are incapable, by reason of their
mental and physical condition, of doing anything for their own safety, is a quasi-
derelict and may, likewise, be the proper subject of salvage. Was the MV Don
Alfredo, on May 1, 1958, when her engine failed and, for that reason, was left
drifting without power on the high seas, a derelict or a quasi-derelict? In other
words, was it a ship that was lost or abandoned, or in a desperate condition, which
could not be saved by reason of incapacity or incapacity of its crew or the persons
on board thereof? From all appearances and from the evidence extant in the
records, there can be no doubt, for it seems clear enough, that the MV Don
Alfredo was not a lost ship, nor was it abandoned. Can it be said that the said ship
was in a desperate condition, simply because S.O.S. signals were sent from it?.
From the testimony of the captain of the MV Don Alfredo, the engine failed and
the ship already lost power as early as 8:00 o'clock on the morning of May 1,
1958; although it was helpless, in the sense that it could not move, it did not drift
too far from the place where it was, at the time it had an engine failure. The
weather was fair — in fact, as described by witnesses, the weather was clear and
good. The waves were small, too slight — there were only ripples on the sea, and
the sea was quite smooth. And, during the night, while towing was going on, there
was a moonlight. Inasmuch as the MV Don Alfredo was drifting towards the open
sea, there was no danger of floundering. As testified to by one of the witnesses, it
would take days or even weeks before the ship could as much as approach an
island. And, even then, upon the least indication, the anchor could always be
weighed down, in order to prevent the ship from striking against the rocks.
"There was no danger of the vessel capsizing, in view of the fairness of the sea,
and the condition of the weather, as described above. As a matter of fact, although
the MV Don Alfredo had a motor launch, and two lifeboats, there was no attempt,
much less, was there occasion or necessity, to lower anyone or all of them, in
order to evacuate the persons on board; nor did the conditions then obtaining
require an order to jettison the cargo.
But, it is insisted for the plaintiff that an S.O.S. or a distress signal was sent from
aboard the MV Don Alfredo, which was enough to establish the fact that it was
exposed to imminent peril at sea. It is admitted by the defendant that such S.O.S.
signal was, in fact, sent by blinkers. However, defendant's evidence shows that
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Captain Loresto of the MV Don Alfredo, did not authorize the radio operator of
the aforesaid ship to send an S.O.S. or distress signal, for the ship was never in
distress, nor was it exposed to a great imminent peril of the sea. What the aforesaid
Captain told the radio operator to transmit was a general call; for, at any rate,
message had been sent to defendant's office at Cebu City, which the latter had
acknowledged, by sending back a reply stating that help was on the way.
However, as explained by the said radio operator, in spite of his efforts to send a
general call by radio, he did not receive any response. For this reason, the Captain
instructed him to send the general call by blinkers from the deck of the ship; but
the call by blinkers, which follows the dots and dashes method of sending
messages, could not be easily understood by deck officers who ordinarily are not
radio operators. Hence, the only way by which the attention of general officers on
deck could be called, was to send an S.O.S. signal which can be understood by
all and sundry.
Be it as it may, the evidence further shows that when the two ships were already
within hearing distance (barely seven meters) of each other, there was a sustained
conversation between Masters and complement of the two vessels, by means of
loud speakers and the radio; and, the plaintiff must have learned of the exact
nature and extent of the disability from which the MV Don Alfredo had suffered
— that is, that the only trouble that the said vessel had developed was an engine
failure, due to the loss of its propellers..
It can thus be said that the MV Don Alfredo was not in a perilous condition
wherein the members of its crew would be incapable of doing anything to save
passengers and cargo, and, for this reason, it cannot be duly considered as a quasi-
derelict; hence, it was not the proper subject of salvage, and the Salvage Law, Act
No. 2616, is not applicable.
Plaintiff, likewise, predicates his action upon the provisions of Article 2142 of
the New Civil Code, which reads as follows:
Certain lawful, voluntary and unilateral acts give to the juridical
relation of quasi-contract to the end that no one shall be unjustly
enriched or benefited at the expense of another.
This does not find clear application to the case at bar, for the reason that it is not
the William Lines, Inc., owners of the MV Henry I which is claiming for damages
or remuneration, because it has waived all such claims, but the plaintiff herein is
the Captain of the salvaging ship, who has not shown that, in his voluntary act
done towards and which benefited the MV Don Alfredo, he had been unduly
prejudiced by his employers, the said William Lines, Incorporated.
What about equity? Does not equity permit plaintiff to recover for his services
rendered and sacrifices made? In this jurisdiction, equity may only be taken into
account when the circumstances warrant its application, and in the absence of any
provision of law governing the matter under litigation. That is not so in the present
case.
In view of the foregoing, judgment is hereby rendered dismissing the case with
costs against the plaintiff; and inasmuch as the plaintiff has not been found to
have brought the case maliciously, the counterclaim of the defendant is, likewise,
dismissed, without pronouncement as to costs.
SO ORDERED.
The main issue to be resolved in this appeal is, whether under the facts of the case, the
service rendered by plaintiff to defendant constituted "salvage" or "towage", and if so,
whether plaintiff may recover from defendant compensation for such service.
The pertinent provision of the Salvage Law (Act No. 2616), provides:
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.
According to this provision, 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, 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, (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.1
Was there a marine peril, in the instant case, to justify a valid salvage claim by plaintiff
against defendant? Like the trial court, we do not think there was. It appears that although
the defendant's vessel in question was, on the night of May 1, 1958, in a helpless condition
due to engine failure, it did not drift too far from the place where it was. As found by the
court a quo 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 it floundering or being stranded, as it was far
from any island or rocks. In case of danger of stranding, its anchor could 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 aboard. Neither did they
find occasion to jettison the vessel's cargo as a safety measure. Neither the passengers nor
the cargo were in danger of perishing. All that the vessel's crew members could not do was
to move the vessel on its own power. That did not make the vessel a quasi-derelict,
considering that even before the appellant extended the help to the distressed ship, a sister
vessel was known to be on its way to succor it.
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If plaintiff's service to defendant does not constitute "salvage" within the purview of the
Salvage Law, can it be considered as a quasi-contract of "towage" created in the spirit of
the new Civil Code? The answer seems to incline in the affirmative, for in consenting to
plaintiff's offer to tow the vessel, defendant (through the captain of its vessel MV Don
Alfredo) thereby impliedly entered into a juridical relation of "towage" with the owner of
the vessel MV Henry I, captained by plaintiff, the William Lines, Incorporated.

Tug which put line aboard liberty ship which was not in danger or peril but which
had reduced its engine speed because of hot grounds, and assisted ship over bar
and, thereafter, dropped towline and stood by while ship proceeded to dock under
own power, was entitled, in absence of written agreement as to amount to be paid
for services, to payment for towage services, and not for salvage services. (Sause,
et al. v. United States, et al., 107 F. Supp. 489)

If the contract thus created, in this case, 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 remuneration.

It often becomes material too, for courts to draw a distinct line between salvage and towage,
for the reason that a reward ought sometimes to be given to the crew of the salvage vessel
and to other participants in salvage services; and such reward should not be given if the
services were held to be merely towage. (The Rebecca Shepherd, 148 F. 731.)

The master and members of the crew of a tug were not entitled to participate in payment by
liberty ship for services rendered by tug which were towage services and
not salvage services. (Sause, et al. v. United States, et al., supra.)

"The distinction between salvage and towage is of importance to the crew of the salvaging
ship, for the following reasons: If the contract for towage is in fact towage, then the crew
does not have any interest or rights in the remuneration 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. (I Norris, The Law of
Seamen, Sec. 222.)

And, as the vessel-owner, William Lines, Incorporated, 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 of his employer, is not entitled
to payment for such towage service.

Neither may plaintiff invoke equity in support of his claim for compensation against
defendant. There being an express provision of law (Art. 2142, Civil Code) 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.

WHEREFORE, finding no reversible error in the decision of the court a quo appealed from,
the same is hereby affirmed in all respects, with costs against the plaintiff-appellant. So
ordered.

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