G.R. No. 241850 - Labay vs. People

The steamship Nippon, loaded principally with copra and other general merchandise, sailed from Manila on May 7, 1913, bound for Singapore.
The Nippon encountered trouble when it went aground on Scarborough Reef on May 8, 1913, at about 4:30 p.m. Scarborough Reef is located approximately 120–130 miles from the nearest point on Luzon.

On May 9, 1913, the chief officer, Weston, along with nine members of the crew, abandoned the ship and succeeded in reaching Santa Cruz, Zambales, arriving on the morning of May 12, 1913.
Immediately upon arrival, on May 12, 1913, a telegram was sent to the Director of the Bureau of Navigation in Manila by Weston reporting the stranding and the urgent need for assistance—with an additional message later that day describing further deteriorated conditions onboard.
The government dispatched the coast guard cutter Mindoro on the same day (May 12) with life-saving appliances to the scene.

At about 1:30 p.m. on May 12, the steamship Manchuria sailed from Manila for Hongkong and was instructed to pass by Scarborough Reef.
The Manchuria arrived at the reef prior to the Mindoro’s arrival on May 13, took on board the captain and remaining crew, and communicated that the Nippon was abandoned.
The captain of the Mindoro attempted to offer assistance to rescue the Nippon’s crew, but the offer was declined; however, the cutter removed the officers’ and crew’s baggage discovered on the deck.

Following the rescue, on May 14, the Nippon’s chief officer and crew were brought to Manila by the Mindoro, arriving on May 14, and formal salvage operations were initiated soon after.
On May 14, the plaintiffs applied to secure a coast guard cutter for further salvage operations.
The plaintiffs took possession of the Nippon on or about May 17, 1913, and maintained possession until around July 1, 1913, during which the remaining cargo (including copra and various other goods) was salvaged, sold, and later brought to Manila after temporary repairs and towing.

The ship itself was valued at P250,000, and the plaintiffs settled their claim against the vessel for approximately P15,000 (or about P145,800).
The plaintiffs initiated an action (filed August 5, 1913, with an amended complaint on September 23, 1913) against the insurance companies and underwriters representing the cargo, seeking determination of the salvage award.
Multiple defendants were involved, including:

The Oelwerke Teutonia – claimant of the copra
The New Zealand Insurance Company (Ltd.) – insurer and assignee for agar-agar and other items
Other related maritime insurers and underwriters.

The lower court under Judge A. S. Crossfield rendered a judgment awarding the plaintiffs one-half of the net proceeds from the salved property, while several parties appealed, raising multiple assignments of error regarding salvage entitlement, division of proceeds, and the rejection of counterclaims.

Evidence from telegrams and statements by the crew indicated that the Nippon was considered “a wreck” and in danger due to being waterlogged and exposed to heavy seas.
The captain’s and crew’s actions, including leaving the vessel to seek timely assistance (and later sending statements and cablegrams), were used to establish that the ship was essentially abandoned or quasi-derelict.
The testimonies detailed the conditions onboard, the crew’s insistence on leaving for safety, and subsequent communications that reinforced the state of imminent peril.

The court evaluated the salvage operations, including handling of wet and dry copra and other cargo items, taking into account both the technical difficulties and the relative ease in salvaging different types of cargo.
Expenses incurred (e.g., by the Collector of Customs) were apportioned between wet and dry cargo in a fixed ratio before determining net salvage values.
Ultimately, based on detailed measurements and various expert testimonies, the court ordered modifications to the salvage award in specific percentages for wet copra, dry copra, and agar-agar.

Was the Nippon legally “abandoned” or did it retain the “animo revertendi” (intent to return) by the master and crew?
Whether the vessel, despite the master’s intention to seek help, was functionally derelict or quasi-derelict under maritime law.

Whether the salvage was conducted with sufficient skill, diligence, and efficiency under the hazardous conditions.
Whether the plaintiffs, though not professionals in the business, adequately remedied their lack of specialized means and handled the unique challenges (e.g., salvage of wet versus dry copra) appropriately.

Whether the award of one-half of the salvage proceeds was justified based on established maritime principles.
Disputes regarding the deduction (or lack thereof) of expenses incurred during salvage operations and the proper computation of the salvage share.
The correctness of allocating salvage percentages (e.g., 40% for wet copra, 25% for dry copra, and 20% for agar-agar) relative to the risks assumed and the benefit conferred to the property owners.

Whether the established doctrines (including those articulated in precedents such as The Mayflower vs. The Sabine and The Coromandel) properly applied to the facts of the case.
The degree to which principles from historical cases and the Laws of Oleron influenced the court’s determination regarding salvage entitlement and award computation.