ERLINGER v GALINGER

Doctrine:
Ingeneral,salvagemaybedefinedasaservicewhichone
personrenderstotheownerofashipwhichtheownerorthose
entrustedwiththeareunabletoprotectandsecure.
IntheErlanger&Galingercase,itwasheldthatthreeelements
arenecessarytoavalidsalvageclaim,namely,(1)amarine
peril,(2)servicevoluntarilyrenderedwhennotrequiredasan
existingdutyorfromaspecialcontract,and(3)successinwhole
orinpart,orthattheservicerenderedcontributedtosuch
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 ships register, the ships
articles, the ships log, and as much of the crews
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) Agaragar 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 &
Galingers claim against the ship was settled for
(L)15,000 or about P145,800.


On5August1913,Erlanger&Galingerbrought
anactionagainsttheinsurancecompaniesand
underwriters,whorepresentedthecargosalvedfromthe
Nippon,tohavetheamountofsalvage,towhichErlanger
&Galingerwereentitled,determined.Thecasecameon
fortrialbeforetheHonorableA.S.Crossfield.The
OelwerkeTeutonia,acorporation,appearedasclaimantof
thecopra.TheNewZealandInsuranceCompanyappeared
asinsurerandassigneeof1,000caseofbeanoilandtwo
casesofbamboolacquerwork;andTheThamesand
MerseyMarineInsuranceCompanyappearedasareinsurer
totheextentofP6,500onthecargoofcopra.Thecourt
adjudgedthecaseinfavorofErlanger&Galingerforof
thenetproceedsofsalesamountingtoP74,298.36andof
theinterestaccruingthereon,andagainstCarlMaecklerfor
thesumofP925,andagainsttheNewZealandInsurance
Company(Ltd.)fortheofP2,800,andagainstwhomever
thetwocasesmarkedRW,Copenhagen,weredelivered
to,andforthesumofP2,370.68,outoftheproceedsofthe
saleof1,000casesofvegetableoil,andinfavorofthe
OelwerkeTeutoniaforthesumofP71,328.53,now
depositedwiththeHongkong&ShanghaiBanking
Corporation,togetherwithoftheinterestthereon.No
costsweretaxed.

TheOelwerkeTeutonia,TheNewZealand
InsuranceCompany(Ltd.).andErlanger&Galinger
appealedfromthedecision.
ISSUE:

WON it is salvage
HELD:
CS ROBINSON v THE SHIP ALTA
Facts:
thesailingvesselAltawaswreckedandstrandeduponthecoast
of
CaviteProvince.Thecertainoftheshipremovedthecargoand
after
workingtenortwelvedaysinattemptstofloatthe
shipmadea
contract,inwriting,withtheplaintiffs,whichisasfollows:
MANILA,November1,1905.
Mr.CHARLESS.ROBINSON,Manila.
DEARSIR:Referringtoyourofferof31stultimo,retheraising
ofthe
shipAltaviz,toputherintoCaviteandinsuchconditionthat
itwill
admitofherbeingsailedtoHongkongorotherport,subjectto
being
passedbyLloyds'surveyorforthesumoffifteenthousand
pesos
(P15,000),Philippinecurrency,Iacceptthesameandshall
esteemit
afavorifyouwillcommencetheworkwiththeleastpossible
delay.
Shouldyounotbesuccessful,itisdistinctly

understoodthatno
moneywhateveristobepaidforanyworkdoneorappliances
used.
Yours,faithfully,(Sgd.)W.THONAGEL
Theplaintiffswenttoworkimmediatelyuponthevessel,raised
it,andtowedittoCaviteonthe10thdayofDecember,1905.It
wasatonce
decidedtoputherintothedrydockorslipthereforthepurpose
of
examiningherhullandascertainingtheextentofthedamages
Theplaintiffs,onthe30thdayofDecember,1905,werepaidby
the
defendantsthesumof3,000pesosonaccountofthecontract.
They
broughtthisactionagainsttheshipandhermasteronthe27th
dayof
February,1906,claimingtorecoverthereasonableworthand
value
oftheservicesperformedbythem,whichtheyfixedat15,000
pesos.
Issue:WONtheplaintiffssalvorareentitledto
compensationby
salvagingtheship?
Held:NO,
Thecontractinthiscase,beingcontingentuponsuccess,their
claim
isthattheyarenotboundbyit.
Weareallofopinionthatthisquestionmustbe
answeredinthe

negative.Salvageservicesareeither(1)voluntarily,
whereinthe
compensationisdependentuponsuccess;(2)rendered
undera
contractforaperdiemorperhoramwage,payableatallevents;
or
(3)underacontractforacompensationpayableonly
incaseof
success.
Thefirstandmostancientclasscomprisescasesofpuresalvage.
ThesecondisthemostcommonupontheGreatLakes.Thethird
includestheoneunderconsideration.Obviouslywherethe
stipulated
compensationisdependentuponsuccess,and
particularlyof
successwithinalimitedtime,itmaybeverymuchlargerthana
mere
quantummeruit.Indeed,suchcontractswillnotbesetaside
unless
corruptlyenteredinto,ormadeunderfraudulentrepresentations,
a
clearmistakeorsuppressionofimportantfacts,inimmediate
danger
totheship,orunderothercircumstancesamountingto
compulsion,
orwhentheirenforcementwouldbecontrarytoequity
andgood
conscience.
Thejudgmentofthecourtbelowisreversedandjudgmentis

ordered
infavorofthedefendantsandagainsttheplaintiffs,absolving
the
defendantsfromthecomplaint,withthecostsofthefirst
instance.No
costswillbeallowedtoeitherpartyinthiscourt.Soordered.
THEMANILARAILROADCO.,plaintiffappellant,
vs.MACONDRAY
andCO.,defendantappellant.
plaintiff,theManilaRailroadCompany,uponFebruary24,
1916,in
theCourtofFirstInstanceofthecityofManilato
recoverofthe
defendant,MacondrayandCo.,thesumofP75,000,
thealleged
valueofsalvageservicerenderedonApril6,1915,bythe
steamer
Hondagua,ownedbytheplaintiff,tothesteamerSeward,which
was
ownedbythedefendant.Atthehearingjudgmentwasrendered
in
favoroftheplaintiffforthesumofP4,000.Fromthisjudgment
both
partieshaveappealed,theplaintiffinsistingthattheamount
allowed
bythelowercourtisinadequate,thedefendantthatitis
excessive.
SewardleftSaigonforthePhilippineIslands,
encounteringa

moderatelyhighsea.Theshipwasladenwithacargoofrice,the
weightofwhich,takeninconnectionwiththeconditionofthe
sea,
causedthevesseltospringaleak,andhermasterfeltcompelled
to
returntoSaigon.Atthisjuncturethesteamship
Hondaguawas
sighted,whereupontheSewardflewtheinternationalcode
signal"In
distress;wantimmediateassistance."TheHondaguachanged
her
courseandapproachedtheSeward,thelatterin
succession
displayingthefollowingsignals:"Ihavesprungaleak;""Iwish
tobe
takenintow;""Canyousparehawser;"and"Theleak
isgaining
rapidly."InresponsetosignalsfromtheHondaguatheSeward
sent
herownboattotheHondaguaforaheavingline,bymeansof
which
ahawserwaspassedfromtheHondaguatotheSewardand
the
former,withthelatterintow,thenproceededathalfspeed
towards
Saigon.
ISSUE:(1)Istheplaintiffentitledtorecoverfromtheownerof
the
Seward,inthisaction,remunerationforsavingthecargoaswell

as
forsavingtheship?(2)Whatisthereasonablecompensation
which
shouldbeallowedinthisaction?
HELD:YESBOTH
salvageallowanceshouldbeapportionedbetweenthe
shipand
cargointheproportionoftheirrespectivevalues,thesameasin
a
caseofgeneralaverage;andneitherisliableforthesalvage
duefromtheother
Infixingtheamountofcompensationtobeawardedforsalvage
service,ithasbeendeclaredbytheSupremeCourtofthe
United
Statesthattheprincipalcircumstancestobetakeninto
consideration
are:(1)Thelaborexpendedbythesalvorsinrenderingthe
salvage
service;(2)Thepromptitude,skill,andenergydisplayedin
rendering
theserviceandsavingtheproperty;(3)Thevalueofthe
property
employedbythesalvorsinrenderingtheservice,andthedanger
to
whichsuchpropertywasexposed;(4)Theriskincurredbythe
salvorsinrescuingthepropertyfromtheimpendingperil;(5)
The
valueofthepropertysalved;and(6)Thedegreeofdangerfrom
whichthepropertywasrescued

Inapplyingthesecriteriatothecasenowbeforeus,the
following
circumstances,notalreadynoted,arepertinent,namely:
the
Hondaguawasdelayedinhervoyageaboutninehours,during
fiveof
whichshewasengagedintowingtheSeward.Thisdelaycaused
her
toenteratIloilo,theportofherarrivalinsteadofthelate
afternoonof
thepreviousday;buttheunloadingofhercargowasnot
thereby
retarded.Consideredonthebasisofcharterparty
contractunder
whichshewasoperating,theHondaguawasearningaboutP300
per
day,whichwasconsideredreasonablecompensationfor
heruse,
includingtheservicesoffofficersandcrew.Theservice
rendereddid
notinvolveanyfurtherexpenditureoflaboronthepartofthe
salvors
thansuchaswascommonlyincidenttoworkingtheship.No
unusual
displayofskillandenergyontheirpartwasrequired;
andthe
conditionoftheseawasnotsuchastoinvolveanyspecialrisk
either
totheHondaguaorhercrew.Finally,thedanger

fromwhichthe
Sewardwasrescuedwasreal,astheshipwhentakenintowwas
confrontedbyaseriousperil.Thevalueofthevesselwhen
saved
was,wethink,properlyfixedbythetrialcourtatP20,000.
Indeterminingtheamountoftheawardtobeallowedincasesof
this
kindtheaimshouldbetoholdouttoseafaringmenafair
inducement
totheperformanceofsalvageserviceswithoutfixingascaleof
compensationsohighastocausevesselinneedofsuchservices
to
hesitateanddeclinetoreceivethembecauseoftheruinouscost.
Thatthesalvorisentitled,asofbounty,tosomethingmorethan
mere
remunerationforhisownworkandtheriskincurredbyhim
BARIOSVGOTHONG
FACTS:
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 case
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.

No marine peril to justify valid salvage claim
There was no marine peril to justify a valid salvage claim
by Barrios against Go Thong. It appears that although Go
Thongs 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 Thongs 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 vessels cargo as a safety
measure. Neither the passengers nor the cargo were in
danger of perishing. All that the vessels 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
agreement
Herein, 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 towage
If 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 law
Barrios 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 quasicontract 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 STEAMER
UnderdateofMay19,1909,counselforG.Urrutiaand
Company
filedawrittencomplaintagainstThePasigSteamerandLighter
Co.,
whereinitwasallegedthattheplaintiffcompanywastheowner
ofthe
steamerNuestraSeoradelPilar,inscribedinthemarine
registryof
theportofManila;thatthesaidvesselswasprovidedwiththe
proper
licensetonavigateandtradeinthewatersofthePhilippines,
was
worthP80,000incash,and,onthedatesmentionedinthe
complaint,
wascarryingacargovaluedatP45,000;thatthedefendant
company
wastheownerofthesteamerSanJuan,inscribedinthe
marine
registryoftheportofManila;thatonoraboutDecember6,
1908,
whileastormwasraging,thesteamerNuestraSeora
delPilar,
belongingtotheplaintiff,wasnavigatinginthedirectionofthe
portof

Legaspiand,aftertwentyhoursandthirtyminutes,descried,
toward
MalAbrigo,asteamshipwhichhadsignalflagshoisted,
wherefore
theNuestraSeoradelPilardirecteditscoursetowards
thesaid
vessel,whichprovedtobetheSanJuandisplayingthesignalsM
Y
andLD,whichmean:"Amunabletonavigate.Willyoutowme
toa
safeanchorage?"thatonthatoccasion,thesteamerNuestra
Seora
delPilar,withgreatrisktoitself,renderedsalvageservicetothe
San
Juanbytakingittoasafeport,andthat,haditnotbeenfor
the
opportune,promptandefficaciousaidlentbytheNuestra
Seoradel
Pilar,theSanJuananditscargowouldcertainlyhavebeen
totally
lost;thatthesalvedsteamer,togetherwithitscargo,wasworth
on
thedatesofthesalvageandthecomplaintP100,000,atatrue
cash
valuation;thatthejustandadequateremunerationforthe
salvage
servicerenderedbytheNuestraSeoradelPilartotheSan
Juan
amountedtothesumofP40,000;andthat;notwithstandingthat

the
plaintiffcompanyhaddemandedofthedefendant
concernthe
paymentofthesaidsumforthesalvageservicereferred
to,and
sincethe15thofJanuary,thedefendant,without
objectingtothe
amountoftheplaintiff'sclaim,hadnotpaidthesameandhad
been
delayingthepaymentthereofunderfutilepretexts:
wherefore,the
plaintiffprayedthatjudgmentberenderedinitsbehalf,to
enableitto
collectfromthedefendantthesumofP40,000,withlegal
interest
thereonfromJanuary15,andthecosts.
Issue:Whetherornotthereissalvage?
Held:YES
Whensoimportantaserviceisrenderedasthatofsalvinga
vessel
withitscrewandthecargoitcarries,fromapositivedangerto
which
itisexposed,exposed,strictjusticedemandsthatwhoever
effectsso
meritoriousaserviceshouldreceiveadequateremuneration
therefor,
notonlyonaccountofactperformedinbehalfoftheshipowner
and
thecrew,butalsobecauseofthedangerrunbythevesselwhich

madethesalvage,duetothecircumstancesthatexistedatthe
time
suchservicewasrendered.
TheprinciplehasbeenestablishedbythecourtsoftheUnited
States
thatwhenavesselhasbeendisabledbythebreakingofitsshaft
at
seaandthehoistsignalsaskingforaid,andanothervesselgoes
to
itsreliefandtakesitintow,suchservicerenderedisoneof
salvage,
andnotmerelyoftowage.
Thetowageofavesselinperiltosomeplaceofsecurity,whenit
is
unablebyitselftoreachthesame,isaserviceofsalvage.
Thetowageofavesselwhichhasthelostuseofits
engineby
accident,thoughitiscompleteinitshullandmasts,isaservice
of
salvage,anditisnotnecessarythatthesaidlossbeinevitable
since,
inviewoftheperil,thevesselcouldnotbesalvedinanyother
way;
foritissufficientthatatthemomenttheservicewasrendered
there
wasaprobable,threateningdangerandreasonablefearthatit
might
strike.
Henceitisnothereaquestionofasimpleserviceof

towagein
ordinaryandnormalwhether,butofanextraordinaryactof
salvage
performedinbehalfofthesteamerSanJuan,in
exceptional
circumstancesandwhileacyclonewasragingoverthepartof
the
seawherethesalvedvesselthenwas,which,inthemidstof
such
peril,wasunabletogovernitsmovementsthroughits
engineon
accountoftheinserviceabilityofitspropeller.
CompensationinsuchcasesasthatwhichoccurredtotheSan
Juan,
deservestobeconsideredasarewardfortheservicerendered
by
theNuestraSeoradelPilarinthemidstofaperil
towhichtherescuedaswellasthesalvingsteamerwas
exposed,anditisproper
thatsuchrewardshouldbemade,notonlybecauseofthe
salvageof
thevesselandofthegoodscarriedandtherescueofthecrew,
but
alsoinorderthatitmayserveasanincentivetorenderprompt
and
efficientaidinsuchcaseswhenrequestedbythosewhointhe
midst
ofsuchunfortunatecircumstancesareurgentlyinneed
thereof.It

shouldalsobeborneinmindthattheNuestraSeoradelPilar
isa
merchantvesselandassuchshouldwithmorereasonbefavored
for
theservicewhichitrenderedtotheSanJuan,which
perhaps
otherwisemighthavebeenlostwithallitscargoandcrew.
ATLANTICGULFvUCHIDA
onthe21stdayofOctober,1918,whilethesteampshipKyodo
Maru
wasdischargingacargoofcoal,thepropertyofthe
defendant
VicenteMadrigal,intheharborofManila,insidethe
breakwater,one
ofthelightersalongsidesaidvesselsank.Inswingingwiththe
tide,
theKyodoMarucameviolentlyincontactwiththissubmerged
lighter,
theresultbeingthatherhullwasperforated.
Thesaidsteamerbegantosinkduringthemorningof
October
22dandtouchedthebottomoftheharborat10o'clockofthe
same
morning.Shecontinuedtosinkdeeperintothemuduntil,on
October
23d,theforwardhalfofthevesselwasentirelysubmerged,
whilethe
sternhalfwasstillafloat.
OntheafternoonofOctober23d,theplaintiffs,attherequestof

the
captainandagentsoftheship,tookpossessionofthesinking
vessel
assalvorsandcommencedsalvageoperationatonce.Atthat
time
theyhadsubmittedtwopropositionstothecaptainandagentsof
the
shipastocompensationforthesalvageservicestobe
performed:
OneforP150,000incaseofsuccessand
reimbursementof
expensesincaseoffailure,andanotherforP300,000"nocure
no
pay."Theplaintiffswereinformedthatthepropositions
wouldbe
transmittedtotheownersofthevesselinJapanforacceptance
or
rejection,buttheywererequestedtocontinueworkinthe
meantime,
upontheunderstandingthatifnospecialcontractshouldbe
made
theywouldbecompensatedassalvors.
ThevesselwasfloatedonOctober30thandthesalvage
operationsendedthefollowingday.OntheafternoonofOctober
30th
theplaintiffswereinformedinwritingthattheheadofficeofthe
steamshipcompanyinJapanhad,bycable,rejectedbothofthe
abovementionedpropositions,andthatitwasproposedtosettle
with

themonthebasisofthereasonablevalueoftheirservicesas
salvors.
ISSUE:(1)withregardtotheamountofcompensationtobe
awarded
totheplaintiffsforthesalvageoftheshipinquestion,and(2)
whether
ornotthedefendantappelleeVicenteMadrigal,asownerofthe
cargo,isliableforanycontributiontosuchcompensation.
HELD:
1.Thisquestionofcompensationinvolvestwoelements:(a)The
actualexpensesincurredinthesalvageoperation,and(b)the
reward
forservicesrenderedbytheplaintiffsassalvors.
(a)wearepersuadedthatmostofthechargesforexpensesmade
by
theplaintiffsarereallyexorbitant.Consideringallofthefacts
and
circumstancesofthiscase,andspeciallytheinflatedwarprices
of
materialsatthetimethesalvageinquestionwasperformed,we
are
oftheopinionthatthesumofP50,000wouldbeavery
reasonable
allowancetotheplaintiffsfortheircashoutlayandtherental
valueof
theirequipment.
(b)Withregardtotherewardforsalvageservices,defendants
appellantsmaintainthatthesumofP35,000wouldbealiberal
net

awardtothesalvors
wearepersuadedthatthesumofP50,000wouldbeanequitably
liberalnetcompensationtotheplaintiffsassalvorsof
theKyodo
Maru.ThistogetherwiththesumofP50,000whichwehave
found
shouldbeallowedthemfortheirexpensesandthereasonable
rental
valueoftheirequipment,makesatotalawardtotheplaintiffsof
the
sumofP100,000.Wearepersuadedthatthisamountisa
sufficient
compensationfortheoutlayandeffortofthesalvorsinthe
present
case,andthatthesameisliberalenoughtoconstitutean
inducement
tootherstorenderlikeservicesinsimilaremergenciesinthe
future.
2.YES,wecannotagreewithhimthat"suchremovaldidnot
operate
inanywaytobenefitthecargo,norsaveitfromanyriskor
damage.'
Hadthevesselcompletelysunkandlisted,extremedifficulty
would
nodoubthavebeenencounteredinremovingthecoalin
question
fromherhold,thusoccasioningconsiderableexpenseandlossto
this
defendant.Itisalsoundeniablethatpartoftheplaintiffs

expenses
whichwehaveallowedagainstdefendantsappellantswere
incurred
incarryingsuchcoaltotheshore.Itisbutjust,then,that
defendant
appelleeshouldshareaproportionateamountoftheaward.
WALLACEvPUJALTE
Facts:
Thisisanactionofreplevinbegunbytheownerto
recover
possessionofaschoonercalledtheKodiakwhichhadbeen
deserted
byitscaptainandcrewbyreasonofitshavingbeencapsizedby
a
galeandwhichhadbeenfound,takenpossessionofandtowed
into
portbythedefendantsMiguelPujalteandMiguelOssoriowho,
atthe
timetheactionwasbegun,wereengagedincompletingthe
salvage
ofthevessel.ThedefendantsMiguelPujalteandMiguelOssorio
set
uptheirrightsonthevesselassalvorsandcontendthatthey
were
entitledtothepossessionofthevesseluntilthesalvage
operations
werecompletedandthat,ifpossessionweretakenfromthem
before
thattime,theywereentitledtothesamecompensationasthey

would
havebeeniftheplaintiffhadallowedthemtocompletethe
work.
Thereislittledisputeabouttheimportantfactsofthecase.It
appears
thatonthe4thdayofAugust,1913,theschoonerKodiakwas
lostoff
thecoastofMindoro,havingbeenblownonhersidebyheavy
winds.
Shewasfloatingatthemercyoftheelementsofthreeorfour
days.
Onorabout7thofAugust,thereportofherlossreachedthe
CollectorofCustomsofthePhilippineIslandswhoimmediately
issuedacircularlettertothemastersofallsteamersandvessels
plyinginPhilippinewaters,declaringtheKodiakaderelictand
a
dangertonavigation.Assoonasthecircularletterwasreceived
by
defendantsMiguelPujalteandMiguelOssoriotheychartered
the
coastguardcutterMindoroandproceededtosearchforthelost
schooner.Onthe8thdayofAugusttheylefttheportofManila
carryingonboardCaptainJoseMuozandsomemen,whowere
to
takechargeof,anddirect,thesalvageoperations.Twodayslater
the
Kodiakwaslocated,floatingabandonedonherside,withallher
sails
unfurledandunderwater.Immediatelyaboat,withCaptainJose

Muozandhismen,wasloweredfromthecoastguardcutter
and,in
themidstofaheavyseaandstrongwind,theysucceededin
making
fastaropetothesternoftheKodiak.Theytowedherintothe
portof
Pola,reachingthatportadayortwolater,theybeingobligedto
proceedveryslowlynotonlyonaccountoftheheavyseabut
alsobyreasonofthefactthattheKodiakwasfullofwater.
OnceinPolaBay
menwereleftinchargeofthevesselwhileCaptainJoseMuoz
went
backtoManilaontheMindoro,andreportedtohisemployers.
They
immediatelycharteredthesteamerLakandulatocarryworkmen
and
totowalightercalledthePaquitawithsalvagematerialsand
implementstoPolaBay.TheyalsodispatchedthesteamerMaria
LuisaY.toassistinthesalvagework.
Onthe12thdayofAugust1913plaintiff'sagentdeliveredto
Miguel
Pujaltethefollowingletter:
WehavebeeninformedthattheschoonerKodiakhasbeen
towed
intotheportofPola,Mindoro,bythecutterMindorobelonging
tothe
Governmentwhichwascharteredforthatpurposeby
you.The
KodiakbelongstoCaptainThomasA.Wallace,ofBinaluan

(Palawan)
andwearethepersonstowhomthevesseland
cargowere
consigned.OnbehalfoftheowneroftheKodiakweoffertopay
you
fortheservicesrenderedinsalvingthevesseluptothepresent
time,
andweoffertotakepossessionoftheKodiakwhereitnowison
the
beachofMindoro.Asrepresentativesoftheownerweshall
refuseto
payanyexpensewhichyoumayincurfromnowon.
Pleasefurnishuswiththeamountofcompensationto
whichyou
believeyouareentitled
Incaseyouaskmorethanweregardasreasonablewewillpay
you
theamountdecideduponbyaboardofarbitrationtobeselected
by
theofficersoftheMaritimeAssociation;andifthisisnot
agreeableto
youwewillpayyouwhateveracourtofjusticewilladjudge.
Ifyourequireitwewillgiveabondtocarrytheaboveofferinto
effect.
Thedefendantscontendthatallthearrangementsforthesalvage
of
theKodiakhasbeenmadebeforethereceiptoftheletterwritten
by
plaintiff'sagentandthatthelargerpartoftheexpensesforthe

salvageoftheKodiakhadalreadybeenincurredatthattime;
that
theythereforeproceededwiththesalvageandwereaboutto
finish
theirworksuccessfullywhenthecomplaintwasfiledinthiscase
and
thepossessionoftheschooner
Issue:WONthereisavalidsalvage?Anddoesthesalvors
entitledto
compensation?
HELD:YES
ThereisnodoubtaboutthefactthattheKodiakcapsizedoffthe
coastofMindoroduringastormandthatshewasdesertedby
her
officersandcrewandleftfloatingonhersidewithsailsunfurled
and
underwater.NoristherequestionaboutthefactthattheBureau
of
NavigationofthePhilippineIslandsdeclaredthevessela
derelictand
dangeroustonavigation
thataconsiderableportionoftheexpenseswereincurredafter
the
ownerdeliveredtheletterofAugust12notifyingthedefendants
that
hewouldpaytheexpensesincurreduptothetimethenotice
was
servedtogetherwiththecompensationtowhichtheywere
entitled,

andthattheywouldpaynothingfromthattimeforwardeitheras
expensesorascompensation
Whatevermightbesaidwithregardtotheeffectofthisletteron
the
relationsbetweenthepartiesifitstoodaloneintherecorditis
unnecessarytosay.Itisnotademandforthepossessionofthe
Kodiakinthesenseinwhichthatwordisgenerallyused.Itis
merely
anoffertodocertainthings.Wedonotcaretodeterminethe
precise
effectofthisofferfromalegalpointofviewsinceitappears
thatthe
circumstances
Whatevereffectthenoticeinquestionmighthaveproducedwas
nullifiedbytheattitudeoftheplaintiff'sagentwhosignedand
served
thenoticetheyrequiringthatthedefendantscomplyonthespot
with
theprovisionsthereof,particularlythoserelatingtofurnishinga
statementoftheexpensesandthevalueoftheserviceswhich
had
beenrendereduptothetimeoftheserviceofthenotice.The
fulfill
thisrequirementwasatthetimeclearlyimpossibleandthe
defendantscannotbeheldresponsiblefortheirnotdoingso.
Itappearsfromallthefactsandcircumstancesofthecasethat
the
defendantsactedingoodfaith;thattheykepttheexpenses
within

reasonablebound;thattheyactedwithdispatchandperformed
their
work,generallyspeaking,inaworkmanlikemannerAstothe
amountofcompensationwecannotsaythatitisexcessive.
FERNANDEZvTHOMPSON
theBritishsteamerBengloeownedbyW.Thompson&co.,
whileenroutefromManila
toEuropeanports,strandedontheMayoneshoalintheSulusea
sometwentyfivemiles
fromBrook'sPointontheIslandofPalawan.
BengloeabandonedlastThursdayeighteendaysonCorralReef
noassistancewhatever
tohandshipdangerouspositionsettlingdownforwardandlisted
heavilytoPortCargoin
aftholdspossibletosalve.Crewallsafe.
JoseFernandez,O.N.Holmsen,andM.A.Macleod,now
plaintiffs,wereresidentsof
Palawan.OnlearningoftheabandonmentoftheBengloebyher
crew,thesegentlemen
formedapartnership,withacapitalofP1,500,forthepurposeof
salvingthevesseland
cargo.TheyhiredthelaunchFlorenceofbetweenthirtyand
fortytonscapacityfromthe
provincialauthoritiesofPuertoPrincesa,andwithanumberof
laborersproceededtothe
wrecktoascertainitscondition
theLondonSalvageAssociationactingintheinterestofthe
underwritersoftheshipand
thecargo,andwiththeconsentoftheship'sagents,engagedKer

&Co.totakecharge
ofthesalvageoperations.Thelatterfirminitsturnemployed
WilliamSwan,anengineer
andmarinesurveyor,toconductthework.SwanleftManilaon
theCoastGuardCutter
PolilloonOctober6forthesceneofthewreck.
Swan,thecaptainoftheBengloe,andtheirassistantsarrivedat
thewreckonOctober9,
thatis,twodaysafterthearrivalofFernandez,Holmsen,and
Macleod,andafterthe
copraandothereffectshadbeenremoved.Macleodandthetwo
laborersfoundon
boardwereshownscanthospitalitybythesecondparty,and
werepointedlygivento
understandthattheirpresencewasnotdesired.
WhentheotherplaintiffsHolmsenandFernandez,returnedon
thelaunch,theywere
preventedfromtakinganyfurtherpartinthesalvageoperations.
Fernandez,Holmsen,andMacleodbeganactionintheCourtof
FirstInstanceofthecity
ofManilatorecoverfromtheownersoftheBengloeandother
partiesthesumof
P179,780,claimedtobedueascompensationforthesalvageof
merchandiseand
effectsofthevalueofP2,500fromthesteamshipBengloeand
asdamagesbecauseof
havingbeenforciblydeprivedofthepossessionofthesteamship
andtherebyprevented
fromprosecutingsalvageoperations.

Thedefendantsoriginallyclaimedthesoleandexclusive
possessionofthewreckonthe
groundthattheyhadnotabandoneditbutonlylefttoseek
assistance.Thetrialcourt
however,foundthattheappearancesjustifiedtheconclusionthat
theBengloewas
abandonedbythedefendantsonOctober7,1914,andthatthe
plaintiffscommencedthe
salvageoperationsinentiregoodfaith.
ISSUE:hadtheplaintiffsadequateequipmenttoeffectthe
salvageoftheshipand
cargo?Hadplaintiffstherighttoinsistuponretaining
possessionoftheBengloeandher
cargoforthepurposeofsalvageasagainstthesalvorsemployed
bytheownersand
underwriters?WasP1,200adequatecompensationforthe
propertysavedbythe
plaintiff?
HELD:
BothNoThatsuchequipmentwasinadequateforthesalvageof
avesselvaluedat
P100,000,ladenwithsugar,copra,andbunkercoalofavalueof
P352,500,perilously
situated,seemsundeniable.Butplaintiffsalsomadefutile
efforts,presumablyingood
faith,toacquireadequatesalvageequipment.Wethushave
presentedthisunique
situation:Wellintentionedmenwithinadequateequipmentare
firstonthesceneofa

wreck,andwhileintechnicalpossession,aredrivenoffand
operationsbegunbya
secondsalvagepartyunderanexpertsuperintendentandwith
adequateequipment.
Theservicesrenderedbytheplaintiffscontributedimmediately
tothepreservationofa
smallamountofpropertyonthestrandedvessel,butasanactual
fact,theirfurther
exertions,howevermeritorioustheywereintendedtobewere
notsuccessfulinany
degreeandcannotbecompensatedindamages
CALTEXvSULPICIOLINES
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 Doa
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 Doa 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 Doa 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 Doa Paz
February 13, 1989: Teresita Caezal
and Sotera E. Caezal, Sebastian Caezals
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. Caezal (public school
teacher 47 years old) and his 11-year old
daughter Corazon G. Caezal
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 navigation
RTC: dismissed the third party
complaint and favored the Caezal's against
Sulpicio Lines

CA: included Caltex as liable party

ISSUE: 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 charter
charter 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 bareboat
charterer 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 voyage
charter-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 ships 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 carrier

Carriage 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
PLANTERSvCA
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 DISMISSED
When 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 so
carrier 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.
COASTWISELIGHTERAGEvCA
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 Pagasa, 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 wellsettled 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.
LITONJUAvSEAMEN
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 seamans handbook is the
reason by owners 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.
Litonjuas 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.
COMPAGNIEvHAMBURG
FACTS:

1. COMPAGNIE DE COMMERCE ET DE NAVIGATION

D'EXTREME ORIENT (Compagnie) is a
corporation duly organized and existing under and by virtue of
the laws of France, with its principal office in
Paris and a branch office in Saigon, Vietnam. THE HAMBURG
AMERIKA PACKETFACHT ACTIEN
GESELLSCHAFT(Hamburg) is a corporation organized under
the laws of Germany with its principal office in
Hamburg 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 was
the cargo belonging to COMPAGNIE. There were rumors of
impending war between Germany and France
and other nations of Europe. The master of the steamship was
told to take refuge at a neutral port (because
Saigon 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 the
declaration of the war.
4. The steamship sailed from Saigon, and was bound for Manila,
because it was issued a bill of health by the
US consul in Saigon. The steamship stayed continuously in
Manila and where it contends it will be compelled
to stay until the war ceases. No attempt was made on the part of
the defendants to transfer and deliver the cargo
to the destinations as stipulated in the charter party.
5. BEHN, MEYER and COMPANY (agent of HAMBURG in
Manila) offered to purchase the cargo from

COMPAGNIE, but the latter never received the cable messages

so they never answered. When a survey was
done on the ship, it was found that the cargo was infested with
beetles, so BEHN asked for court authority to
sell the cargo and the balance to be dumped at sea. The proceeds
of the sale were deposited in the court, waiting
for 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 the
defendants failure to deliver the cargo to the
destinations Dunkirk and Hamburg), while defendants
contended that they have a lien on the proceeds of the
sale (amount due to them because of the upkeep and
maintenance of the ship crew and for commissions for the
sale of the cargo).
6. The trial court ruled in favor of the plaintiffs. On appeal, the
defendants made the following assignments on
appeal (that the court had no jurisdiction, that the fear of capture
was not force majeure, that the court erred in
concluding that defendant is liable for damages for non-delivery
of cargo, and the value of the award of
damages). 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 of
the non-delivery of the cargo belonging to the plaintiffs
COMPAGNIE contends that the master should have in mind the

accepted principles of public international

law, the established practice of nations, and the express terms of
the Sixth Hague Convention (1907). The
master should have confidently relied upon the French
authorities at Saigon to permit him to sail to his port of
destination under a laissez-passer or safe-conduct, which would
have secured both the vessel and her cargo
from all danger of capture by any of the belligerents. The
SHIPOWNER contends that the master was justified
in declining to leave his vessel in a situation in which it would
be exposed to danger of seizure by the French
authorities, 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 the
disposition of his cargo, after entering a port of refuge; and
though he must act promptly thereafter, when the
cargo is a perishable one, neither he nor the shipowner is
responsible for loss or damage suffered by the cargo
as a result of its detention aboard the vessel during such time as
may reasonably necessary to come to a
decision in this regard.
Under the circumstances set out in the opinion, the master of the
Sambia proceeded with all reasonable dispatch
and did all that could be required of a prudent man to protect the
interests of the owner of the cargo aboard is
vessel; so that any losses which resulted from the detention of
the cargo aboard the Sambia must be attributed to
the act of the Enemy of the King which compelled the Sambia
to
flee to a port of refuge, and made necessary

the retention of the cargo aboard the vessel at anchor under a

tropical sun and without proper ventilation until it
could be ascertained that the interests of the absent owner would
be consulted by the sale of this perishable
cargo in the local market
In fleeing from the port of Saigon, and taking refuge in Manila
Bay the master of the Sambia was not acting for
the common safety of the vessel and her cargo. The French
cargo was absolutely secure from danger of seizure
or 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 sale
of the cargo (P128,977.71) affirmed; but so much thereof as
allowed damages for a breach of the charter party
(P60,841.32) reversed