ERLINGER v GALINGER

Doctrine: In general, salvage may be defined as a service which one person renders to the owner of a ship which the owner or those entrusted with the are unable to protect and secure.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.

Facts:• The steamship Nippon loaded principally

with copra and with some other general merchandise sailed from Manila on 7 May 1913, bound for Singapore.

• Accident: The steamship Nippon went aground on Scarborough Reef about 4:30 p.m. of 8 May 1913.

⁃ Scarborough Reef is about 120 to 130 miles from the nearest point on the Island of Luzon. • On 9 May 1913, the chief officer, Weston,

and 9 members of the crew left the Nippon and succeeded in reaching the coast of Luzon at Santa Cruz, Zambales, on the morning of 12 May 1913. On 12 May 1913, at 12:30 p.m. the chief officer sent a telegram to Helm, the Director of the Bureau of Navigation at Manila.

• 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.

•• At 3 p. m. the steamship Manchuria sailed

from manila for Hongkong and was requested to pass by Scarborough Reef. The Manchuria arrived at Scarborough Reef some time before the arrival of the Mindoro on 13 May 1913, and took on board the captain and the remainder of the crew.

• 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. The captain and crew of 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.

• The Mindoro proceeded to Santa Cruz, Zambales, where the chief officer, Weston, and the 9 members of the crew were taken on board and brought to Manila, arriving there on 14 May 1913.

• On 13 May 1913, Dixon, captain of the Manchuria sent the message that “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.”

• The captain of the Nippon saw the above message before it was sent.

• On 14 May 1913, Erlanger & Galinger 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.” The coast guard cutter Mindoro was chartered to Erlanger & Galinger and started on its return to the S.S. Nippon on 14 May 1913. Erlanger & Galinger took possession of the Nippon on or about 17 May 1913, and continued in possession until about 1July 1914, when the last of the cargo was shipped to Manila.

• The Nippon was floated and towed to Olongapo, where temporary repairs were made, and then brought to Manila. The Manchuria arrived at Hongkong on the evening of 14 May 1913.

• When the captain and crew left the Nippon and went on board the 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.

• The cargo was brought to the port of Manila and the values for the (1) Copra (approximately 1317 tons) valued at, less cost of sale by Collector of Customs were valued at P142,657.05; (2) General

cargo-sold at customhouse at P5,939.68; (3) Agar-agar at P5,635.00; (4) Gamphor at P 1,850.00; (5) Curios at P150.00, respectively; totaling P156,231.73. The ship was valued at P250,000. The Erlanger & Galinger’s claim against the ship was settled for (L)15,000 or about P145,800.

• On 5 August 1913, Erlanger & Galinger brought an action against the insurance companies and underwriters, who represented the cargo salved from the Nippon, to have the amount of salvage, to which Erlanger & Galinger 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 1,000 case 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 adjudged the case in favor of Erlanger & Galinger for ½ of the net proceeds of sales amounting to P74,298.36 and ½ of the interest accruing thereon, and against Carl Maeckler for the sum of P925, and against the New Zealand Insurance Company (Ltd.) for the 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 ½ of the interest thereon.” No costs were taxed.

• The Oelwerke Teutonia, The New Zealand

Insurance Company (Ltd.). and Erlanger & Galinger appealed from the decision.

ISSUE:WON it is salvage

HELD:

CS ROBINSON v THE SHIP ALTA

Facts:the sailing vessel Alta was wrecked and stranded upon the coast ofCavite Province. The certain of the ship removed the cargo and afterworking ten or twelve days in attempts to float the ship made acontract, in writing, with the plaintiffs, which is as follows:MANILA, November 1, 1905.Mr. CHARLES S. ROBINSON, Manila.DEAR SIR: Referring to your offer of 31st ultimo, re the raising of theship Alta — viz, to put her into Cavite and in such condition that it willadmit of her being sailed to Hongkong or other port, subject to beingpassed by Lloyds' surveyor — for the sum of fifteen thousand pesos(P15,000), Philippine currency, I accept the same and shall esteem ita favor if you will commence the work with the least possible

delay.Should you not be successful, it is distinctly understood that nomoney whatever is to be paid for any work done or appliances used.Yours, faithfully, (Sgd.) W. THONAGELThe plaintiffs went to work immediately upon the vessel, raised it, and towed it to Cavite on the 10th day of December, 1905. It was at oncedecided to put her into the dry dock or slip there for the purpose ofexamining her hull and ascertaining the extent of the damagesThe plaintiffs, on the 30th day of December, 1905, were paid by thedefendants the sum of 3,000 pesos on account of the contract. Theybrought this action against the ship and her master on the 27th day ofFebruary, 1906, claiming to recover the reasonable worth and valueof the services performed by them, which they fixed at 15,000 pesos.Issue: WON the plaintiffs-salvor are entitled to compensation bysalvaging the ship?Held: NO,The contract in this case, being contingent upon success, their claimis that they are not bound by it.We are all of opinion that this question must be answered in the

negative. Salvage services are either (1) voluntarily, wherein thecompensation is dependent upon success; (2) rendered under acontract for a per diem or per horam wage, payable at all events; or(3) under a contract for a compensation payable only in case ofsuccess.The first and most ancient class comprises cases of pure salvage.The second is the most common upon the Great Lakes. The thirdincludes the one under consideration. Obviously where the stipulatedcompensation is dependent upon success, and particularly ofsuccess within a limited time, it may be very much larger than a merequantum meruit. Indeed, such contracts will not be set aside unlesscorruptly entered into, or made under fraudulent representations, aclear mistake or suppression of important facts, in immediate dangerto the ship, or under other circumstances amounting to compulsion,or when their enforcement would be contrary to equity and goodconscience.The judgment of the court below is reversed and judgment is orderedin favor of the defendants and against the plaintiffs, absolving

thedefendants from the complaint, with the costs of the first instance. Nocosts will be allowed to either party in this court. So ordered.

THE MANILA RAILROAD CO., plaintiff-appellant, vs.MACONDRAYand CO., defendant-appellant.plaintiff, the Manila Railroad Company, upon February 24, 1916, inthe Court of First Instance of the city of Manila to recover of thedefendant, Macondray and Co., the sum of P75,000, the allegedvalue of salvage service rendered on April 6, 1915, by the steamerHondagua, owned by the plaintiff, to the steamer Seward, which wasowned by the defendant. At the hearing judgment was rendered infavor of the plaintiff for the sum of P4,000. From this judgment bothparties have appealed, the plaintiff insisting that the amount allowedby the lower court is inadequate, the defendant that it is excessive.Seward left Saigon for the Philippine Islands, encountering amoderately high sea. The ship was laden with a cargo of rice, theweight of which, taken in connection with the condition of the sea,

caused the vessel to spring a leak, and her master felt compelled toreturn to Saigon. At this juncture the steamship Hondagua wassighted, whereupon the Seward flew the international code signal "Indistress; want immediate assistance." The Hondagua changed hercourse and approached the Seward, the latter in successiondisplaying the following signals: "I have sprung a leak;" "I wish to betaken in tow;" "Can you spare hawser;" and "The leak is gainingrapidly." In response to signals from the Hondagua the Seward senther own boat to the Hondagua for a heaving line, by means of whicha hawser was passed from the Hondagua to the Seward and theformer, with the latter in tow, then proceeded at half speed towardsSaigon.ISSUE: (1) Is the plaintiff entitled to recover from the owner of theSeward, in this action, remuneration for saving the cargo as well asfor saving the ship? (2) What is the reasonable compensation whichshould be allowed in this action?HELD: YES BOTH

salvage allowance should be apportioned between the ship andcargo in the proportion of their respective values, the same as in acase of general average; and neither is liable for the salvage due from the otherIn fixing the amount of compensation to be awarded for salvage service, it has bee n declared by the Supreme Court of the United States that the principal circumstances to be taken into consideration are: (1) The labor expended by the salvors in rendering the salvage service; (2) The promptitude, skill, and energy displayed in rendering the service and saving the property; (3) The value of the property employed by the salvors in rendering the service, and the danger to which such property was exposed; (4) The risk incurred by the salvors in rescuing the property from the impending peril; (5) The value of the property salved; and (6) The degree of danger from which the property was rescuedIn applying these criteria to the case now before us, the followingcircumstances, not already noted, are pertinent, namely: theHondagua was delayed in her voyage about nine hours, during five ofwhich she was engaged in towing the Seward. This delay caused

herto enter at Iloilo, the port of her arrival instead of the late afternoon ofthe previous day; but the unloading of her cargo was not therebyretarded. Considered on the basis of charter party contract underwhich she was operating, the Hondagua was earning about P300 perday, which was considered reasonable compensation for her use,including the services off officers and crew. The service rendered didnot involve any further expenditure of labor on the part of the salvorsthan such as was commonly incident to working the ship. No unusualdisplay of skill and energy on their part was required; and thecondition of the sea was not such as to involve any special risk eitherto the Hondagua or her crew. Finally, the danger from which theSeward was rescued was real, as the ship when taken in tow wasconfronted by a serious peril. The value of the vessel when savedwas, we think, properly fixed by the trial court at P20,000.In determining the amount of the award to be allowed in cases of this kind the aim should be to hold out to seafaring men a fair inducement

to the performance of salvage services without fixing a scale of compensation so high as to cause vessel in need of such services to hesitate and decline to receive them because of the ruinous cost. That the salvor is entitled, as of bounty, to something more than mereremuneration for his own work and the risk incurred by him

BARIOS V GO THONGFACTS: Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel, and steered and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon getting close to the MV Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also released.

Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an appeal.

ISSUE: 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.

HELD:It is not a salvage service.

Salvage defined“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.”

Elements for a valid salvage claim; Erlanger & Galinger caseIn 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.

No marine peril to justify valid salvage claimThere was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It appears that although Go Thong’s vessel in question was, on the night of 1 May 1958, in a helpless condition due to engine failure, it did not drift too far from the place where it was. The weather was fair, clear, and good. The waves were small and too slight, so much so, that there were only ripples on the sea, which was quite smooth. During the towing of the vessel

on the same night, there was moonlight. Although said vessel was drifting towards the open sea, there was no danger of its foundering or being stranded, as it was far from any island or rocks. In case of danger of stranding, its anchor could be released, to prevent such occurrence. There was no danger that Go Thong’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.

Contract of towage perfected even without written agreementHerein, in consenting to Barrios’ offer to tow the vessel, Go Thong (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 Barrios, the William Lines.

Only owner entitled to remuneration in towageIf the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to remuneration. The courts have 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 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. 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 salved vessel for its share.

Equity cannot be resorted if there is an express provision of lawBarrios cannot invoke equity in support of his claim for compensation against Go Thong. There being an express provision of law (Art. 2142, Civil Code) applicable to the relationship created in the case, i.e. 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.

URRUTIA v PASOG STEAMERUnder date of May 19, 1909, counsel for G. Urrutia and Companyfiled a written complaint against The Pasig Steamer and Lighter Co.,wherein it was alleged that the plaintiff company was the owner of thesteamer Nuestra Señora del Pilar, inscribed in the marine

registry ofthe port of Manila; that the said vessels was provided with the properlicense to navigate and trade in the waters of the Philippines, wasworth P80,000 in cash, and, on the dates mentioned in the complaint,was carrying a cargo valued at P45,000; that the defendant companywas the owner of the steamer San Juan, inscribed in the marineregistry of the port of Manila; that on or about December 6, 1908,while a storm was raging, the steamer Nuestra Señora del Pilar,belonging to the plaintiff, was navigating in the direction of the port ofLegaspi and, after twenty hours and thirty minutes, descried, towardMal-Abrigo, a steamship which had signal flags hoisted, whereforethe Nuestra Señora del Pilar directed its course towards the saidvessel, which proved to be the San Juan displaying the signals M Yand L D, which mean: "Am unable to navigate. Will you tow me to asafe anchorage?" that on that occasion, the steamer Nuestra Señoradel Pilar, with great risk to itself, rendered salvage service to the San

Juan by taking it to a safe port, and that, had it not been for theopportune, prompt and efficacious aid lent by the Nuestra Señora delPilar, the San Juan and its cargo would certainly have been totallylost; that the salved steamer, together with its cargo, was worth onthe dates of the salvage and the complaint P100,000, at a true cashvaluation; that the just and adequate remuneration for the salvageservice rendered by the Nuestra Señora del Pilar to the San Juanamounted to the sum of P40,000; and that; notwithstanding that theplaintiff company had demanded of the defendant concern thepayment of the said sum for the salvage service referred to, andsince the 15th of January, the defendant, without objecting to theamount of the plaintiff's claim, had not paid the same and had beendelaying the payment thereof under futile pretexts: wherefore, theplaintiff prayed that judgment be rendered in its behalf, to enable it tocollect from the defendant the sum of P40,000, with legal interestthereon from January 15, and the costs.

Issue: Whether or not there is salvage?Held: YESWhen so important a service is rendered as that of salving a vesselwith its crew and the cargo it carries, from a positive danger to whichit is exposed, exposed, strict justice demands that whoever effects someritorious a service should receive adequate remuneration therefor,not only on account of act performed in behalf of the shipowner andthe crew, but also because of the danger run by the vessel whichmade the salvage, due to the circumstances that existed at the timesuch service was rendered.The principle has been established by the courts of the United Statesthat when a vessel has been disabled by the breaking of its shaft atsea and the hoist signals asking for aid, and another vessel goes toits relief and takes it in tow, such service rendered is one of salvage,and not merely of towage.The towage of a vessel in peril to some place of security, when it isunable by itself to reach the same, is a service of salvage.The towage of a vessel which has the lost use of its engine byaccident, though it is complete in its hull and masts, is a service

ofsalvage, and it is not necessary that the said loss be inevitable since,in view of the peril, the vessel could not be salved in any other way;for it is sufficient that at the moment the service was rendered therewas a probable, threatening danger and reasonable fear that it mightstrike.Hence it is not here a question of a simple service of towage inordinary and normal whether, but of an extraordinary act of salvageperformed in behalf of the steamer San Juan, in exceptionalcircumstances and while a cyclone was raging over the part of thesea where the salved vessel then was, which, in the midst of suchperil, was unable to govern its movements through its engine onaccount of the inserviceability of its propeller.Compensation in such cases as that which occurred to the San Juan,deserves to be considered as a reward for the service rendered bythe Nuestra Señora del Pilar in the midst of a peril to which the rescued as well as the salving steamer was exposed, and it is properthat such reward should be made, not only because of the

salvage ofthe vessel and of the goods carried and the rescue of the crew, butalso in order that it may serve as an incentive to render prompt andefficient aid in such cases when requested by those who in the midstof such unfortunate circumstances are urgently in need thereof. Itshould also be borne in mind that the Nuestra Señora del Pilar is amerchant vessel and as such should with more reason be favored forthe service which it rendered to the San Juan, which perhapsotherwise might have been lost with all its cargo and crew.

ATLANTIC GULF v UCHIDAon the 21st day of October, 1918, while the steampship Kyodo Maruwas discharging a cargo of coal, the property of the defendantVicente Madrigal, in the harbor of Manila, inside the breakwater, oneof 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 samemorning. She continued to sink deeper into the mud until, on October23d, the forward half of the vessel was entirely submerged, while thestern half was still afloat.On the afternoon of October 23d, the plaintiffs, at the request of thecaptain and agents of the ship, took possession of the sinking vesselas salvors and commenced salvage operation at once. At that timethey had submitted two propositions to the captain and agents of theship as to compensation for the salvage services to be performed:One for P150,000 in case of success and reimbursement ofexpenses in case of failure, and another for P300,000 "no cure nopay." The plaintiffs were informed that the propositions would betransmitted to the owners of the vessel in Japan for acceptance orrejection, but they were requested to continue work in the meantime,upon the understanding that if no special contract should be madethey 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 30ththe 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 withthem on the basis of the reasonable value of their services as salvors.ISSUE: (1) with regard to the amount of compensation to be awardedto the plaintiffs for the salvage of the ship in question, and (2) whetheror not the defendant-appellee Vicente Madrigal, as owner of the cargo, is liable for any contribution to such compensation.HELD: 1. This question of compensation involves two elements: (a) The actual expenses incurred in the salvage operation, and (b) the rewardfor services rendered by the plaintiffs as salvors. (a) we are persuaded that most of the charges for expenses made bythe 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 salvorswe are persuaded that the sum of P50,000 would be an equitablyliberal net compensation to the plaintiffs as salvors of the KyodoMaru. This together with the sum of P50,000 which we have foundshould be allowed them for their expenses and the reasonable rentalvalue of their equipment, makes a total award to the plaintiffs of thesum of P100,000. We are persuaded that this amount is a sufficientcompensation for the outlay and effort of the salvors in the presentcase, and that the same is liberal enough to constitute an inducementto others to render like services in similar emergencies in the future.2. YES, 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

thisdefendant. 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.

WALLACE v PUJALTEFacts:This is an action of replevin begun by the owner to recoverpossession of a schooner called the Kodiak which had been desertedby its captain and crew by reason of its having been capsized by agale and which had been found, taken possession of and towed intoport by the defendants Miguel Pujalte and Miguel Ossorio who, at thetime the action was begun, were engaged in completing the salvageof the vessel. The defendants Miguel Pujalte and Miguel Ossorio setup their rights on the vessel as salvors and contend that they wereentitled to the possession of the vessel until the salvage operationswere completed and that, if possession were taken from them before

that time, they were entitled to the same compensation as they wouldhave been if the plaintiff had allowed them to complete the work.There is little dispute about the important facts of the case. It appearsthat on the 4th day of August, 1913, the schooner Kodiak was lost off the coast of Mindoro, having been blown on her side by heavy winds. She was floating at the mercy of the elements of three or four days. On or about 7th of August, the report of her loss reached the Collector of Customs of the Philippine Islands who immediately issued a circular letter to the masters of all steamers and vessels plying in Philippine waters, declaring the Kodiak a derelict and a danger to navigation. As soon as the circular letter was received by defendants Miguel Pujalte and Miguel Ossorio they chartered the coast guard cutter Mindoro and proceeded to search for the lost schooner. On the 8th day of August they left the port of Manila carrying on board Captain Jose Muñoz and some men, who were to take charge of, and direct, the salvage operations. Two days later the Kodiak was located, floating abandoned on her side, with all her sails unfurled and under water. Immediately a boat, with Captain Jose Muñoz and his men, was lowered from the coast guard cutter

and, in the midst of a heavy sea and strong wind, they succeeded in making fast a rope to the stern of the Kodiak . They towed her into the port of Pola, reaching that port a day or two later, they being obliged to proceed very slowly not only on account of the heavy sea but also by reason of the fact that the Kodiak was full of water. Once in Pola Bay men were left in charge of the vessel while Captain Jose Muñoz wentback to Manila on the Mindoro, and reported to his employers. They immediately chartered the steamer Lakandula to carry workmen and to tow a lighter called the Paquita with salvage materials and implements to Pola Bay. They also dispatched the steamer Maria Luisa Y. to assist in the salvage work.On the 12th day of August 1913 plaintiff's agent delivered to MiguelPujalte the following letter:We have been informed that the schooner Kodiak has been towedinto the port of Pola, Mindoro, by the cutter Mindoro belonging to theGovernment which was chartered for that purpose by you. TheKodiak belongs to Captain Thomas A. Wallace, of Binaluan (Palawan)and we are the persons to whom the vessel and cargo were

consigned. On behalf of the owner of the Kodiak we offer to pay youfor the services rendered in salving the vessel up to the present time,and we offer to take possession of the Kodiak where it now is on thebeach of Mindoro. As representatives of the owner we shall refuse topay any expense which you may incur from now on.Please furnish us with the amount of compensation to which youbelieve you are entitledIn case you ask more than we regard as reasonable we will pay youthe amount decided upon by a board of arbitration to be selected bythe officers of the Maritime Association; and if this is not agreeable toyou we will pay you whatever a court of justice will adjudge.If you require it we will give a bond to carry the above offer into effect.The defendants contend that all the arrangements for the salvage of the Kodiak has been made before the receipt of the letter written by plaintiff's agent and that the larger part of the expenses for the salvage of the Kodiak had already been incurred at that time; that they therefore proceeded with the salvage and were about to finish their work successfully when the complaint was filed in this case

and the possession of the schoonerIssue: WON there is a valid salvage? And does the salvors entitled to compensation?HELD: YESThere is no doubt about the fact that the Kodiak capsized off the coast of Mindoro during a storm and that she was deserted by her officers and crew and left floating on her side with sails unfurled and under water. Nor is there question about the fact that the Bureau of Navigation of the Philippine Islands declared the vessel a derelict anddangerous to navigationthat a considerable portion of the expenses were incurred after the owner delivered the letter of August 12 notifying the defendants that he would pay the expenses incurred up to the time the notice was served together with the compensation to which they were entitled, and that they would pay nothing from that time forward either as expenses or as compensationWhatever might be said with regard to the effect of this letter on the relations between the parties if it stood alone in the record it is unnecessary to say. It is not a demand for the possession of the Kodiak in the sense in which that word is generally used. It is

merely an offer to do certain things. We do not care to determine the precise effect of this offer from a legal point of view since it appears that the circumstancesWhatever effect the notice in question might have produced was nullified by the attitude of the plaintiff's agent who signed and served the notice they requiring that the defendants comply on the spot with the provisions thereof, particularly those relating to furnishing a statement of the expenses and the value of the services which had been rendered up to the time of the service of the notice. The fulfill this requirement was at the time clearly impossible and the defendants cannot be held responsible for their not doing so.It appears from all the facts and circumstances of the case that thedefendants acted in good faith; that they kept the expenses withinreasonable bound; that they acted with dispatch and performed theirwork, generally speaking, in a workmanlike manner As to the amount of compensation we cannot say that it is excessive.

FERNANDEZ v THOMPSONthe British steamer Bengloe owned by W. Thompson & co., while en route from Manila to European ports, stranded on the Mayone shoal in the Sulu sea

some twenty-five milesfrom Brook's Point on the Island of Palawan.Bengloe abandoned last Thursday eighteen days on Corral Reef no assistance whateverto hand ship dangerous position settling down forward and listed heavily to Port Cargo inaft holds possible to salve. Crew all safe. Jose Fernandez, O. N. Holmsen, and M. A. Macleod, now plaintiffs, were residents of Palawan. On learning of the abandonment of the Bengloe by her crew, these gentlemen formed a partnership, with a capital of P1,500, for the purpose of salving the vessel and cargo. They hired the launch Florence of between thirty and forty tons capacity from the provincial authorities of Puerto Princesa, and with a number of laborers proceeded to thewreck to ascertain its conditionthe London Salvage Association acting in the interest of the underwriters of the ship and the cargo, and with the consent of the ship's agents, engaged Ker & Co. to take charge of the salvage operations. The latter firm in its turn employed William Swan, an engineer and marine surveyor, to conduct the work. Swan left Manila on the Coast Guard Cutter Polillo on October 6 for the scene of the wreck.Swan, the captain of the Bengloe, and their assistants arrived at the wreck on October 9,that is, two days after the arrival of Fernandez, Holmsen, and Macleod, and after the

copra and other effects had been removed. Macleod and the two laborers found on board were shown scant hospitality by the second party, and were pointedly given to understand that their presence was not desired.When the other plaintiffs Holmsen and Fernandez, returned on the launch, they were prevented from taking any further part in the salvage operations.Fernandez, Holmsen, and Macleod began action in the Court of First Instance of the city of Manila to recover from the owners of the Bengloe and other parties the sum of P179,780, claimed to be due as compensation for the salvage of merchandise and effects of the value of P2,500 from the steamship Bengloe and as damages because of having been forcibly deprived of the possession of the steamship and thereby prevented from prosecuting salvage operations.The defendants originally claimed the sole and exclusive possession of the wreck on theground that they had not abandoned it but only left to seek assistance. The trial courthowever, found that the appearances justified the conclusion that the Bengloe was abandoned by the defendants on October 7, 1914, and that the plaintiffs commenced the salvage operations in entire good faith. ISSUE: had the plaintiffs adequate equipment to effect the salvage of the ship and cargo? Had plaintiffs the right to insist upon retaining possession

of the Bengloe and her cargo for the purpose of salvage as against the salvors employed by the owners and underwriters? Was P1,200 adequate compensation for the property saved by the plaintiff?HELD:Both No That such equipment was inadequate for the salvage of a vessel valued at P100,000, laden with sugar, copra, and bunker coal of a value of P352,500, perilously situated, seems undeniable. But plaintiffs also made futile efforts, presumably in good faith, to acquire adequate salvage equipment. We thus have presented this unique situation: Well-intentioned men with inadequate equipment are first on the scene of a wreck, and while in technical possession, are driven off and operations begun by a second salvage party under an expert superintendent and with adequate equipment.The services rendered by the plaintiffs contributed immediately to the preservation of a small amount of property on the stranded vessel, but as an actual fact, their further exertions, however meritorious they were intended to be were not successful in any degree and cannot be compensated in damages

CALTEX v SULPICIO LINES

December 19, 1987 8 pm: motor tanker MT Vector owned and operated by Vector Shipping Corporation carried 8,800 barrels of petroleum products of Caltex by virtue of a charter contract 

December 20, 1987 6:30 am: MV Doña Paz passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. left the port of Tacloban headed for Manila with 1,493 passengers indicated in the Coast Guard Clear

December 20, 1987: MT Vector collided with MV Doña Paz in the open sea within the vicinity of Dumali Point between Marinduque and Oriental Mindoro, killing almost all the passengers and crew members of both ships except for 24 survivors 

MV Doña Paz carried an estimated 4,000 passengers most were not in the passenger manifest

board of marine inquiry in BMI Case No. 653-87 after investigation found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz

February 13, 1989: Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and mother respectively, filed a complaint for “Damages Arising from Breach of Contract of Carriage” against Sulpicio Lines, Inc. for the

death of Sebastian E. Cañezal (public school teacher 47 years old) and his 11-year old daughter Corazon G. Cañezal

Sulpicio, in turn, filed a 3rd party complaint against Francisco Soriano, Vector Shipping Corporation and Caltex 

Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad faith knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to safe navigationRTC: dismissed the third party

complaint and favored the Cañezal's against Sulpicio Lines

CA: included Caltex as liable partyISSUE: W/N Caltex as a voyage charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship

HELD: NO. Grants Petition. CA set aside.

respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage:

bill of lading or equivalent shipping documents; or 

charter party or similar contract on the other

Caltex and Vector entered into

a contract of affreightment, also known as a voyage chartercharter party

contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use

Charter parties fall into three main categories:  

(1) Demise or bareboatcharterer mans the vessel with

his own people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence 

common carrier becomes private

contract of affreightment one by which the owner of a

ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight

may be either:(2)time charter - wherein

the leased vessel is leased to the charterer for a fixed period of time

(3) voyage charter - wherein the ship is leased for a

single voyagecharter-party provides for the

hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship’s store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship

charterer is free from liability to third persons in respect of the ship

does not convert the common carrier into a private carrierCarriage of Goods by Sea Act :

Sec. 3.  (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to -

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx                               xxx                                    xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship.  For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew.  The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code

a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness

nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes

Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident occurred in 1987.  Past services rendered showed no reason for Caltex to observe a higher degree of diligence.

Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness

PLANTERS v CA

FACTS:

June 16 1974: Mitsubishi International Corporation (Mitsubishi) of New York, U.S.A., 9,329.7069 M/T of Urea 46% fertilizer bought by Planters Products, Inc. (PPI) on aboard the cargo vessel M/V "Sun Plum" owned by private Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading 

May 17 1974: a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan

Before loading the fertilizer aboard the vessel, 4 of her holds were all presumably inspected by the charterer's representative and found fit

The hatches remained closed and tightly sealed throughout the entire voyage

July 3, 1974: PPI unloaded the cargo from the holds into its steelbodied dump trucks which were parked alongside the berth, using metal scoops attached to the ship, pursuant to the terms and conditions of the charter-partly 

hatches remained open throughout the duration of the discharge

Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the

consignee's warehouse located some 50 meters from the wharf

Midway to the warehouse, the trucks were made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo. 

The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally while the discharge was in progress.

Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer

It took 11 days for PPI to unload the cargo

Cargo Superintendents Company Inc. (CSCI), private marine and cargo surveyor, was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge

shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt

Certificate of Shortage/Damaged Cargo prepared by PPI 

short of 94.839 M/T and about 23 M/T were rendered unfit for commerce,

having been polluted with sand, rust and dirt 

PPI sent a claim letter 1974 to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been contaminated with dirt

SSA: what they received was just a request for shortlanded certificate and not a formal claim, and that they "had nothing to do with the discharge of the shipment 

RTC: failure to destroy the presumption of negligence against them, SSA are liable

CA: REVERSED - failed to prove the basis of its cause of action

ISSUE: W/N a time charter between a shipowner and a charterer transforms a common carrier into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo

HELD: NO. petition is DISMISSEDWhen PPI chartered the vessel M/V

"Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any

control of the means in doing socarrier has sufficiently overcome, by

clear and convincing proof, the prima facie presumption of negligence. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom.

bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading

This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. 

On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.

COASTWISE LIGHTERAGE v CA

Facts:

Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to

Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As a consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost.

Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled against Coastwise.

Issues:

(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pag-asa, and whether it exercised the required degree of diligence

(2) Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:

(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized

ones. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.

(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any private of contract or upon written assignment of, claim. It accrues simply upon payment of the insurance claim by the insurer.

LITONJUA v SEAMEN

FACTS

Petitioner is the duly appointed local crewing managing office of the Fairwind Shipping Corporation.On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry owned by the R.D. Mullion ship broking agency under charter by Fairwind, while in the port of Cebu contracted the services (among others) of Gregorio Candongo as Third Engineer for 12 months with a monthly wage of US$500.00. The agreement was executed before the Cebu Area Manning Unit of the NSB, after which respondent boarded the vessel.

On December 28, 1976 before the expiration of contract, respondent was required to disembark at Port Kilang, Malaysia. Describe in his seaman’s handbook is the reason “by owner’s arrange.”

Condongo filed a complaint against Mullion (Shipping company) for violation of contract and against Litonjua as agent of shipowner.

On February 1977, NSB rendered a judgment by default for failure of petitioners to appear during the initial hearing, rendering the same to pay Candongo because there was no sufficient or valid cause for the respondents to terminate the service of the complainant.

Litonjua’s defense:Contends that the shipowner, nor the charterer, was the employer of private respondent; and that liability for damages cannot be imposed upon petitioner which was a mere agent of the charterer.

ISSUE

Whether or not Litonjua may be held liable to the private respondent on the contract of employment?

HELD

YES.

The first basis is the charter party which existed between Mullion, the shipowner, and Fairwind, the charterer.

It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of the seamen

Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on the contract of employment between the ship captain and the private respondent.

There is a second and ethically more compelling basis for holding petitioner Litonjua liable on the contract of employment of private respondent. The charterer of the

vessel, Fairwind, clearly benefitted from the employment of private respondent as Third Engineer of the Dufton Bay, along with the ten (10) other Filipino crewmembers recruited by Captain Ho in Cebu at the same occasion.

In so doing, petitioner Litonjua certainly in effect represented that it was taking care of the crewing and other requirements of a vessel chartered by its principal, Fairwind.

Last, but certainly not least, there is the circumstance that extreme hardship would result for the private respondent if petitioner Litonjua, as Philippine agent of the charterer, is not held liable to private respondent upon the contract of employment.

COMPAGNIE v HAMBURG

FACTS:1. COMPAGNIE DE COMMERCE ET DE NAVIGATION D'EXTREME ORIENT (Compagnie) is acorporation duly organized and existing under and by virtue of the laws of France, with its principal office inParis and a branch office in Saigon, Vietnam. THE HAMBURG AMERIKA PACKETFACHT ACTIENGESELLSCHAFT(Hamburg) is a corporation organized under the laws of Germany with its principal office inHamburg and represented in Manila by Behn, Meyer & Company (Limited), a corporation.2. HAMBURG owned a steamship named SAMBIA, which proceeded to the port of Saigon and on board wasthe cargo belonging to COMPAGNIE. There were rumors of

impending war between Germany and Franceand other nations of Europe. The master of the steamship was told to take refuge at a neutral port (becauseSaigon was a French port).3. COMPAGNIE asked for compulsory detention of its vessel to prevent its property from leaving Saigon.However, the Governor of Saigon refused to issue an order because he had not been officially notified of thedeclaration of the war.4. The steamship sailed from Saigon, and was bound for Manila, because it was issued a bill of health by theUS consul in Saigon. The steamship stayed continuously in Manila and where it contends it will be compelledto stay until the war ceases. No attempt was made on the part of the defendants to transfer and deliver the cargoto the destinations as stipulated in the charter party.5. BEHN, MEYER and COMPANY (agent of HAMBURG in Manila) offered to purchase the cargo fromCOMPAGNIE, but the latter never received the cable messages so they never answered. When a survey wasdone on the ship, it was found that the cargo was infested with beetles, so BEHN asked for court authority tosell the cargo and the balance to be dumped at sea. The proceeds of the sale were deposited in the court, waitingfor orders as to what to do with it.6. BEHN wrote COMPAGNIE again informing the latter of the disposition which it made upon the cargo.COMPAGNIE answered that it was still waiting for orders as to what to do. COMPAGNIE wanted all the proceeds of the sale to be given to them (damages, for thedefendants’ failure to deliver the cargo to the

destinations Dunkirk and Hamburg), while defendants contended that they have a lien on the proceeds of thesale (amount due to them because of the upkeep and maintenance of the ship crew and for commissions for thesale of the cargo).6. The trial court ruled in favor of the plaintiffs. On appeal, the defendants made the following assignments onappeal (that the court had no jurisdiction, that the fear of capture was not force majeure, that the court erred inconcluding that defendant is liable for damages for non-delivery of cargo, and the value of the award ofdamages). On appeal, the plaintiffs also contended that the court erred in not giving the full value of damages ISSUE: WONthe master of the steamship was justified in taking refuge in Manila (therefore being the cause ofthe non-delivery of the cargo belonging to the plaintiffsCOMPAGNIE contends that the master should have in mind the accepted principles of public internationallaw, the established practice of nations, and the express terms of the Sixth Hague Convention (1907). Themaster should have confidently relied upon the French authorities at Saigon to permit him to sail to his port ofdestination under a laissez-passer or safe-conduct, which would have secured both the vessel and her cargofrom all danger of capture by any of the belligerents. The SHIPOWNER contends that the master was justifiedin declining to leave his vessel in a situation in which it would be exposed to danger of seizure by the Frenchauthorities, should they refuse to be bound by the alleged rule of international law.

HELD:A shipmaster must be allowed a reasonable time in which to decide what course he will adopt as to thedisposition of his cargo, after entering a port of refuge; and though he must act promptly thereafter, when thecargo is a perishable one, neither he nor the shipowner is responsible for loss or damage suffered by the cargoas a result of its detention aboard the vessel during such time as may reasonably necessary to come to adecision in this regard.Under the circumstances set out in the opinion, the master of the Sambia proceeded with all reasonable dispatchand did all that could be required of a prudent man to protect the interests of the owner of the cargo aboard isvessel; so that any losses which resulted from the detention of the cargo aboard the Sambia must be attributed tothe act of the “Enemy of the King” which compelled the Sambia to flee to a port of refuge, and made necessarythe retention of the cargo aboard the vessel at anchor under a tropical sun and without proper ventilation until itcould be ascertained that the interests of the absent owner would be consulted by the sale of this perishablecargo in the local marketIn fleeing from the port of Saigon, and taking refuge in Manila Bay the master of the Sambia was not acting forthe common safety of the vessel and her cargo. The French cargo was absolutely secure from danger of seizureor confiscation so long as it remained in the port in Saigon, and the flight of the vessel was a measure of precaution adopted solely and exclusively for the preservation of the vessel from the danger of seizure or

capture.Dispositive: So much of the judgment as provides for the delivery to the plaintiff of the net proceeds of the saleof the cargo (P128,977.71) affirmed; but so much thereof as allowed damages for a breach of the charter party(P60,841.32) reversed